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Capitalizing China$
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Joseph P. H. Fan and Randall Morck

Print publication date: 2012

Print ISBN-13: 9780226237244

Published to Chicago Scholarship Online: September 2013

DOI: 10.7208/chicago/9780226237268.001.0001

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PRINTED FROM CHICAGO SCHOLARSHIP ONLINE (www.chicago.universitypressscholarship.com). (c) Copyright University of Chicago Press, 2020. All Rights Reserved. An individual user may print out a PDF of a single chapter of a monograph in CHSO for personal use.date: 02 June 2020

China’s Financial System

China’s Financial System

Opportunities and Challenges

(p.63) 2 China’s Financial System
Capitalizing China

Franklin Allen

Jun “QJ” Qian

Chenying Zhang

Mengxin Zhao

University of Chicago Press

This chapter chronicles the development of China's financial system and compares it with those of other countries. Four main conclusions are drawn about the financial system and its future development. First, the large banking sector dominated by state-owned banks has played a bigger role in funding the growth of many types of firms than financial markets. Second, the stock market has been growing fast since 1990, but has played a relatively limited role in supporting economic growth. Third, alternative financing channels have had great success in supporting the growth of the Hybrid Sector, which contributes most of the economic growth compared to the State and Listed Sectors. Finally, a significant challenge for China's financial system is to avoid damaging financial crises that can severely disrupt the economy and social stability. A commentary is included at the end of the chapter.

Keywords:   Chinese financial system, banking sector, state-owned banks, stock market, alternative financing, hybrid sector, economic growth

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