China: Banking Reforms Critical to Avoiding a New Financial Crisis
A branch of the Industrial and Commercial Bank of China (ICBC) a Chinese state-owned bank that is the world's largest bank by market capitalization. ( FREDERIC J. BROWN/AFP/Getty Images)
February 9, 2012
| Economics
| Asia and the Pacific
While the IMF this week predicted an 8.2 percent growth rate this year for China, it also assessed that China’s growth could drop four more percentage points if Europe’s economic crisis worsens and causes large declines in credit and output. Such a development would be devastating to the Chinese economy. To avoid such a crisis, China must undertake fundamental reforms of its state-controlled banking sector and may also need to implement a large economic stimulus.

Chinese banks are still often used by the government to serve political and social goals by funneling money to local governments and state-owned enterprises in unprofitable sectors.  These political and social imperatives placed on banks need to end if China’s economy is to remain a strong engine of growth.

Comments or questions about this article? Click here to contact us.
Login or Create New Account
Email Address:
New to LIGNET? Create New Account
GET FREE Intelligence Reports

LIGNET provides you with actionable intelligence and in-depth analyses from seasoned insiders including senior CIA officials, presidential advisors, ambassadors, and more.

Sign Up for
FREE Intelligence Reports!
Join Now
Already have an account?
Click here to log in.

Join Now
Knowledge is Power
Only if You Access it!
Upgrade to a full access account and get the official CIA World Fact Book 2014 FREE!
Upgrade Now
FREE CIA World Factbook 2013
What is LIGNET?
Powered by Newsmax
LIGNET is registered in the U.S. Patent and Trademark Office. Langley Intelligence Group Network is registered in the U.S. Patent and Trademark Office.