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China's Financial Reforms Face Big Challenges 

July 18, 2016

Sarah Hsu, Forbes

China’s leadership has several challenges before it: to increase economic growth while implementing much-needed reforms to improve the market orientation and efficiency of the economy and maintaining stability in the financial system.  All of these challenges are particularly steep: economic growth is slowing due to changes in the domestic and global economic structure, creating the need for additional stimulus and policy measures; reforms are necessary to move the economy toward a service and consumption-based system, but economic headwinds and vested interests have dramatically slowed this process; and financial stability remains a concern due to aftershocks in the stock market and potential bubbles elsewhere.

Certainly, strides have been made on the financial front.  The People’s Bank of China’s Financial Stability Report released at the end of June 2016 states that in 2015 the financial system was relatively sound, with reforms aimed to increase credit to small enterprises, control credit risk, improve opening of the capital market, increase trading volume in money markets, expand bond issuance, and grow the futures and interest rate derivatives trading volume.  Financial infrastructure strengthened, with improvements in the RMB cross-border payment, clearing, and settlement system, better financial regulations, consumer protection, and macroprudential management. Read more



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