Research On The Deviating And Originalizing Of Chinese Policy-based Finance System

Policy-based finance is still prevalent around the world and has become an integral part of modern financial system. Since the establishment of Chinese policy-oriented financial institutions, on the one hand, it has played an irreplaceable role in the promotion of socio-economic development, especially in the development of infrastructure and basic industries, agricultural production as well as foreign trade. On the other hand, China's economic system has changed a lot and the economic structure is in constant adjustment. Policy-oriented financial system and business can not meet the requirement of such development. Some of the traditional policy-oriented financial business is being challenged. New policy-oriented financial sector is to be gradually opened up. Under such circumstances, the Chinese policy-based finance opened up the journey of the reform in 2004 and became the hot topic after that of the joint-stock reform of the state-owned commercial banks.From the view of the orientation and the process of reform, the policy makers have not combined the system supply and system demand of Chinese policy-oriented finance properly. In the background of implementing the scientific development concept and building a harmonious society and a well-off society, the incompatible reform path– commercialization, is being selected. At present, China Development Bank has been transformed into commercial bank. The listing is just around the corner. Under the demonstration effect of China Development bank, the Agricultural Development Bank and Export-Import Bank decreased policy-related business and increased commercial business. Commercial trend seems irreversible. Whether from the view self-examine of Chinese policy financial practices or from that of the policy experience of foreign financial development, Chinese policy-based finance has created a clear alienation.Using Chinese Policy-Oriented Finance alienation as breakthrough point, this paper first reviewed and evaluated China's Policy-based Financial practice. It pointed out that low efficiency of Chinese Policy-Oriented Finance for economic benefits and social benefits, and low efficiency for financial and non-commercial co-ordination and financial resources allocation. Then the theses made a further discussion on transition of policy-related banks in order to give a comprehensive understand of financial institutions reform.Secondly, the paper summed up the various manifestations of Chinese Policy-Oriented Finance alienation, such as scale and structure of Policy-Oriented Finance and commercial finance, macro and micro objectives of resources allocation, the funding gap and automatic compensation mechanism, mission and strength of Financial policy, support and moderate supervision on policy-based finance, as well as deviation between actual needs of society and financial reform direction.Thirdly, the paper made an in-depth analysis on the reasons of Chinese Policy-Oriented Finance alienation from six aspects, such as co-exist of lack and offside country's responsibility, market-oriented thinking and path dependence, weak financial theory, departure and evolve of institution, errors and misleading reorganization, the game between the internal control and interest groups. The paper mainly focused on analysis on market-oriented operation, the theory of new development finance, and exposed a new comprehensive development on essence and risk existence of Policy-Oriented Finance.Fourth, the consequence of the alienation of policy-based finance is expressed from the following four aspects: incontrollable development, negative effects on financial development, economic development as well as on social and country development.Fifth, this paper explored theoretical basis of existence and development of policy-related finance from ten aspects, compared the boundary concept, business scope and operational objectives between financial policy-related finance and commercial finance, and then it gave the conclusion that the policy-based finance can not be replaced. It also got the idea that Chinese policy-oriented financial management can only be strengthened.Sixth, through inspection analysis on the foreign policy and its development trend, the paper summed up the experience of foreign financial operation and its impact on the Chinese Enlightenment.Seventh,from perspective of strengthening the self-compliance mechanism of Chinese policy-oriented financial institutions, the paper put forward six proposals, such as to strengthen the legal system, change the external oversight system, establish the performance evaluation system, improve the risk compensation mechanism, adjust dynamically business scope of policy-oriented financial institutions. Meanwhile, the paper designed the basic principles and framework for reconstruction of Chinese policy-oriented financial system. It also demonstrated that Chinese policy-oriented financial services should be devoted to special institutions to take care. Finally, the paper discussed the function of existing policy-oriented financial institutions, and suggested to build a number of policy-oriented financial institutions, including regional development banks, small and medium-sized banks, housing credit bank, agricultural insurance, as well as deposit insurance companies.