China's financial reform Essay Example | Topics and Well Written Essays - 2500 words

China's financial reform - Essay Example The economic theory argues that the financial repression minimize the increase and efficiency risk. Thus, this report provides interpretations for reforms experiences understanding on economy and industry and the financial industry. Though, the financial systems have not yet get completed. It is because, even though the free markets now determine the product prices, the production market factors get heavily distorted. In this case, the Chinese financial liberalization is important in the financial reforms even in many other developing countries. The reform period has experienced a rapid financial activity growth. Thirty years ago, the industry of finance was close to non-existence (Huang 384). Now, China has wide financial institutions range, from security companies to banks. The useful measure that determines the financial progress is the money supply proportion to GDP. Researchers argue that the financial systems affect the economic development of a country. Thus, theoretically, the financial sector has a basic relationship with economic development. For this reason, the financial reforms that get carried out in China aims to improve the economic development in China and its economic relationship with other countries. Economists have argued that the main role of the financial sector in the economic development is to stimulate the economic growth through providing various important functions like setting and clearing of payments. Levine summarized the five main financial systems (Levine 105). They include; exerting corporate governance and monitoring investment; to control trading; to pool and, mobilize savings; management of risk and easing the goods and services exchange. Given that the sector of finance gives such basic services important for economic growth sustainability, many economists says that the financial reforms have a significant role economy. Thus,