The function of banks in China is very particular, as Yukon Huang argues, but it is unlikely to change any time soon. When the country entered the World Trade Organisation almost exactly ten years ago, there was great excitement about the potential impact of liberalisation on its banks, with competition from outside, the opening up of new markets, and the general internationalisation of the biggest players. A decade on, we can see that banks still preserve their unique position in the Chinese firmament, as protected agents of the state, and of the Communist party in particular. Their remit is narrow, and they are used as accomplices for the provincial and central governments’ greater budgetary purposes.

Almost all Chinese banks are state-owned (with the possible exception of the partially-private Mingsheng bank), and that they march to the tune of government policy, in ways that banks elsewhere would find unimaginable. But to fundamentally change this would involve unleashing reforms in other areas of state-society-commerce relations, which the current leadership have shown they are profoundly resistant to. To them, the one lesson to be drawn from the global financial crises since 2008 is that state direction and involvement in enterprises, and in particular in those in the finance and banking sector, has been vindicated, and shown to be a good thing. All the shouting from outside China in the late 1990s urged them alter the banking model and to adopt ones more like those in the west, with high levels of entrepreneurship, but also risk. But if there is one thing this leadership dislike, that is risk.

It could be that as levels of provincial indebtedness grow, and issues of hidden loans and financial irregularities become harder to ignore, the government will start to clarify the roles of banks a little more clearly, and set tighter conditions on how they work with local, and national, government, and with party and business elites and their interests. However, this would have to be part of a bigger push for reform. But systemic reforms redefining the role of the party within society – that have been ongoing since 1980 – have yet to have a major breakthrough. At the moment, status quo is sustainable, and in the party’s political interests. So status quo is likely to be, in the short to medium term, how things stay. In the long term, of course, there will have to be reform – but that will always remain best for another day.