1. Financial Suggestion for Chinese Government Shiyi, Ren 250709671 Yue, Wu 250764816 Zhihua, Dai 25070901 Ruihan, Liang 250765431

2. Suggestion about Chinese Official Finance Market Management Accroding to the situation between China, Japan

3. Policy differences :The Japanese government(Cabinet Office) control three ministries(Troika),which control and decide how much loan should be given to which company, and given by which bank. 通产省（ Ministry of Economy, Trade and Industry 大藏省 (Ministry of Finance) Economic Planning Agency(EPA) merge in 2001

4. 1.Janpanses Banking System(Financial Institutions)

5. China and Janpan Official Finance Market 1. The central bank as the core banking system(Main part in China) 2.Serval parts and kinds of banks take part in Finance Market(Main part in Japan)

6. The differences between China and Japan 2.Chinese Official Banking System （制度）

7. Market Share of Bank

8. What are the differences? 1.Japan: One company can only get loan from one single Financial Institutions (which is decided by MIETI and MIF) to make sure governemnt can monitor the situation ， Japanese government totally control on the financial sector through the Main (Transactions) Bank System 2 China: Do not care about the profit, they only make loan to those companies which need it, base on social, weafare situation of society(This is we call low bank efficency)

9. Bank Efficency of China It shows the descriptive statistics of profit efficiency levels, profit efficiency ranks, cost efficiency levels, and cost efficiency ranks of the full sample and for subsamples grouped by majority ownership categories

10. Underground Finance Market “ 地下钱庄 ” Illegal

12. Origin Time: Ming dynasty (1628—1643) “ 钱桌 ” 1980s (“ 改革开放 ”) -- prosperous Places: - Coastal region - Advanced private economy (Wenzhou, Taiwan, HK, Guangdong, Zhejiang, Yiwu) - Inland area Motivation: next page

13. Contradictions Limited currency Massive demand Tedious loan procedure Immediate needs

14. What does it do? “ 庶民金融 ” Usury (loan shark) “ 高利贷 ” Intimidation Money laundering ( corruption) Deposit taking Debit & Credit Foreign exchange trading Funds raising others

15. Involvers Government officials Overseas labors Small-size investors Illegal immigrants others

16. Impacts Cons: Monetary policy interference illegal activities inducement Pros ： information collection at a low price (efficient) Transform savings into investment

17. Wenzhou Cigarette Lighters: 45.3 million 126.5% 31.83 million USD 171.1% 550 million 80%

18. Huge Size of it According to China Xinhua Newspaper, the size of the unofficial financial market in China has reached 10,000,000,000,000 Yuan till the June of 2008. Another report on China Xinhua Finance indicates that the number in postal areas of China only is between 740,500,000,000 to 816,400,000,000. (excluding the money laundering)

19. References for the numbers http://news.sohu.com/20080804/n258564921.sh tmlhttp://news.sohu.com/20080804/n258564921.sh tml http://news.xinhuanet.com/fortune/2007- 11/26/content_7145809.htmhttp://news.xinhuanet.com/fortune/2007- 11/26/content_7145809.htm http://news.takungpao.com.hk/paper/q/2014/031 0/2338310.htmlhttp://news.takungpao.com.hk/paper/q/2014/031 0/2338310.html http://news.oeeee.com/a/20071117/501190.html

20. The Reasonability & Danger of Underground Banking Existence ---Reflection of a Private Entrepreneurs Fall

21. Jin Libin Tragedy Huilong Group was founded in 1992, Huilong Group's assets over 25 million yuan, with nearly 2,000 employees.

22. Jin Libin Tragedy April 13, 2011, after Jin Libin’s self- immolation, the behind folk huge debt up to 1.237 billion yuan surfaced.

23. Jin Libin Tragedy Huilong group’s total lending was1.46 billion yuan financial institutions - 1.1 million yuan private high interest financing -1.35 billion yuan Interest Rate: 24% to 36% interest per annual Interest: at least 400 million yuan a year

24. The Tragedy is not just Jin Libin “The loan is too large to repay, so Fuhe bean industry is a tragedy, I will burn myself ”

25. The Reasonability of Existence Small and medium size businesses hard to get loan However, Chinese small to medium sized businesses make up 70% of employment on the mainland, and about 60% of the country's GDP.

26. The Reasonability of Existence The shortage of overseas remittance arrangements To protect assets from theft or seizure by government It permits evasion of stringent import/export duties; It permits evasion of exchange control regulations; It facilitates evasion of tax;

27. Suggestion for Chinese Finance Market Legalize Underground Bank Japan's Main Bank System

28. Suggestions for Chinese Finance Market Interest Rates Iberalization Set up Private Banks Reform the State Owned Commercial Bank

29. References http://www.aclaedu.cn/newModule/discuss.php?forum=rd_default&post_id=1 20440&MoodleSession=ee17192bdea362a2e5ddddcc2a87ff8ehttp://www.aclaedu.cn/newModule/discuss.php?forum=rd_default&post_id=1 20440&MoodleSession=ee17192bdea362a2e5ddddcc2a87ff8e http://www.people.com.cn/GB/paper2086/9589/885574.html http://news.xinhuanet.com/legal/2014-02/27/c_119520740.htm http://m.secretchina.com/node/471691 http://article.chinalawinfo.com/Article_Detail.asp?ArticleId=32330 http://www.wantchinatimes.com/news-subclass- cnt.aspx?id=20120122000055&cid=1502http://www.wantchinatimes.com/news-subclass- cnt.aspx?id=20120122000055&cid=1502 http://www.wenzhouguide.com/news/export-of-wenzhou-lighters-to-japan- gains-recovery.htmlhttp://www.wenzhouguide.com/news/export-of-wenzhou-lighters-to-japan- gains-recovery.html http://blogs.reuters.com/financial-regulatory-forum/2012/02/08/china-shadow- banking-dancing-in-the-dark/http://blogs.reuters.com/financial-regulatory-forum/2012/02/08/china-shadow- banking-dancing-in-the-dark/ http://www.thedailybeast.com/articles/2014/02/26/inside-china-s- underground-black-market-banks.htmlhttp://www.thedailybeast.com/articles/2014/02/26/inside-china-s- underground-black-market-banks.html

30. THANK YOU !!!