The next section outlines China's banking reform since the early 1980s. The limitations of the reform will also be discussed. In Section 3, China's attempt to separate policy and commercial loans since 1994 will be introduced. We will analyse the motivations and rationales of the separation From the discussion, one may also note that the separation was made possible partly because of the progress in the reforms in some related areas, such as the government's effort in financing budget deficits by issuing securities instead of forcing the state banks to issue currency. However, the separation is not a complete one. The newly established policy banks and the state-owned commercial banks are still facing various problems and could not be totally responsible for their performance. We suggest a change in the scope of policy loans in order for the reform to succeed. The final section contains some concluding remarks.
Scopus Subject Areas
- Geography, Planning and Development