International Monetary Fund. Monetary and Capital Markets Department
INTERNATIONAL MONETARY FUND
Since the 2011 FSAP, China's impressive economic growth has continued, and it is now undertaking a necessary but prolonged economic transformation. China is transitioning from an economic model based on exports and investment to a more sustainable one based on services and consumption. The financial system has facilitated this high growth rate and the consequent sharp decline in poverty rates. The sector now reaches most of the population, as evidenced in financial inclusion measures, and permeates virtually all aspects of economic activity.
The economic transformation requires a fundamental change in the role of the financial system. Historically its role was to channel China's high savings at low cost to strategic sectors. Looking ahead, the policy objective for the financial sector should be to facilitate China's economic transformation to a more demand-driven system, in which markets play an increasingly dominant role in resource allocation and where consequences of risk-taking are well-understood and accepted.