China's Financial Operating Mode Selection

With the increasing competition in the international financial market .especially after China's entry into WTO.the financial service market will open up to the outside step by step. The trend of comprehensive run for international finance will compact and challenge the separated run existing in China to a large extent.Under such conditions,the most urgent issue is how to choose the right way to develop China's financial sectors.This article begins with studying the experience of financial system reforms in foreign countries,with the current situation of the financial market and financial operating system.And it tries to find a target model which is suitable for China's financial operating system.Chapter One: It explains the meaning of the separated and mixed operation. And by the analysis of the two models, it is certain that the mixed operation is the real one which suits most of countries' development and the trend of the world economy. At the same time, I make a further study about the academic bases of the mixed operation. And it also analyses the reasons why the International Finance Sectors choose the mixed operation from the supply and demand. Whether a country should adopt separated operation or mixed one should depend on the conditions of the country at that time. Mixed operation in China at present is restricted by many factors, including the level of economic development, the degree of financial marketlization,risk awareness of the financial institutions,level of risk management.regulation of the security market,environment of law enforcement.IT development and talents reserve and so on.Chapter Two:As a matter of fact,major countries have all experienced a financial reform once or several times in choosing separated operation or mixed one.US adopted mixed operation system before 1933 and turned to separated operation system with the implementation of GS Act.While in 1999,it returned to mixed operation system.Japan went through a similar scenario of mixed -separated-remixed one.The practical experience of these countries might illuminate and enlighten us in the reform financial operation system.Chapter Three:The financial operation system in China also witnessed a series ofreforms.And it analyses the "Sub- Mixed operation system" which includes the cooperation between the money market and capital market and the mixed financial conglomerates in China as well.In 1989.the government began to regulate the financial market by enacting a series of laws and regulations and setting up supervisor)' institutions such as SSC and ISC managing banking .security .insurance and trust sectors separately.The separated management of financial system has been basically shaped in 1998.But over the past few years.the separated system in China is somewhat loosen due to the effect of international trend of financial integration.The money market ,capital market and insurance market are to some extent permitted to cooperate with each other by the government.Many financial institutions make Mixed Financial Conglomerates to extent their operation field.The banking capital and insurance also have access to the security market in some way and to some size.And the appearance of Mixed Financial Conglomerates push our financial sectors into the mixed operation.Chapter FounThere are many obstacles for China to adopt mixed operation system at present,so absolute mixed operation system is just a long-term objective.The medium-term objective for China is to set up a financial system that is strongly supervised and operated by moderately crossing business on the premise if sticking to sepatation.The procedures of the reform is as follows:The first stage: we try to realize the marketlization and legalization of the financial environment.This includes the marketlization of interest rate step by step;strengthening the financial legislation ;enhancing the financial supervision in order to set up secure and stable financial supervisory system;accelerating the development of China's capital market;speeding up the listing pr...