Reform and Strengthening of the Banking Sector
In the past, China’s banks and credit cooperatives performed the task of conveying funds to state-owned enterprises and hereby ensuring their functionality. With the formation of asset management companies, the government took first steps in solving the problem of the continually rising number of non-performing loans. Due to these bad debts and historical special functions, Chinese financial institutions have limited abilities in assessing credit risks objectively and in acquiring and serving new customer groups. Lack of equity capital, weak corporate governance, and inadequate risk management are further core problems of Chinese banking.
Selective reforms, mostly including the big state-owned commercial banks, led to an uneven development in the availability of financial services: private enterprises as well as the rural and poor population hardly have access to formal credits. The key to a stable financial sector lies in the solution to these problems. The future path of the Chinese banking sector is also determined by foreign institutions. However, successful alliances and strategic partnerships of German credit institutions in China require experience and intercultural sensitivity.
See how we help to address these issues:
Microfinance and Rural Financial Sector Reform
Asset and Equity Market Reform