The Achievements And Challenges Of China's Financial System

Since the market orientated economic reforms were introduced in 1978 (Khan, Hu (1997, P103) China’s economy has seen a 10% increase in Gross Domestic Product (GDP) Per year (Vincellete, Manoel,

These effective strategies helped Hong Kong overcome the financial crisis. All these facts fully demonstrated that China is a responsible big country. After the Asia financial crisis, the importance of China's economy has been brought into focus; China's neighboring countries have begun to recognize the influence of the Renminbi.

Over the past ten years China’s financial flows have fluctuated a fair bit, with down turns and upturns throughout. With an obvious trough when the GFC hit. Although as soon as the GFC finished China’s financial flows bounce straight back up and boomed. As of recent China’s financial flows have been in a deficit and is now looking to be bouncing back up into the positive numbers. (Refer to Figure C)

China had a GDP per capita level similar to Zambia, less than half of the Asian average and was lower than two-thirds of the African average at the outset of the reforms in 1978 (Eckart, 2016). China was poor. Since then, China has grown exponentially experiencing nearly 10% GDP grown per year until 2014 raising GDP from 155 current US Dollars in 1978 to 7,590 US Dollars in 2014 (Eckart, 2016). China, who accounts for 18% of the world’s population, was able to lift 800 million people out of poverty and growth in the middle class. This document will examine China’s financial and currency markets.

The Chinese Banking Regulatory Commission seeks to open three to five new banks throughout the year. Their focus is to be responsible for their own risk as a tactic to open their institution to domestic and foreign capital for investing (CBRC). In doing so, the CBRC will need to “reduce the threshold for foreign banks to enter the banking sector” and ease currency operation requirements to make investing more ‘user-friendly’ to foreigners (CBRC).

China is considered the second largest economy in the world. During the past two years, this country has faced a number of both positive and

The purpose of this paper is to outline the relationship between Chinese and American financial markets. The paper will outline the levels of debt for chines, the major drivers of that debt, and the future consequences of debt levels. The paper will also describe the the structure of Chinese banking system; it will not describe the U.S structure simply because we had a whole semester discussing that material. I believe this research is essential because of the sheer interconnectedness of the global banking system; and the rise of China specifically has implications that should not go misunderstood.

Following a shaky first era from 1990 to 2000, China’s financial market received a standing as a casino like environment manipulated by speculators and insiders who has government influence. In the recent times, China’s after crisis stock market regaining has insulated those of other dominant markets, as its rapidly increasing sleuth banking sector, delivering new high yielding but covertly guaranteed wealth-management financial instruments to finance both market influenced and centrally prearranged investment, has dragged in financial capital and elevated essential equity returns. New issues may lead to the dangerous underpricing in China’s market that are the inexperienced investors and higher demands of IPO shares, the foreign exchange trading stage is not effective and well-organized to entice the overseas investors, the unwarranted industry assembly of the registered firms is very significant as the Chinese stock market is heavily dominated by the industrial firms. Small and medium sized enterprises in China that are not qualified from the primary stock market, turns to the growth enterprise market that is essential to address the issue of raising capital for those small medium sized firms. There are many stock

After languishing for the past six years after the financial crisis, the Chinese stock markets suddenly took off last summer, becoming a cauldron of voracious buying, selling and spectacular profit-taking. In fact, drawn by the casino-like profits to be made in the boom, more and more small investors flocked to the thousands of brokerage houses that are now proliferating in every Chinese city in order to buy and sell while staring up at flickering electronic data boards charting the rise and fall of equity prices.Stock shares of newly listed companies soared thousands of percentage points within months of their initial public offerings, driven upward by a green and growing cadre of relatively unsophisticated private investors that

The International Monetary Fund (IMF) recently highlighted that global recession risks in 2016 had risen, but attached a zero percent chance that China would experience this fate. A scenario of an economically contracting China would send deflationary scares spiralling: government bond yields in advanced markets, particularly safe-haven countries, would collapse and perhaps go negative as investors switched their focus to real returns. Although China is unlikely to experience negative growth in the near term, the economy is clearly growing below trend, thereby imparting a deflationary bias on activity. One possible way to eradicate such forces is to export them by weakening the yuan. The decision by the Peoples’ Bank of China (PBoC) to allow the currency to weaken in August sent shock waves around global financial markets, because it highlighted the risks of further escalation in the Great Currency War. Furthermore, the decision to at least contemplate devaluation to solve deflationary issues was viewed as mimicking the policies of the European Central Bank (ECB) and the Bank of Japan (BoJ). The latter is an old hand at fighting the persistence of falling prices, but the fact is that it is still paying a heavy price for failing to contain the forces that were producing a bubble economy, notably a major expansion of bank lending and corporate debt issuance. Japan consequently experienced a so-called balance sheet recession that

Seemingly transformed overnight; China has become an economic power house. In truth, however, China has been growing now for more than 30 years. Since it’s initiation of economic reforms and trade liberalization in 1979. China is one of, if not the fastest growing economy world-wide, averaging nearly 10% growth GDP (Growth Domestic Product). (Morrison, 2015) This financial revolution began with a series of reforms. One was designed to revitalize the state sector and save socialism, others began as more grass root initiatives that led to free market capitalism. (Wang, 2013). China began to change their investments from producing capital goods to producing more consumer goods. They allocated more money to agriculture, and the government raised pricing for the agricultural products and increased grain import. After a series of painful events China began to privatize farming. This led to the de-collectivization of agriculture (Wang, 2013)

The article of Yasheng Huang，named how did China take off，discussing on economic growth mechanism, mainly come to China’s economic reform had the process of financial liberalization. Furthermore, he pointed out that political reform, financial liberalization and the development of township enterprises are the key focus on China’s development.

In February this year, China’s top securities regulator Xiao Gang was dismissed and criticized for financial corruption because under his administration, a speculative stock bubble has inflated in the country’s stock market. Share prices more than doubled in one year. Despite of the abnormal inflation, since last June, there has been “a steep plunge in stocks” as well as “erosion in the value of China’s currency”. Xiao Gang conceded that recent troubles reflected that “imperfect trading system, flawed market mechanisms and inappropriate supervision systems” are three detriments to the Chinese stock market as well as to other financial markets like real estate. (New York Times, 2016)

Over the past decade the banking system has globalized rapidly in foreign ownership of bank assets. Gyongyi Loranth, a

Events in China took on a new level of intensity last week as the authorities attempted to stabilise the equity market. The weakness appears to be event-drive as opposed to being the result of economic malaise. In fact, recent economic data out of China suggests that recent stimulus measures appear to have had some traction. The event in question appears to be a large margin call being made by one of the main regulatory authorities. Recently, I mentioned that margin debt as a percentage of GDP was a relatively high 8%. The problem facing the authorities was sourcing where the trouble was emanating from. Margin debt can be originated from two sources: 1) licensed brokers, and 2) the so-called grey market within the shadow banking system. The origination split is roughly 50/50 between the two sectors. This is where the similarities end. At licensed brokers, margin credit can only be extended for up