Bank reform and privatization in China: Will the reformed banking sector lead to prosperity as China joins the World Trade Organization?

摘要

As part of its agreement to enter the World Trade Organization, China must open its banking sector to foreign institutions. Consequently Chinese banks must be completely reformed. Yet an inadequate capital base, poor internal controls and a legacy of state directed lending poses enormous challenges for bank improvement. This paper studies the following three banks in the context of this transition to an open, modern banking system based on market values. Minsheng Bank is a new Chinese bank that attempts to introduce sound systems of governance while serving China's new consumer society. Bank of China is one of the big four state-owned banks that is struggling to transform itself from a crude instrument of socialist industrial policy into a modern commercial bank. Guangdong Development Bank is a deeply troubled state-owned bank that is being taken over by Citigroup, a large foreign bank. This thesis applies SWOT (Strengths, Weaknesses, Opportunities and Threats) analysis to each of these banks to determine which approach to bank modernization will be most successful so that the reformed Chinese banks through the introduction of professionalism will further lead to China's prosperity by efficiently allocating resources to the most promising sectors of China's economy.