A retrospect on China’s banking reform

Wai Chung Lo

Research output: Chapter in Book/Report/Conference proceedingChapterpeer-review


China’s banking system has undergone substantial changes in the past two decades, and it has been transformed from an institutional setup for central planning to a banking system in a market-oriented economy. The reform strategy is consistent with the overall economic reform in China, which, unlike many transitional economies in Eastern Europe, has taken a gradual or incremental approach. This approach enables the banks in China to progress in phase from the accounting units of the central planner to a modern commercial banking system consistent with the price system which aims at efficient allocation of financial resources. The first phase of the reform (1978-92) created a banking system that was oriented to a market economy but imprinted with the legacy of central planning. The second phase of reform (1992-present) has removed the remnants of central planning and established a full-fledged modern banking system. The purpose of this paper is to delineate the banking reform’s gradual approach, with the focus on the achievements and problems of each stage.

Original languageEnglish
Title of host publicationFinancial Markets and Foreign Direct Investment in Greater China
Number of pages16
ISBN (Electronic)9781315499208
Publication statusPublished - 1 Jan 2016


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