Study On The China's Financial System Reform Since The Reform And Opening Up

This article consists of Introduction and four Chapters. It is based on the Marxism currency theory, guided by the contemporary currency and banking theory, financial development and economic growth theory, institutional economics and law & economics. Taking the development of China's financial system reform since 1978 as the research objective, under the international circumstance and background of economic globalization, this article brings forward the feasible solution of the policy choice to deepen China's financial reform, to clear up the obstacles of China's financial development and to expedite the financial system reform for the final aim of establishing the market-oriented financial system which is adapted to the development of China's market economy. Theoretically, the financial system consists of three parts: financial institutions, financial instrument and financial market, and among which, financial institution plays a vital role, and it is the vector of central bank's monetary policy, also is the link between economy and finance, and it can be regarded as the kernel of a nation's financial system; Financial market is the place and area where financial institutions and other economic entities engage in the financial activities, while financial instrument are the means by which financial institutions engage in the financial activities. Generally, different countries adopt different financial systems and development path because there are differences among countries in system circumstance, entities of financial activities and the process of innovation's commencement and pervasion. China experienced a different process from the western mature market-economy countries in the development of financial system just because of the difference between our "transition economy" and western countries' "market economy", which leads to not only the different circumstance and motivation of financial innovation, but also the different effect, and consequently affects the evolution direction of China's financial system. In the beginning of China's foundation, China adopted all-in-one mono financial system; before the reform and opening-up in 1978, China adopted highly centralized financial system; in the initial stage of reform, we adopted planned and government-oriented financial system, we can see from this process that China's financial system started from a kind of financial restraint condition, a lower level of financial deepening, an underdeveloped financial system, in which the micro-entities are lack of the economic incentives to pursue the innovation positively. Currently, to adapt the rapid development of market economy, China's financial system is gradually transforming from government-oriented mode to market-oriented mode, and its essential character is the financial system reform and innovation under the nation's pushing force.In Chapter One, it makes a comprehensive address on 30-years financial system reform practice of China, which follows two lines: financial reform's historical process and main contents. In vertical line, this chapter divides China's financial reform into 5 phases, and in horizontal line, it makes detailed comments on reform contents in the following 8 aspects: Establishment and development of central bank system; Reform and development of commercial banks credit funds management system; Market-oriented reform of interest rate; Enterprise reform and business innovation of commercial bank; Reform of China's rural financial system; Reform of China's foreign exchange management system; Establishment and deepening reform of China's financial market; Opening up of China's financial industry.In Chapter Two, it fully confirms the effectiveness of China's financial system reform, and it draws the conclusion that China's financial industry has grown and developed continually through financial reform and financial industry has supported and prompted Chinese economy's rapid development for nearly 30 years. Also it objectively summaries some important experience in China's financial system, which includes: we should learn the experience of financial system reform from foreign countries to serve for China's financial reform; we should positively, safely and progressively promote the reform; we should correctly handle the relationship among financial reform, development and stabilization; the existing financial system guarantees China's economy long-term, stable and rapid development; we should regulate the financial system reform by the legal system and set aside legislative spaces to support the development of finance; financial system reform should match the economic system reform; we must adhere to appreciate regulation and supervision of government to ensure the coordinated and rapid development of economy.Based on above two Chapters, in Chapter Three, in a dialectical view, it adopts some latest theories in modern economics and politics---public choice theory, financial restraint theory, information economics theory, behavior choice theory etc, addresses the disadvantages existing in the nearly 30-years financial reform and the fundamental reason why China's financial reform faces the dilemma. Because the micro entities in financial activities are lack of innovation incentives, the nation becomes the main force to prompt the financial reform, but the deficiency in the current property right structure of financial institution leads to the prevalence of rent-seeking and predatory activities, at the same time, because of the tremendous cost of nation's supervision on the rent-seeking activities of financial institution, the supervision efficiency is rather low, as the result, the micro risks in the financial activities can be easily accumulated and transformed to overall systematic risks, and the nation may be trapped into a dilemma. To prompt the reform and improve the efficiency of allocation of financial resource, the nation shall encourage the innovation activities of financial institutions, but the institutions will make the chances of financial innovation to engage in the rent-seeking activities, and consequently will lead to the accumulation of social financial risks.In Chapter Four, it deeply analyzes and interprets the domestic economic and political environment, international economic situation and trends. Learning from the experience of Asian developing countries' financial system reform in recent years, this chapter makes profound analysis on the deep-level contradiction and problems faced by current financial reform: financial system's own problem, such as the competitiveness and service function of financial institutions are weak, financial market is not mature, efficient financial supervision and coordination mechanism is urgently to be established, foreign exchange management system is expected to develop further, the imbalance of BOP, RMB exchange rate formation mechanism need the gradual improvement, RMB is to realize convertible under the capital account, financial macro-control system need further improvement to be more scientific, perspective and effective; the problems of financial ecological environment's construction, such as social pension insurance system is to be established and sound, social credit system is to be established and improved, deposit insurance mechanism is to be established, laws and regulations concerning the financial system shall be more complete and sound etc. Finally, according to the "11^th Five-Year" development planning, the author proposes the goal of deepening the financial reform: to establish a financial system which can adapt to the transition of economic growth mode and can support the economy to continually and steadily develop. As to the options of policy, we can take action from two aspects: internal reform and improvement of financial system; Construction of financial ecological environment, and we shall take a progressive approach to promote the market-oriented reform of financial system.