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Category: Business and Industry
Date Submitted: 07/16/2011 10:45 PM
3
The Banking System Structure in China
and India
LUO PING*
Acomparison of China and India is both exciting and challenging, and
should ideally lead to a serious consideration of various policy implications.
In this context, our conference today marks the beginning of a
long journey. In my remarks, I will try to compare the banking sectors in
China and India, largely focusing on structure and robustness as well as the
effectiveness of the banking supervisory systems.
General Comment
Both China and India are large, developing economies with huge populations,
which help to contribute to their economic weight in the world.
The transformation of both countries has strong implications for the
rest of the world. No wonder some people believe that the emergence of
China and India as economic giants should serve as a wake-up call for
the developed world. It is true that China and India possess cheap skilled
labor, reform-minded governments in favor of a more market-oriented
economy, and huge domestic markets. Both countries have proven to be
capable of managing their economies. And fortunately, both countries
have maintained high growth rates, roughly 9 percent for China and 8
percent for India over the past couple of years.
However, it is important to note that high growth for the two economies
is critical, because they depend on a high growth rate to generate enough
job opportunities for millions of people joining the labor force each year.
Given their inherent constraints, it will take ages for both economies to
catch up with the developed world, particularly as measured by per capita
income. Even if China can continue its high growth rate for another 10
years, and assuming the United States stopped growing, it would reach
only one-tenth of the per capita income of the United States by then.
Therefore, I would have thought, of course, that on the part of the developed
countries, in full recognition of the need to boost domestic consumption...