Chinese Financial System

China’s financial system

This short report will give us an overview of China’s financial system. The report will be divided into 5 Chapters. The first chapter is mainly about the overview of the China’s financial structure of China’s financial system. Chapter 2-4 chapter are about financial institutions like banks, stock market and bond market. The last Chapter is a short conclusion about this report.

Chapter 1: introduction to China’s financial system

Financial system is a very important part in China’s expansion and it helps China to grow to be the second largest economy in the world. China’s financial system has managed for decades to deliver enough supports to the rapid economic growth of the nation. Due to the fact of its opacity and continuing evolution, it is hard for people to analyze it. However, we can have some clues to know its basic structure.

Banks dominate the Chinese financial system. It provides about three fifths of total credit to the private sector. However, the main difference with more developed financial systems is the high level of state ownership and control. The five largest Chinese banks are majority-owned by government and government stakes are in many of the other banks. Chinese stock market is not as mature as US stock market. The stock in China is more like a speculation market than an end-investment market. A large portion of shares are owned by government entities and they are non-tradable. This causes a high turnover rate of the stock market. In past 5 years, the annual turnover rate of the market is 20.5%, compared with US, 18.8%, it is very high. Insurance companies are under-developed part of Chinese financial system. It has 14% GDP, $1.2 trillion. The insurance sector is very still very small compare with US’s $4.8 trillion in total assets, amounting to over 30% of GDP. However, the development rate