Financial Deepening Research, China's Financial Development

Intensification of finance ensures the liquidity for the optimized allocation of the social resources and economic development of a nation, thus playing a significant role in the newly developed market and transitional economy. Since the performance of the reform and open policy, China' s financial industry has developed at a phenomenal rate with its structure apparently changed and finance increasingly intensified, e.g. with its M2/GNP( indicators of the economic monetarization) increased from 0.32 in 1978 to 1.5264 in 2000, five times of that in the early stage of the reform, with FIR from 0.94 in 1978 to 2.86 in 1999, 3 times more than that in early stage of reform.With the increasingly enlarged quantities and sizes of financial institutions , diversified business, more created financial products, financial industry has developed from the original unit bank assets toward the marketization and diversification. Security market, particularly stock market has grown at a speedy rate with the ratio of market value of stocks to GNP only 2% in 1991, but to 54.5% in 2000, and the procession of marketization of interest rate and exchange rate has been speeded up .China' s financial reform has contributed greatly to its economic development, but its existed reform performed as the expansion of the quantity instead of the improvement of the quality, with its specific functions as: low efficiency of financial operation, weak competitive power of the financial institutions and relatively later development of non-bank financial institutions, improper structures of financial products and less developed financial market, deregulation of the behavior of the interest rate vehicle and lack of elasticity due to its improper structure, and low efficiency in financial supervision system etc.Finance has become the core of modern economy . If China wants to be a stronger modernized a nation smoothly and speedily in 21 century, we must , based on our national conditions and realities, further the deepening of financial reform and insist firmly on the principle of the freedom of finance. Under the circumstance of macro-economic stabilization and financial regulation soundness , we should , as per a defined free order, intensify the reform of the financial structure, open step by step the financial market, strengthen the financial supervision and raise the efficiency of the supervision and regulation and make the Chinese financial industry become impetus of the economic development of China.This paper, guided by the Marxism economic theory and combined the relevant knowledge of western economics and modern financial development, by adopting the complicated methods of theoretic andpractical analysis, systematic and comparative analysis, quantitative and qualitative analysis, by focusing on the topic" financial development" , on the basis of combined judgement on the extent of the deepening of China' s finance, summarizes the contribution to the China' s economic development made by its financial development and the problems existed, and, according to the characteristics of the expansion in quantity on the China' s financial development in the past, puts up forward some constructive proposals on how to intensify our financial reform and push forward the financial development in the future.