China, with its almost 5 000 years of rich history; is one of the world’s oldest countries. Though China’s economy has suffered grave instabilities and uncertainties in the past, it is now experiencing strong economic growth. Beginning in the late 70’s, and extending into the 1980’s, China began a period of economic readjustment during which crucial imbalances in its economy were to be reformed. Major goals of the readjustment period included improving deficiencies in communications and transportation. Other key goals included to expand exports and to balance the growth of new industries. This readjustment period initially was a success; it increased incomes, raised the availability of food and consumer goods, and caused steady growth in several key industries. The success of this socialist market economy, under the rule of Deng Xiaoping, enabled China to gradually open its economy while preserving its political system.

Since the 1980’s China has become increasingly a major, first in the industry workforce. In industries such as textile and manufactured goods, China leads the world in production. Thanks to a large labor force they are able to produce these consumer goods and keep the prices low while still keeping the exchange rate highly competitive. It is this type of practices in China’s now modern economy that has earned it the nickname “the world’s workshop”.

China now has a formed financial system which falls under the regulation and supervision of the Peoples Bank of China; which acts as Chinas central bank, while state banks provide its main support. This bank also operates by separating policy-related finance and commercial finance, and enjoys the cooperation of various financial institutions that operate with the same functions.

The Chinese financial system is composed of several different key elements. State commercial banks; under the direction of the People’s Bank Of China (the nations central bank) are the backbone of this financial market.