Transcript Suggestion about Chinese Official Finance Market Management

Financial Suggestion for
Chinese Government
Shiyi, Ren
Yue, Wu
Zhihua, Dai
Ruihan, Liang
250709671
250764816
25070901
250765431
Suggestion about Chinese Official Finance
Market Management
Accroding to the situation between
China, Japan
Policy differences :The Japanese government(Cabinet
Office) control three ministries(Troika),which control and
decide how much loan should be given to which company,
and given by which bank.
Economic
Planning
Agency(EPA)
merge in
2001
通产省（Ministry of Economy, 大藏省(Ministry of Finance)
Trade and Industry
1.Janpanses Banking System(Financial
Institutions)
China and Janpan Official Finance Market
1. The central bank as the core banking system(Main part in China)
2.Serval parts and kinds of banks take part in Finance Market(Main part in
Japan)
The differences between China and Japan
• 2.Chinese Official Banking System（制度）
Market Share of Bank
What are the differences?
• 1.Japan: One company can only get loan from
one single Financial Institutions (which is
decided by MIETI and MIF) to make sure
governemnt can monitor the situation，
Japanese government totally control on the
financial sector through the Main
(Transactions) Bank System
• 2 China: Do not care about the profit, they only
make loan to those companies which need it,
base on social, weafare situation of society(This
is we call low bank efficency)
Bank Efficency of China
It shows the descriptive statistics of profit efficiency levels,
profit efficiency ranks, cost efficiency levels, and cost efficiency
ranks of the full sample and for subsamples grouped by
majority ownership categories
Underground Finance Market
“地下钱庄”
Illegal
Origin
• Time: Ming dynasty (1628—1643) “钱桌”
1980s (“改革开放”) -- prosperous
• Places: - Coastal region
- Advanced private economy
(Wenzhou, Taiwan, HK, Guangdong,
Zhejiang, Yiwu)
- Inland area
• Motivation: next page
Contradictions
• Limited
currency
Massive demand
• Tedious loan
procedure
Immediate needs
What does it do?
“庶民金融”
•
•
•
•
•
•
•
•
Usury (loan shark) “高利贷”
Intimidation
Money laundering (corruption)
Deposit taking
Debit & Credit
Foreign exchange trading
Funds raising
others
Involvers
• Government officials
• Overseas labors
• Small-size investors
• Illegal immigrants
• others
Impacts
• Cons:
 Monetary policy interference
 illegal activities inducement
• Pros：
 information collection at a low price (efficient)
 Transform savings into investment
Wenzhou Cigarette Lighters:
• 45.3 million
• 31.83 million USD
• 550 million
126.5%
171.1%
80%
Huge Size of it
• According to China Xinhua Newspaper, the size
of the unofficial financial market in China has
reached 10,000,000,000,000 Yuan till the June
of 2008.
• Another report on China Xinhua Finance
indicates that the number in postal areas of
China only is between 740,500,000,000 to
816,400,000,000. (excluding the money
laundering)
References for the numbers
• http://news.sohu.com/20080804/n258564921.sh
tml
• http://news.xinhuanet.com/fortune/200711/26/content_7145809.htm
• http://news.takungpao.com.hk/paper/q/2014/031
0/2338310.html
• http://news.oeeee.com/a/20071117/501190.html
The Reasonability & Danger
of Underground Banking
Existence
---Reflection of a Private
Entrepreneurs Fall
Jin Libin Tragedy
• Huilong Group was founded in 1992, Huilong
Group's assets over 25 million yuan, with nearly
2,000 employees.
Jin Libin Tragedy
• April 13, 2011, after Jin Libin’s selfimmolation, the behind folk huge debt up
to 1.237 billion yuan surfaced.
Jin Libin Tragedy
• Huilong group’s total lending was1.46 billion
yuan
financial institutions - 1.1 million yuan
private high interest financing -1.35 billion yuan
• Interest Rate: 24% to 36% interest per annual
• Interest: at least 400 million yuan a year
The Tragedy is not just Jin Libin
• “The loan is too large to repay, so Fuhe
bean industry is a tragedy, I will burn
myself ”
The Reasonability of Existence
• Small and medium size businesses hard
to get loan
However, Chinese small to medium sized
businesses make up 70% of employment
on the mainland, and about 60% of the
country's GDP.
The Reasonability of Existence
• The shortage of overseas remittance
arrangements
• To protect assets from theft or seizure by
government
• It permits evasion of stringent
import/export duties;
• It permits evasion of exchange control
regulations;
• It facilitates evasion of tax;
Suggestion for Chinese
Finance Market
 Legalize Underground Bank
 Japan's Main Bank System
Suggestions for Chinese
Finance Market
 Interest Rates Iberalization
 Set up Private Banks
 Reform the State Owned
Commercial Bank
References
•
•
•
•
•
•
•
•
•
http://www.aclaedu.cn/newModule/discuss.php?forum=rd_default&post_id=1
20440&MoodleSession=ee17192bdea362a2e5ddddcc2a87ff8e
http://www.people.com.cn/GB/paper2086/9589/885574.html
http://news.xinhuanet.com/legal/2014-02/27/c_119520740.htm
http://m.secretchina.com/node/471691
http://article.chinalawinfo.com/Article_Detail.asp?ArticleId=32330
http://www.wantchinatimes.com/news-subclasscnt.aspx?id=20120122000055&cid=1502
http://www.wenzhouguide.com/news/export-of-wenzhou-lighters-to-japangains-recovery.html
http://blogs.reuters.com/financial-regulatory-forum/2012/02/08/china-shadowbanking-dancing-in-the-dark/
http://www.thedailybeast.com/articles/2014/02/26/inside-china-sunderground-black-market-banks.html
THANK YOU !!!