Healthier Chinese Banks Wanted

By Aude Lagorce, MarketWatch

An overhaul of the Chinese banking system is critical to securing the country’s future growth, said economists gathered in this ski resort for the annual meeting of the World Economic Forum.

“Banks make up the bulk of the Chinese financial system. The problem is that there are too few insurance companies and mutual funds to offer the variety of products, services and risk profiles the economy needs to flourish,” said Dominic Barton, head of consultant firm McKinsey’s Asia practice.

The country’s banks are almost entirely responsible for channeling the population’s sky-high savings into industry and investment. Barton said that 80% to 90% of the country’s financial activity occurs through the banks.

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