Book contents
- Demystifying the Chinese Economy
- Demystifying the Chinese Economy
- Copyright page
- Reviews
- Contents
- Figures
- Tables
- Preface to the Second Edition
- Preface to the First Edition
- 1 Opportunities and Challenges in China’s Economic Development
- 2 Why the Scientific and Industrial Revolutions Bypassed China
- 3 The Great Humiliation and the Socialist Revolution
- 4 The Comparative Advantage-defying, Catching-up Strategy and China’s Traditional Economic System
- 5 Enterprise Viability and Factor Endowments
- 6 The Comparative Advantage-following Development Strategy
- 7 Rural Reform and the Three Rural Issues
- 8 Urban Reform and the Remaining Issues
- 9 Reforming the State-owned Enterprises
- 10 The Financial Reforms
- 11 Deflationary Expansion and Building a New Socialist Countryside
- 12 Improving the Market System and Promoting Fairness and Efficiency for Harmonious Development
- 13 Supply-side Structural Reform and Economic Transformation and Upgrading under the New Normal
- 14 China’s Economic Development and Cultural Rejuvenation
- 15 Reflections on Neoclassical Theories
- Book part
- Index
- References
10 - The Financial Reforms
Published online by Cambridge University Press: 12 December 2025
Translated by
Book contents
- Demystifying the Chinese Economy
- Demystifying the Chinese Economy
- Copyright page
- Reviews
- Contents
- Figures
- Tables
- Preface to the Second Edition
- Preface to the First Edition
- 1 Opportunities and Challenges in China’s Economic Development
- 2 Why the Scientific and Industrial Revolutions Bypassed China
- 3 The Great Humiliation and the Socialist Revolution
- 4 The Comparative Advantage-defying, Catching-up Strategy and China’s Traditional Economic System
- 5 Enterprise Viability and Factor Endowments
- 6 The Comparative Advantage-following Development Strategy
- 7 Rural Reform and the Three Rural Issues
- 8 Urban Reform and the Remaining Issues
- 9 Reforming the State-owned Enterprises
- 10 The Financial Reforms
- 11 Deflationary Expansion and Building a New Socialist Countryside
- 12 Improving the Market System and Promoting Fairness and Efficiency for Harmonious Development
- 13 Supply-side Structural Reform and Economic Transformation and Upgrading under the New Normal
- 14 China’s Economic Development and Cultural Rejuvenation
- 15 Reflections on Neoclassical Theories
- Book part
- Index
- References
Summary
The primary role of the financial system is to serve the real economy. However, China’s financial system is predominantly characterized by large state-owned banks and the stock market, and it is ridden with a spate of problems including bad debts and a highly speculative stock market. One of the fundamental problems related to economic development is the irrational financial structure, which underserves private small- and medium-sized enterprises (SMEs) and farmers, who are the main players in the real economy. Therefore, alongside enhancing financial supervision, it is crucial to improve the financial structure by promoting the development of regional small- and medium-sized banks, contributing to a healthier and more balanced financial system.
Information
- Type
- Chapter
- Information
- Demystifying the Chinese Economy , pp. 200 - 213Publisher: Cambridge University PressPrint publication year: 2026
References
Ju, Jiandong, Lin, Justin Y., and Wang, Yong. “Endowment Structures, Industrial Dynamics, and Economic Growth,” Journal of Monetary Economics 76 (2015): 244–63.CrossRefGoogle Scholar
Levine, R., “Bank-Based or Market-Based Financial Systems: Which Is Better?” Journal of Financial Intermediation 11 (2003): 398–428.CrossRefGoogle Scholar
Lin, Justin Y. “Four Issues on China’s Stock Market.” Jin Rong Xin Xi Can Kao [Financial Information Reference] 4 (2001): 24.Google Scholar
Lin, Justin Y. “How to Develop Small and Medium-sized Banks.” Peking University CCER Newsletter 48 (2002).Google Scholar
Lin, Justin Y. “What Is the Direction of China’s Financial Reform?” Peking University CCER Working Papers 20 (1999).Google Scholar
Lin, Justin Y., and Li, Zhou. “China’s SOE and Financial Reforms.” Peking University CCER Working Paper, October 2003.Google Scholar
Lin, Justin Y., Sun, Xifang, and Jiang, Ye. “Endowment, Industrial Structure and Appropriate Financial Structure: A New Structural Economics Perspective.” Journal of Economic Policy Reform 16(2) (May 2013): 109–22.CrossRefGoogle Scholar
Stiglitz, J. E. “Credit Markets and the Control of Capital.” Journal of Money, Credit and Banking 17 (1985): 133–52.CrossRefGoogle Scholar
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