China

China’s banking sector is substantially isolated from international competition. A chorus of international commentators warns that China faces the prospect of a major financial crisis. In response to the crisis, China implemented a huge rescue package, with infrastructure construction at the core. In the late 1990s the prospects for China’s financial system looked bleak. The accumulation of local government debt was considered to be a danger to the financial system. Local government financing platforms are widely thought to be prone to corruption and weak performance monitoring by lenders. In fact, unlike the West and numerous developing countries, China has not experienced a financial crisis throughout the past forty years. The systems strengths are rarely appreciated outside China. China’s bank employees are aware that China’s financial institutions have a moral purpose to serve the interests of the real economy and improve the welfare of the whole society.