This is reflected by indicators such as the ratio of financial assets relative to GDP, the number of financial intermediaries, the capitalization value of the stock markets, and the fact that some of the major banks in the world in terms of market value are Chinese.5 This advancement is obviously impressive, especially given the daunting complexity of the system.
The next step is to increase quality and efficiency. Indeed, China’s financial system could yield greater benefits by becoming more market oriented, in the spirit of the reform plan. Well-known avenues for transformation would include further interest rate liberalization, credit allocation according to business criteria, transparent local government finances, competitive capital markets, currency convertibility, flexible exchange rates, and additional opening of the capital account.