Abstract
Currently, the Chinese economy is encountering a period of stagnation in its development. Sustaining the rapid growth rate of the economy has become a challenge, as there is a lack of adequate momentum for continuous high-speed advancement. The nation is edging closer to the middle-income trap, and the conventional approach of relying on investment, exports, and consumption to propel economic growth is proving to be unattainable. It must be achieved through the transformation of economic structure, and the transformation of the financial industry is the most important part of it. The research question of this article is how commercial banks affect economic growth and how China's banking system has developed. The WTO's entrance into China has been a major catalyst for the banking industry and its system to be built. The literature review section delved deeply into economic growth, examining the concept of it, how it is achieved in China, as well as any factors that may influence it. More importantly, the study reviewed what the banking industry is and the development stages of China's banking industry. The banking industry's development was examined in the concluding part of the literature review, examining pertinent studies on the effect of economic expansion. In the discussion section of the research, we analyzed how the banking industry affects economic growth through its impact on capital allocation, banking services, and currency. Ultimately, we drew corresponding conclusions and proposed countermeasures and suggestions for the future development of the banking industry. Due to the fact that the industrial structure of developing countries is usually dominated by labor-intensive industries, clarifying the interrelationship between China's banking structure, capital allocation efficiency, and economic growth has universal significance and reference value for relevant financial arrangements in developing countries.
Published Version
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