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Money and Banking in the People's Republic of China: Recent Developments

Published online by Cambridge University Press:  17 February 2009

Katharine H. Y. Huang Hsiao
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Extract

The economy of the People's Republic of China is undergoing a sweeping transformation at the present time. Drastic changes are being made in its objectives, developmental strategies and the basic economic structure. The national objectives are no longer high speed industrialization and socialization at all costs, but an increase in economic efficiency and a rise in the people's standards of living. In terms of strategies, the country is shifting from a policy of unbalanced growth to a more balanced approach, while at the same time it opts for international co-operation instead of isolation. In other words, heavy industry no longer receives an overwhelmingly large share of state investments; now light industry and agriculture are given their fail shares. Besides, instead of emphasizing economic self-sufficiency, it now actively seeks foreign trade and foreign investment in an attempt to modernize the country. Meanwhile, the economic structure is also being fundamentally overhauled. The price mechanism is being allowed to function alongside planning; basic productive units, farmers and enterprises alike, are receiving more autonomy; pecuniary incentives in the form of bonus and profit are being reinstituted; a limited degree of competition is encouraged; and direct, administrative controls are giving way to indirect, economic controls. In sum, the economy is becoming more decentralized, with prices, markets and profits playing important parts. Under these circumstances, it is inevitable that the role of money and banking would be affected. The purpose of this paper is to examine changes in money and banking in China. In the following, I shall first briefly summarize the Chinese money and banking system inherited from the 1950s, then investigate recent changes and developments, and conclude with a generalization about the new role played by money and banking and its prospect.

Type
Research Article
Information
The China Quarterly , Volume 91 , September 1982 , pp. 462 - 477
Copyright
Copyright © The China Quarterly 1982

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