Chinas accession to the wto in 2001 will further

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Unformatted text preview: s accession to the WTO in 2001 will further force the government to seriously reform the banking sector in order to build up the competitive advantage to face the imminent competition from foreign banks. With more international practices introduced and corporate governance improved, China's banking system could be more resilient and healthier in the near future. The AMC scheme would hopefully be a once-off prescription. Thesis Supervisor: Edward S. Steinfeld Title: Assistant Professor, Political Science Acknowledgments There are many people that deserve my sincere thanks and appreciation. Without them, I don't think I could have made it so far within such a short period of time. First, I would like to thank Professor Edward S. Steinfeld, my thesis advisor, for guiding me through this process from the early stages to the final stretches and completion of the paper. I would like to thank the people who took time from their busy schedules to meet with me and provide me with valuable insights and data. Special thanks go to Mr. Goodwin Tyler for his sincere advice and great support. Folks in China including Cai Na, Shuiwen, Shengwei, Qiaoling and Jiang Feng also deserve many thanks for providing me with valuable networks and information during the research process. Special thanks go to Matthew for helping me edit the final draft. My best friend, Jason Wang, deserves many thanks for not only providing his enormous support but for inspiring me with his diligence and enthusiasm. Finally, I would like to thank my family for their uncompromising support and generous love. It is because of them, that I have accomplished what I have. Table of Contents 1 In trod u ctio n ....... ............................ ......................................................... 5 2 Evolution of China's Banking System...............................................................6 3 Causes of China's Non-performing Loans 3-1 Triangular Relations of China's SOEs, SOBs and Fiscal System............................ 3-2 Real Estate Bubbles in 1990s.........................................................................11 3-3 Underdeveloped Credit Culture...................................................................... 3-4 Underdeveloped Institutional Infrastructure........................................................ 12 14 4 Non-performing Loans in China 4-1 Definition of NPLs in Chinese Banking System.....................................................15 4-2 Amount of China's NPLs............................................................................. 4-3 Special Character of China's NPL Issue-A Stock Problem...................................... 4-4 Fundamental Issue - Irrational Allocation of Resources........................................ 4-5 P otential Im pact........................................................................................ 16 17 18 19 9 5 Solutions 5-1 Formation of Four AMCs..............................................................
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