Financial sector reform in China is gaining steam. A number of recent developments point to a renewed push to clean up the country's financial system by chipping away at a disjointed and outdated regulatory system and clamping down on corruption in the banking, securities and insurance industries. Simultaneously, programs aimed at helping local governments and businesses metabolize their enormous debts have expanded rapidly. But while these initiatives hint at a more comprehensive approach to financial reform, with efforts to manage past debts running in tandem with those to tamp down the unsustainable credit growth of recent years, they do not portend substantial liberalization of China's financial system in the near future. More likely, these are early steps in what Chinese authorities see as an incremental, carefully managed program to restructure and improve (but not dismantle) the country's heavily state-influenced financial and economic systems....
