Chinese State-owned Banking System, Changing The Logic

The reform of Chinese state-owned banks is given attention because of its hardships and particularity. Bank of China Limited (BOC) set up in Beijing on August 26^th, 2004, and its registration capital is RMB 186.39 billions. All of its shares are hold by Chinese state. China Construction Bank Limited (CCB) set up in Beijing on September 21^st, and its registration capital is RMB 194.23 billions. The 85.228 percent of its shares are hold by Center Huijin Investment Company, and 10.653 percent are hold by China Construction Bank Investment Company, and the others are respectively hold by Chinese Electric Net Company, Shanghai Baoshan steel Company and Chinese Yangtse River Electric Power Company. On April 18, 2005, the state approved the program for stock system reform of Industrial and Commercial Bank of China (ICBC). By the end of June, the work of financial recombination of the stock system reform of ICBC had been basically finished and its registration capital is RMB 248 billions. CCB was listed in Hong Kong Exchange on October 27^th, 2005. BOC was listed in Hong Kong Exchange on June 1^st, 2006, and then ICBC was listed in Hong Kong Exchange and Shanghai Stock Exchange on October 27^th, 2006.The program for stock system reform indicates that the reform of Chinese state-owned banks enters key phase. This reform is a crucial promotion relative to preterit marginal reform. Give the devil his due, this reform is an inspiring institutional change, because this change not only reflects the decision of Chinese state, but also shared commercial banks are the main style in the world.But the problem is that this reform is not the end of the whole story, on the contrary this reform is the start point of the whole reform of Chinese state-owned banks. The scholar and governor still dispute on the next reform step of Chinese state-owned banks. In fact, this kind of disputation does not appear now, and it exists in the course of reform of Chinese state-owned banks. In the other word, due to not grasping clearly the logic of evolution of Chinese state-owned banks we are often paradoxical in selecting policies. In fact, Chinese state-owned banks have special evolution logic and are in a frequently changed and adjustive social environment, and it keeps in deep touch with the state. So the reform of Chinese state-owned banks is a systemic work, and brash action will fail if other conditions are not possessed.This paper searches for the inherent logic of reform on Chinese state-owned banks. Only when well and truly grasping their inherent evolution logic, we can distinctly face the difficulty of reform and find the feasible reform strategy. This paper has seven chapters.Chapter One establishes the two main footstones: long-term and endogenetic angle of view. We think that studying the institutional change of Chinese state-owned banks must base on the long-term and endogenetic angle of view. Otherwise, Chapter One clarifies the means, idea path, ideas and innovation of this paper.Chapter Two inspects the whole institutional changes of Chinese state-owned banks. We analyse the driving mechanism and the characteristic of institutional changes of Chinese state -owned banks. According to other scholars' production, we plot four phases of institutional changes of Chinese state-owned banks: First phase is from 1978 to 1984, Second phase is from 1985 to 1993, Third phase is from 1994 to 2001, and Fourth phase is from 2002 to now.Chapter Three inspects institutional changes of Chinese state-owned banks from the angle of view of government. This chapter clarifies the effect of government and its utility function in transition economy, and then inspects the shaping course of state-owned finance. This chapter indicates that over interposition of government is one reason of difficulty of Chinese state-owned banks, and the impulse of government and the competition in banks markets are the two headspring of shares reform of Chinese state-owned banks. We think that it is necessary that government exits state-owned banks, and the key point of exiting is that non-government strength becomes strong in the condition that government can not forwardly exit state-owned banks.Chapter Four inspects institutional changes of Chinese state-owned banks from the angle of view of the whole economic reform. This chapter inspects the status of state-owned banks in Chinese economics and finance, and their contribution to development of Chinese economics and finance, and points the necessity and stringency of reform of state-owned banks. Finally, this paper emphasizes that the trouble of state-owned banks is the condition of success of Chinese economic reform and is the cost of success of Chinese economic.Chapter Five analyses the effect of foreign capital entering Chinese banks. This chapter points that the open of Chinese finance is exogenous, and the conclusion indicates that this kind of open may bring large financial risk. In the meanwhile, we analyse the reason and property of Chinese banks loving foreign capital and the dual effects of the entry of foreign capital. Finally, this chapter points that we must balance the efficiency and stability when using foreign capital.Chapter Six discusses the gradual logic of reform of Chinese state-owned banks. There are three main viewpoints in this chapter: First, institutional changes have inherently gradual logic, the reform of state-owned banks as a kind of institutional changes must follow this basic logic. Second, state-owned banks do have certain efficiency in transition economics, which suggests that the reform of state-owned banks is not so urgent. Third, the key of the reform is to improve autogenetic ability of state-owned banks, and this needs a lot of time. The conclusion of this paper is that the reform on Chinese state-owned banks has its inherently gradual logic, and it is a futile effort if we expect to settle the problem by a shock therapy.Chapter Seven discusses the logic order of reform of Chinese state-owned banks, and then bring forward some policies and advices. This paper points that he reform must first solve the problem of policy burden on state-owned banks, and then corporate governance. In the end, this chapter advances some policies and advices to the reform of sate-owned banks.