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25 Ga. J. Int'l & Comp. L. 479 (1995-1996)
Transforming China's Traditional Banking Systems under the New National Banking Laws

handle is hein.journals/gjicl25 and id is 487 raw text is: TRANSFORMING CHINA'S TRADITIONAL BANKING SYSTEMS UNDER THE NEW NATIONAL BANKING LAWS Andrew Xuefeng Qian* I. INTRODUCTION In traditional Chinese, bank translates to qian zhuang, which means a place where money is deposited and lent and a profit is made. However, for three decades under the centrally planned economy in China (1949-1979), the Chinese government owned and controlled banks. Rather than qian zhuang, a profit-generating body, banks in China had been operated more like a government administrative agency to perform the government's economic and monetary polices. As a result, banks in general were operated in the red with heavy government subsidies. The economic reforms initiated in late 1978 entailed a significant restructuring of China's unitary and inefficient banking and financial systems. In recent years, banking reform has appeared increasingly important at a time when the central government is combatting double-digit inflation, seeking to attract more foreign trade and investment, and attempting to rescue thousands of ailing state-run enterprises that are mired in operational losses and triangular debts.1 The recently enacted Central Banking Law and the Commercial Banking Law seek to solidify the progress that has been made, and more significantly, provide a framework in which a new banking system will develop. Such a new banking system will make China more closely integrated with international banking and financial systems. As a crucial part of the overall economic reforms, this could help to overhaul China's entire financial * Associate, Cleary, Gottlieb, Steen & Hamilton; J.D., Yale (1994), M.A., UCLA (1991), LL.B., Foreign Affairs College (Beijing, 1985). The author wishes to thank friends at the People's Bank of China, the editors of the Georgia Journal of International and Comparative Law, and finally, Gudrun Fosse. 'See Tony Walker, China to Impose Tougher Discipline on Banks, FIN. TIMEs, June 29, 1995, at 6 (noting that among most serious burdens on banking system is that of triangular debt, which means inability of one enterprise to meet its obligations to another, thus setting off chain reaction that requires infusion of public funds to unblock the system).

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