MGI’s research approach involved measuring China’s financial system performance against a comprehensive set of metrics, compared it to that of a range of other countries, and then assessed the flow of funds from savers to users of capital.
Chapter 2: Benchmarking China's financial system performance
MGI compares the performance of each component of China’s financial system to those in other emerging markets and developed countries, and examines the system’s overall financial depth, banking system, equity market, bond markets, and payments system.
Chapter 3: The effect of China's financial system performance
Despite ongoing reforms, the poor allocation of capital to private and small and medium-sized enterprises--the growth engine of China’s economy--lowers productivity and investment efficiency, skews the structure of the economy, and raises questions about the sustainability of China’s investment-led growth path.
Addressing the shortcomings in China’s financial system could create enormous value for China’s economy. MGI estimates that reforming China’s financial system could boost GDP by up to $321 billion annually, bringing higher returns—and living standards—for Chinese savers.
Because many problems in China’s financial system are interlinked, only
coordinated, transparent, system-wide financial reforms can create the modern
financial system China requires to support the country’s rapid growth and shift
the economy onto a more sustainable development path.
Interactive exhibit Explore the findings of MGI's research on China's financial system, how the system's performance stacks up, and the value of further reform. Read more
How financial system reform could benefit China A more efficient financial system could have a profound and far-reaching impact on China's economy. Read more on the McKinsey Quarterly site
China and India’s financial systems: A barrier to growth This article looks at the need to reduce government interference in the financial systems of India and China and strengthen market orientation in order to evolve these systems. Read more on the McKinsey Quarterly site
The promise and perils of China's banking system An exhibit-driven article underscores how China's banking system must change drastically. Read more on the McKinsey Quarterly site
Accelerating India's growth through financial system reform Addressing the inefficiencies in India's financial system could free up $48 billion of capital a year and raise the country’s real GDP growth to 9.4 percent a year. Read more
