On The Bad Assets In China's State-owned Banks: Its Emergence And Solution

In 1999,four AMCs(asset management coporation)were founded by the Chinese government,in order to do with great mounts of bad assets existed in state-owned banks. In this article,with the approach of systematic analyse,the author tried to explain the systematic background of those bad assets,and after doing that,gives some advice on how to do with itThe continuous emergence and great accumulation of bad assets used to be taken as the result of the government s reforming of the investment & financing system (IFS).But,with a review of the changing process of the IFS and the government s finiancial policies,the author will not agree with the take-for-granted opinion just mentioned. On the contrary,the foundamental reason should only lie in the whole system enviorment consisting of the economic system,where the property form plays a central role,corresponding superstructure and ideology.The characteristic of the property right system in our country can be generalised as follows:first,the state s property right plays a key role in the whole system,more important than any other property right;second,the conception of the property has not been defined clearly and exactly,and the subject has been somewhat out of place.This is the system factor which has contribute to the emergence the great amount of bad assets in state-owned banks. While the government required that the state-owned banks should repay for the decrease of policymaking financial approporiation,the banks take use of such opportunity to avoid the risk of business loan,from which arises bad assets in those banks.In the end of this article,after a intruction of the way how foreign AMCs do with bad assets,four steps are suggested. First,reform the present property right system . Second,make special acts for AMCs. Third,promote the establishment of market systems of bad assets and the secondary market for those bad assets. Fourth,change the present administration structure of AMC. The author is optimistic about the future,if only some measures to reform the whole systems are to be taken.