At a time in which geographical frontiers blur, the globalization unstoppably strides away and the world economy becomes more and more important, it is more significant, to have uniform guidelines to exclude discrimination and guarantee peaceful cooperation with each other.
For a country is it very important to be in accordance with the international claims, in order to be competitive. Since the last decade, China has been opened politically and economically. Thus they attempted to clear the existing delay as fast as possible, to develop a connection to economic leaders such as the US or Europe and then itself to play a significant role in the international economy. A step toward this goal was the entry into the World Trade Organization (WTO).
The following paper will tackle this topic, including analyzing the impact of the WTO on the Chinese finance system. But first, I will go over some details about the WTO, its agreements and principles. After this, I will discuss the course of Chinese entry and the ensuing problems. In the second part of the paper, the Chinese finance system will be explained, and more precisely, the Chinese banking system. At this I will illustrate the history of the banking system, the role of foreign banks in China before entry into the WTO and then present the problems of the system. In the third part it will analyze the variances and ascendancies, also the pros and cons of inclusion in the WTO.
Table of Contents
1. Introduction
2. The World Trade Organization
2.1 Agreements and principles from the WTO
2.2 China’s way into the WTO
3. Chinese finance system
3.1 Chinese banking system – history –
3.2 Chinese banking system – problems –
3.3 Chinese banking system – foreign banks before the WTO –
4. Chinese banking system and the entry into the WTO – influence and changes –
5. Concluding Remarks
Objectives and Topics
This paper examines the impact of China's accession to the World Trade Organization (WTO) on its domestic financial and banking sector, analyzing the necessary structural reforms and competitive challenges arising from global integration.
- Historical development of the Chinese banking system
- Principles and requirements of the World Trade Organization
- Structural problems such as non-performing loans and low equity ratios
- The transition from a planned economy to a competitive market system
- Impact of WTO commitments on foreign bank operations in China
Excerpt from the Book
3.1 Chinese banking system – history –
At the beginning, the People’s Bank of China (PBoC) exercised the central bank’s functions and powers, as well as handling industrial and commercial credits and savings business. In the year 1979, China commenced to reform and open up their banking system. The bank reforms in China started with the division of the PBoC into several state special banks and with that came the first step in the evolution of a new bank structure. The first special bank was the Agricultural Bank of China (ABoC). This bank is occupied with banking business in rural environments. The second special bank was the Bank of China (BoC), which is occupied by business relating to foreign countries, and the third special bank was the People’s Construction Bank of China (PCBoC). 1984 was year the Industrial and Commercial Bank of China (ICBoC) was established and took on the banking business in the cities. Since that time, the PBoC was no longer a commercial bank. This position was assumed by the four State-owned Commercial Banks (SOCB) and the PBoC is now only the central bank. In 1986, the first independent bank, the Bank of Communications (BoCOMM), was authorized. After 1986, smaller independent banks were established.
Summary of Chapters
1. Introduction: This chapter outlines the motivation for the paper, focusing on the globalization of the world economy and the significance of China's entry into the WTO.
2. The World Trade Organization: The chapter describes the function, objectives, and foundational principles of the WTO, such as non-discrimination and free trade, alongside the timeline of China's complex accession process.
3. Chinese finance system: This section details the historical evolution of China's banking structure, the systemic problems like non-performing loans, and the restrictive environment for foreign banks prior to WTO entry.
4. Chinese banking system and the entry into the WTO – influence and changes –: The chapter analyzes the specific commitments made by the Chinese government to liberalize financial markets and the ongoing transition toward commercialization and international competitiveness.
5. Concluding Remarks: The author summarizes the necessity of ongoing reforms for the Chinese banking system to survive internationally, acknowledging both the risks and the eventual long-term benefits of WTO membership.
Keywords
WTO, China, Banking System, Finance, Globalization, Non-performing loans, Liberalization, Commercialization, Market economy, State-owned banks, Financial integration.
Frequently Asked Questions
What is the primary focus of this paper?
The paper focuses on the Chinese financial and banking sector and how it has been impacted by China's accession to the World Trade Organization.
What are the central themes discussed in the work?
Key themes include the history of Chinese banking, the challenges of non-performing loans, the influence of the government, and the transition toward a market-based financial system.
What is the ultimate goal of the research?
The goal is to analyze the influence of WTO membership on the domestic financial market and evaluate whether the Chinese banking system can become internationally competitive.
Which scientific approach does the author use?
The paper employs a descriptive and analytical approach, examining historical developments, official statistics, and international policy commitments to assess the impact of reforms.
What topics are covered in the main section of the paper?
The main sections cover the background of the WTO, the historical development of Chinese state-owned banks, the structural problems currently faced by the banking sector, and the changes required by the five-year liberalization plan.
How would you characterize the keywords of this work?
The keywords are centered around institutional economic change, the intersection of international trade policy and domestic finance, and the modernization of the Chinese banking structure.
Why were foreign banks previously handicapped in the Chinese market?
They faced high entry barriers, strict geographic limitations, were restricted to foreign currency business, and were subjected to arbitrary control by local authorities.
What is the main side effect of the commercialization process?
A significant consequence of commercializing the "Big Four" banks is the large-scale reduction in staff and the closing of local branches to improve efficiency and competitiveness.
- Arbeit zitieren
- Jan Vosshage (Autor:in), 2004, Chinese finance system and the WTO, München, GRIN Verlag, https://www.grin.com/document/25819
