Corporate Governance and Financial Reform in China's Transition Economy

Abstract

The world economy is facing unprecedented challenges brought by the still unfolding global financial crisis. At this critical juncture in history, China's economic performance and financial stability are closely watched across the world. This book examines corporate governance reforms in China as an economy in transition—from a planned economy to a market economy—in the context of globalization and the country's accession to the WTO. The book interprets China's experience as a gradualist transition strategy, which is appropriate given the existing constraints imposed by China's limited political, legal, and regulatory framework. This approach also compares favorably with the radical privatization program (shock therapy) in Russia. In China, institutional innovations play a key role in discovering a better way to the market, even though such transitional institutions may not fully comply with a full market economy. Meanwhile, mutually supporting and complimentary structural reforms of China's enterprises, banks, and stock market should proceed hand in hand in order to achieve effective and sustained results during the transition period.