Financial Reform in China

The paper analyzes the place of financial reform in China's economic reforms since 1978. While international transactions were gradually freed in response to the needs of the open door policy, domestic financial markets remained repressed through the 1980s. The reform process has created pressures for financial reform, which is difficult to undertake piecemeal because financial markets are interconnected. Attempts at gradual reform had little impact in the financial sector, and in 1990 and 1991 more far-reaching reforms were initiated. Developments during the early 1990s in bond and equity markets and in banking reform are described and evaluated.