OVERVIEW: In 2006, China's economy experienced steady and fast growth with gradually improved economic performance. As the reform and opening up continued to deepen. major achievements were made in economic and social development, and the Eleventh Five-Year Plan got off to a good start. The stability of financial system was further strengthened as a result of the breakthroughs in financial sector reform and innovation, the enhanced role of financial policies and services, and the improved financial supervision, regulation, as well as legal system.

Stability of Financial System Further Enhanced
With favorable macroeconomic environment and strong microeconomic conditions, the overall strength of China's financial sector and its robustness to external shocks have enhanced.

Rapid econmnic growth worldwide and stability in the intemational financial market provided a favorable intemati.rm.al environment for financial stability in China

Steady and rapid growth of the domestic economy and improved macroeconmnic regulation laid the firm ground for financial stability

Low inflation and more flexibility in the exchange rate regime helped RMB stay steady

Foreign exchange reserves continued to grow rapidly, enhancing resilience to external shocks

Rapid growth in fiscal revenue and continuous improvement of business profitability and household income led to greater solvency of the government, businesses and households

With breakthroughs in reform and restructuring, financial institutions have become more competitive and profitable, laying a solid foundation for financial stability

Institutional development in the finamial market continued and finamial markets were by and large stable

Efforts to enhance financial safety net continued and financial infrastructure functioned well

Finamial sector opening up deepened in compliance with China's WTO commitments

Visit China Financial Stability Report 2007 Download Page

You can download full publication in PDF format.

Published by Financial Stability Analysis Group of the People's Bank of China

Members of Financial Stability Analysis Group of the PBC
Head: WU Xiaoling
Deputy Head: LIU Shiyu
Members: CHEN Xiaoyun, JIAO Jinpu, MU Huaipeng, TANG Sining, WEN Sili, ZHANG Xiaohui, HU Zhengheng, JIN Qi, SHAO Fujun, TANG Xu, XU Luode, ZHANG Xin

http://www.pbc.gov.cn/english/jinrongwending/report2007/01.pdf

http://www.pbc.gov.cn/english/jinrongwending/report2007/02.pdf

http://www.pbc.gov.cn/english/jinrongwending/report2007/03.pdf

http://www.pbc.gov.cn/english/jinrongwending/report2007/04.pdf

http://www.pbc.gov.cn/english/jinrongwending/report2007/05.pdf

http://www.pbc.gov.cn/english/jinrongwending/report2007/06.pdf

http://www.pbc.gov.cn/english/jinrongwending/report2007/07.pdf

http://www.pbc.gov.cn/english/jinrongwending/report2007/08.pdf

http://www.pbc.gov.cn/english/jinrongwending/report2007/09.pdf

http://www.pbc.gov.cn/english/jinrongwending/report2007/10.pdf

http://www.pbc.gov.cn/english/jinrongwending/report2007/11.pdf

http://www.pbc.gov.cn/english/jinrongwending/report2007/12.pdf

Preface
In 2006, China's Eleventh Five-Year Plan got off to a good start with major achievements in economic and social development. The breakthroughs in financial sector reforms and innovations, the enhanced role of financial policies and services, and the improved financial supervision, regulation, as well as legal system helped further strengthen the stability of financial system. The China Financial Stability Report 2007 aims to reflect the latest developments in China's financial sector reforms, opening up, and innovations, providing a balanced assessment of financial stability in China.

The China Financial Stability Report 2007 is organized as follows. Following an overview of financial stability in China, Chapter I analyzes the impact of macroeconomic environment on financial stability. The next three chapters discuss the reforms and developments in the banking industry, securities and capital market, and insurance industry, respectively, and their implications for financial stability. Chapter V focuses on the present and the future of financial innovations. Chapter VI explores financial safety net and financial infrastructure development. The Report contains 16 "boxes" that provide in-depth analyses and discussions on a number of issues critical to financial stability.

The Report also includes two special topics, one on Asset Prices and Financial Stability and the other on International Experience in Agricultural Insurance and Its Implications. In addition, the Report for the first time introduces the Financial Sector Assessment Program (FSAP) to provide quantitative analysis on the stability of the banking industry, securities and capital market, and insurance industry. Upon this first attempt, we expect to further improve the implementation of this framework in future reports. All data cited and circumstances described in the Report were valid as of the end of 2006, unless otherwise stated.

Given the limitation of our knowledge and experience in this area, the Report is far from perfection. We welcome comments and suggestions on the Report to help us continually improve our methods of evaluating financial stability and monitoring financial risks.

Financial Stability Analysis Group of the PBC
May 30,2007

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