Although it is quite common that in developing economies the securities market is not developed yet and direct financing is difficult for enterprises to access, such a high ratio of indirect financing in China exerts some difficulties for the asset-liability management and risk control for the whole economy. Third, the ratio of M2 to GDP is too high.
In 2003, that ratio in China was close to 200 percent. So high a ratio does not exist across the globe except for extremely exceptional cases. While the Chinese economy has its particularity, excessively high ratio of M2 indicates that financing relies too heavily on the banking system in the course of the economic development and thus the risk concentration is higher than desired.