Financial Sector Reform
for the Improvement of the Legal Framework
Since the beginning of the opening and reform policy in 1978, Chinese society has been going through a dramatic change process. Reforms in the financial sector have so far not been able to keep up with the rate of change in the Chinese real economy. Overcoming these weaknesses is crucial for the Chinese reform process as a whole.
Compared to the dominating banking sector, China’s stock and bond markets are underdeveloped. Banks are struggling with bad debts and weak corporate governance, insufficient risk management, and a narrow product range. China’s successful transformation from a planned economy to a market economy requires extensive legal reforms, even more so since its accession to the WTO. Not only do new laws have to be drafted, but judges, government officials, and legal practitioners also need to improve their competence and knowledge to properly implement and apply the new legislation.
However, the Chinese government is aware of these weaknesses.
Further reforms in this field will affect the general conditions of the financial sector: the implementation of WTO regulations, the structure of banking, insurance, and securities supervision, accounting principles, property law, deposit insurance, capital market reform, the leeway of foreign investors – all these questions are still under discussion. However, the answers will strongly influence the further path of the Chinese financial sector.
Against this background, GTZ has developed its own profile in the financial sector, which is highly valued by clients all over the world: GTZ experts draw from the strengths of the German system and take the values of a social market economy into their partner countries. Experiences from financial sector development projects in more than 30 countries are added to form a solid international state-of-the-art knowledge. Important instruments of GTZ and their comparative advantage lie in our middle to long term consulting services, which accompany the process with orientation towards the partner.
Our political network, which has grown over the last ten years, is invaluably important when counseling complex change processes.
In our opinion, the German pluralistic system offers convincing approaches for the reform process in the Chinese financial sector – particularly in the field of banking – and GTZ integrates these options into its consulting services.
For more detailed information on legal reforms, please visit the homepage of our Legal Advisory Service Programme.