Poor access to conventional bank finance is one of the chief constraints to private-sector growth in China. Inefficiency Prevails Inefficiency also slows the banks' progress. One reason is that, as state-owned entities, their transformation into commercial banks has produced little change in their actual practices. Training and education of banking employees will also be essential. There are other factors at work.
China still lacks a truly national, integrated banking system.
Banks in different regions operate differently, and the backward state of the country's communications impedes the integration of their operations. Meanwhile, the stock and bond markets in China remain undeveloped and are poorly tied-in to international financial markets. In the meantime, foreign banks are gaining ground. By 1994, they had established 98 banking agencies and opened 302 representative offices in China. Many have made loans to joint ventures, and in some areas, as in Pudong, a district of Shanghai, foreign banks have even handled Chinese currency transactions.