China's Financial Markets (1 Viewer)
- Thread starter PLooB
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The PRC suffered from the Asian Financial Crisis of 1998-99, with official growth rates at 7.1% (low for China which was at the time enjoying growth rates upwards of 10%) and GDP slowing sharply.
Unlike other South-East Asian nations, most foreign investment in China was in the form of factories on the ground rather than securities. This insulated China from the main impact of the crisis, as solid, on the ground investments are much more difficult to withdraw from than securities.
Although the effects of the Financial Crisis were not felt as strongly in China as in other ‘Asian Tigers’ such as Thailand and South Korea, it never the less taught the PRC some valuable lessons.
Shortly after the crisis, China redoubled efforts to reform its financial and banking system, seeing the disaster that an under-developed banking system could cause.
The Chinese government has, for this reason, implemented new reforms to enhance the power of the central bank over provincial banks.
These changes were also made in order to improve the management systems of all Chinese banks by setting a central precedent. This policy was aimed at reducing the power of local officials of pressuring banks into make ‘bad loans’. Such events had become unfortunately common in PRC, with corruption rife within the leadership structure.
In addition, banks, like farmers, are increasingly able to make bank loan decisions based on their own commercial and managerial decisions, rather than all decisions being made by the government.
That's part of my case-study on China. Hope it helps. Don't have much in the way of statistics, but there are a few handy websites which glance over it a bit. Some of them are propaganda, though, so watch out.
Hope that helped!
Unlike other South-East Asian nations, most foreign investment in China was in the form of factories on the ground rather than securities. This insulated China from the main impact of the crisis, as solid, on the ground investments are much more difficult to withdraw from than securities.
Although the effects of the Financial Crisis were not felt as strongly in China as in other ‘Asian Tigers’ such as Thailand and South Korea, it never the less taught the PRC some valuable lessons.
Shortly after the crisis, China redoubled efforts to reform its financial and banking system, seeing the disaster that an under-developed banking system could cause.
The Chinese government has, for this reason, implemented new reforms to enhance the power of the central bank over provincial banks.
These changes were also made in order to improve the management systems of all Chinese banks by setting a central precedent. This policy was aimed at reducing the power of local officials of pressuring banks into make ‘bad loans’. Such events had become unfortunately common in PRC, with corruption rife within the leadership structure.
In addition, banks, like farmers, are increasingly able to make bank loan decisions based on their own commercial and managerial decisions, rather than all decisions being made by the government.
That's part of my case-study on China. Hope it helps. Don't have much in the way of statistics, but there are a few handy websites which glance over it a bit. Some of them are propaganda, though, so watch out.
Hope that helped!
Tabris
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In short CHina's stock market is quite primitive compared to NDE'S and AIE's, thats coz it is heavily regulated and institutions are government supported, although it has a massive GDP growth, its stock market is lightyears behind. Besides, I cant name even a handful of chinese private firms that operate outside the government's influence. This is ebcause CHina's firms are usually heavily influenced and financialy supported by the state, hence when left alone in the global market, its entrepreneurs wont survive in the real world, because they simply arnt quick enough to adapt after being spoon fed so much
Givent he fact that all property was state owned and private property is a relatively new development, loans from banks to develop upon these properties are relatively low in demand, hence china's banking system is nowhere near as complicated as AIE's or NDC's. Also the iron rice bowl no longer exists, which means the government pensions are starting to fade out as financial activities such as supperanuation and specialised financial funds slowly emerge
Givent he fact that all property was state owned and private property is a relatively new development, loans from banks to develop upon these properties are relatively low in demand, hence china's banking system is nowhere near as complicated as AIE's or NDC's. Also the iron rice bowl no longer exists, which means the government pensions are starting to fade out as financial activities such as supperanuation and specialised financial funds slowly emerge
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