Introdution to business and economy of China Essay

Introdution to business and economy of China - Essay Example The purpose of this paper is to identify the financial and banking reforms in China. Furthermore, the essay will also analyze whether or not these reforms have enhanced and transformed the economic sustainability and the overall economic performance of China. According to Ash et al., (2013), China has remained for many years as one of the fastest growing economies in the world (cia.gov, 2014). However, the background to the economy of China is totally conflicting. The financial sector of China was completely dependent of its banking sector while the banking sector was under serious threats as it was under debts and was facing challenges (Garnaut, 2013; Liao et al., 2013). If the speed and scale of the transformation that China has gone through is observed, then it certainly has no historical match. According to a survey conducted in 1978, China was among one of the poorest countries in the world as its per capita GDP was 1/40th compared to the United States (Das, 2012; Naughton, 2007). Zhu (2012) stated that since China was not doing very well economically and was left far behind in the economic world, therefore, it had to come up with strategies and reforms that may enable its entire economic system to enhance the overall operations. By 1976, many Chinese leaders agreed to the idea that reforms in the field of finance and banking are essential as they will boost up the economy (Lin, 2012). The Chinese leaders were looking for ideas and solution to counter the serious issue of economic instability and challenges that were faced by the country. To counter these issues, the financial and banking reforms were introduced in 1978 (Das, 2012; Cai, 2010). Naughton (2007) has discussed that, before the introduction of the financial and banking reforms, Chinese economy went through major issues and faced numerous obstacles. It was only during the 1930’s that the economy of