China's Economy: Beijing Seeks Reform and Stability for Banks

China's leaders are looking to balance steady, incremental reforms of the state-controlled banking sector with the need for stability and strong central oversight of the system. Recently released statistics from China's National Audit Office point to the growing imbalances plaguing China's financial system and highlight the need to stabilize credit expansion and reform the relationship between local governments, state-owned enterprises and state-owned banks. These are critical components of Beijing's ambition to move toward a more sustainable model of economic growth.