Research
BPEA | Fall 2006The Contradiction in China’s Gradualist Banking Reforms
Anil K. Kashyap and
Anil K. Kashyap
University of Chicago
Wendy Dobson
Wendy Dobson
University of Toronto
Discussants:
Lawrence H. Summers and
Lawrence H. Summers
Charles W. Eliot University Professor and President Emeritus
- Harvard University
Nicholas Lardy
Nicholas Lardy
Anthony M. Solomon Senior Fellow, Peterson Institute for International Economics
Anil K. Kashyap
University of Chicago
Wendy Dobson
University of Toronto
Lawrence H. Summers
Charles W. Eliot University Professor and President Emeritus
- Harvard University
Nicholas Lardy
Anthony M. Solomon Senior Fellow, Peterson Institute for International Economics
Fall 2006
DURING CHINA’S TWO and a half decades of economic reform, it has often
been observed that the bank-dominated financial system is the economy’s
Achilles’ heel. Since 2003, China’s central government has reformed the
largest state-owned commercial banks to improve their competitiveness
before opening the banking industry to foreign competitors, as mandated as
part of the country’s accession to the World Trade Organization (WTO).
Reform of these banks has markedly improved their performance, but the
process has been gradual, and underlying problems remain.