Analyzing China’s Banking System as One of its Economic Rise Factors

In 2013, China’s GDP grew at an average annual rate of nearly 10% than 1979. Many economists provide that China’s economic will take a key position in international trade map and a major place with the world leaders at beginning of second quarter of currant century. Generally, economists attribute China’s growth to two major factors: the financial system and the increasing of productivity. This paper tries to examine the role of China’s financial system in supporting the economic growth. Through giving, firstly, a short review of the history of China’s banking system by presenting it through 5 main periods: from 17th century until 1949, from 1949 to 1978, the first reform period from 1978 to 1984, the second reform period from 1984 to 1994, the third (present) reform from 1994. Secondly, it presents a brief view on the Structure of China’s Banking System that can be resuming in 4 main characteristics: (1) The Huge Size, (2) The State-owned, (3) The “BIG FOUR”, and (4) The Foreign Banks Operating in China. Then, it shows a short literature background about the relationship between financial and economic growth. Moreover, it discusses theoretical study of the influence of banking system on economic growth. Finally, this paper will analyze the role of banking system in supporting some indicators of China’s economic growth: GDP, Unemployment Rate, SME … etc.