Dimensions of financial liberalization in transition economies: A case of China

In 2010, China proposed the strategy to accelerate transformation of economic development models in order to lay a base for sustainable development. In this paper, we definite transition economies as those economies transferring from socialist-centrally-planned economies to market-oriented economies. Basically, there are two kinds´ types in transition economies, “big-bang” types as Russia and gradualism types as the mainland of China. There are serious problems in both types of transition economies. Russia have experienced economic recession in large scale. In contrast, the macroeconomic performance of China seems to be much better. But in its economic system, especially in its financial system, there are some unsolved problems besides non-performing loans, which had been one of the most critical problems for the system in history. The financial global crisis promoted China to enter a new transition stage so that there is demand to study the basic dimensions of financial liberalization. There are three dimensions in financial liberalization of transition economies, the developing dimension, the transitional dimension and what type of financial system should be chosen between the capital-market-oriented system and the bank-based system that has adopted by many new economies, especially the post-war Japan.