In This Review

China's Financial Transition at a Crossroads
China's Financial Transition at a Crossroads
By Charles Calomiris
Columbia University Press, 2007, 432 pp.

It is widely acknowledged that China's financial system is one of the weakest and most vulnerable parts of the rapidly growing Chinese economy. It also does a poor job of allocating financial capital within China. This book is the result of a fruitful collaboration between researchers at Columbia University, in New York, and Tsinghua University, in Beijing. The authors and discussants examine closely and critically the Chinese banking system, which is a source of credit for state-owned enterprises and also, increasingly, for consumers; the Chinese bond market, which is only in the incipient stages of development; the Chinese stock markets, which lack the regulatory oversight and ethical practices expected in more mature economies; and China's foreign-exchange-rate policy and exposure to capital flows, both incoming and outgoing, despite tight restrictions on the free flow of capital. China is changing so rapidly that any book on it is in some respects out of date by the time of publication, but this is an excellent overview of China's financial markets.