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non-performing loans (NPLs). Although it remained below 1%, boosting infrastructure construction during the past few years saw a surge in local government financing vehicles (LGFVs). It was estimated that when such local government debt and surging property loans go bad, it would lead to 20-30% non-performing loans.14 That explains why China was reluctant to undertake another large-scale stimulus plan facing deteriorated economic condition in 2012. It needs to avoid the same “mistake” made in 2008. The credit fuelled radical stimulus was infrastructure oriented and it may trigger another round of housing bubble and subsequently worsen the local governments’ debt condition. Therefore, all such temporary remedies are not good for the country’s long-term growth. The second problem is bank’s profit generating capability. As pointed out by Prime Minister Wen Jiabao that it was far too easy for the nation’s biggest state-owned banks to make huge profits as they enjoyed a monopoly power to charge a big interest spread between the deposit and lending rates. 15 This explains why China is working hard to absorb private capital into the financial sector nowadays. On 26 May 2012, the China Bank Regulation Commission (CBRC) surprisingly lifted the restrictions on private ownership stake in the banking sector, allowing non-state-owned companies to buy over 20% of shares in regional banks and rural lenders, provided they meet certain requirements. All such efforts have been made to break up the monopoly position of a small number of major banks and to further improve the efficiency and transparency of the whole banking system. Thirdly, it is the lack of confidence across the whole market. Figure 15 depicts the Entrepreneur Expectation Index and Business Climate Index in 2012. Both of the indices showed a downward trend in 2012. The former index reflects entrepreneurs’ confidence about future economic growth and a higher than 100 score means that they are generally optimistic about the market. The latter index is a key gauge of corporate performance.
Lack of market confidence and increased uncertainty in Chinese economic growth prospects are also reflected by its stock market. In 2012, the Shanghai Stock Exchange (SSE) Composite Index dropped by 21.7% from a year earlier, declining for three years in a row. During the year, only 39 new companies were listed on the SSE and the average P/E ratio of the listed companies dropped from 21.61 in 2011 to only 13.4 in 2012 (SSC Annual Report, 2012).16 On 28 November 2012, the SSE Index dropped to 1973.52, the lowest level for three years (Figure16). It has become increasingly important for the government to take effective measures to restore market confidence in the near future.

During the 18th CCP National Congress, the new leadership re-emphasised the government’s mission to develop an all-round well-off society by 2020 and proposed for the first time that by that time, China would achieve the goal of doubling its GDP and per capita income from the 2010 level. This is the first time that two indicators, personal income and GDP growth were connected. In 2012, per capita rural and urban real incomes rose by 12.6%, or 9.6% respectively, significantly surpassing the real growth of GDP at 7.8%. It needs to point out that the urban-rural income gap remains large despite the fact that rural income rose faster than urban income in 2012. According to the National Bureau of Statistics, the本论文由英语论文网提供整理，提供论文代写，英语论文代写，代写论文，代写英语论文，代写留学生论文，代写英文论文，留学生论文代写相关核心关键词搜索。