2.2 Major achivements of China’s reform from 1978 to
present

  During the reform period, China’s reform had certainly
enormous successes. According to quantitative estimation from of lastest stuty of
Chinese government, financial liberalization already decreased degree of
repression by about more than 40 percentage, which added about 1.5 percentage
point to GDP growth in the period. Financial liberalization was an essential
role behind China’s strong economic growth. In about three decades in past (
from 1978 to 2008). China’s GDP growth achived an average of 10 percent, this
nation still remained down growth ratio by about 2 percentage point and
increased 2.7 percentages on a daily basis. On the other hand, national saving
playing an important role in economy of each nations in the world affected
countries’ finance. Meanwhile, the developed countries had detrimental matter
about national saving and many household lost their life saving. In those
nations, transition happened in the circumstance of disintermediation. In
contrast, in China, national saving high level before, during and after reform
but the institutions of saving varied dramatically. Government saving, as in most,
transitional economies, has dropped sharply. House saving has risen very
significantly in response to the new opportunities created by transition. Total
household saving- consisting of in- kind and financial saving rose rapidly from
7% of household income in 1978 to 17% in 1982 and have kept on growing gradually.
Financial saving grew more than three times, rising from 2.3% of house income
in 1978, with an average of 6.8% in three years ( 1980-1983) (Cheng Xiaonong
1991, Marcroeconomic 1987). In 1995, households reached 70% of  domestic saving and over 25% of GDP (Xu
Meizheng 1997).

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In
addition, the banking system, a part of China’s reform as well, was expanded deeply.
In early years of reform, there were two-tier banking sector and the four
state-owned specialized banks including the Agriculture Bank of China, the
People’s Construction Bank of China, the Industrial and Commercial Bank of
China, and the Bank of China  were
founded to progress the allocation of financial resoures. Starting in 1984, new
banks were allowed to operate alongside with these four banks. The People’s
Bank of China became the China’s central bank (PBC) in this country with the potential
to control leading and central bank lending. Fundamentally, the banking system
has been altered, M2 grew by about 80% GDP (from 32% in 1978 to 112% in 1996).
Since 1992, China has need to deepen its financial system than other industries
of economy ( Caprio and Levine). Between 1978 and 1996, household saving
deposits also increased from 6% to 57%. In 1990, stocks markets were
established in Shanghai and Shenzhen as well as authorities gave enterprise to
issue diverse types of stocks and bonds. Moreover government bonds of various
sorts in China have been sat up since 1981. Important steps were taken by the
government contract market, with China’s treasury bonds consist of  the wholesale of realeases. During 1996, the
government bond market took many 
important strategies and the PBC began to open market in co-operation on
April.

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