Abstract/Summary

Although analyses based on recent data suggest that China has made progress in its financial system after 2005, certain areas still require further substantial improvements. While improvements have taken place in areas like non-performing loans, the legal and regulatory framework, financial deepening and widening, institution building, excessive dominance of the state-controlled banks over China’s financial system, and the still underdeveloped capital market still need radical reforms. Moreover, the informal financial sector has indeed been a blessing for the Chinese economy, but governing it is of vital importance in order to contain the potential risk elements.