ABSTRACT
In their quest to modernize China, one of the objectives of the current leadership is the transition of financial institutions that had been integral to the bureaucracy into relatively autonomous firms operating on the basis of hard budget constraints, with managers innovating the sort of loan and credit evaluation technology prevalent in banks and other financial enterprises of the OECD nations. In order to create the conditions for a transition from state feudalism to state and private capitalism, reform of the financial sector does not simply require changing existing financial institutions, but also entails the development of new financial institutions, such as the stock market, insurance companies, and a wide range of other financial enterprises. The construction of the stock exchange building in Shanghai, a beautiful glass and steel structure built in the shape of the Chinese symbol for rice, is reflective of this commitment, for as Deng Xiaoping noted, “Experience tells us that whoever has grain has everything.” Just as rice has been the basic life sustenance for the Chinese people, so the financial markets symbolize for the modernists the role of financial relationships (and financial instruments, including money) in sustaining the Chinese economy. The financial markets are a medium through which power can be wielded to control assets and ultimately people.
