Strengthening of the Internal Financial Market:

The weakness of the Chinese financial system is recognized as one of the factors that hinder the internationalization of the Yuan. Efforts to develop and strengthen this sector can be considered an important part of the country's strategy to achieve that goal, although financial reform really plays a larger role as it constitutes a fundamental axis of economic reform.

At present, the strengthening of the domestic financial system is focused on two fundamental directions: the restructuring of the predominant banking system and the improvement of financial markets, fundamentally the exchange and securities.

In the banking sector, important achievements have been made. For example, the bad debts of banks have been significantly reduced. China is the only country that has managed to continue reducing debts in the context of the crisis. There has been a gradual and sustained growth of the sector. Banks have expanded abroad following a prudent pattern.

However, this sector is still vulnerable due to the risks and challenges it must face. In the short term, the main weaknesses are related to the deterioration in credit quality due to its rapid expansion with the dangers of the growing disintermediation as a result of the emergence of banks that act in parallel to the state banking system with the fall in real estate prices.

Strengthening China's position as a lender and investor abroad:

China has increased its presence in international finance by strengthening its position as a provider of financial resources, mainly from the last five years. In fact, since the early 2000s, Chinese state banks have extended loans to underdeveloped countries, mainly through international syndicated loans.

After the crisis, its contribution has become more important, taking into account that traditional sources of flows have contracted. Between 2009 and 2010 two Chinese state banks (the Development Bank of China and the Bank of Imports and Exports) offered loans to governments and companies from underdeveloped countries worth 110 billion dollars.

It is noteworthy that the country promotes the granting of loans in its domestic currency in order to boost trade with the favored nations and promote the use of the Yuan abroad, not only with a view to its internationalization but as a way to reduce the use of the dollar.

Another initiative in which China participates is the creation of a development bank of the BRICS group, whose main objective is to finance infrastructure works in developing countries and act as an alternative lender to the World Bank and other international organizations.

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