Two decades after the Asian financial crisis which tipped nations into economic and political turmoil, China now finds itself a major financial power capable of better global contribution.
Latest progress in the financial sector includes global recognition of Chinese shares. Only two weeks ago, equity index provider MSCI finally included a number of Shanghai and Shenzhen listed stocks in one of its most traded indices, after three years of stalling.
The path has been neither smooth nor straight.
When the crisis quickly enveloped most of the Asian economies including China's Hong Kong, the nation's GDP and export growth slowed down markedly. China, however, made great efforts to protect its currency renminbi from devaluating, which contributed to stabilizing the regional and, in fact, the global economy.
Lessons have been learned. The crisis could be traced to the premature opening up of capital accounts before domestic financial systems and regulations were ready.
China has been steadfast on pursuing sound economic and financial policies as well as effective regulation and supervision over the past two decades, aiming to build a more open and competent financial system and fulfill its WTO commitments.
From the banking sector reshuffle years ago to the current tight financial regulation, reforms never stop despite emerging problems especially in recent years.
In 2013, a credit crunch at Chinese banks caused interbank rates to rise by double digits and pounded the market, seeding concerns among investors. In 2014, a major Chinese seafood company perplexed investors when it announced a huge questionable loss.
In 2015, an unanticipated stock market plunge erased huge amounts of wealth, especially for small and new investors, spawning last year's industry-wide reshuffle of online lenders.
At the end of last year, China's financial system was backed by the world's largest banking sector with assets of more than 232 trillion yuan (34 trillion U.S. dollars), a stock market valued of nearly 54 trillion yuan and an insurance sector with assets of over 15 trillion yuan.
China now has a big say in the global financial system. Last year Ministry of Finance official Yang Shaolin was appointed chief administrative officer and managing director of the World Bank Group, following Zhu Min and Justin Lin Yifu who also served at international financial institutions.
Despite these steps forward, China remains committed to letting the market play a bigger role in deciding interest rates and the yuan exchange rates.
In the name of full interest rate liberalization, the central bank removed the 50 percent upper-bound for deposit rates in 2015, in principle leaving banks free to set their own deposit rates. Also in 2015, the central bank adjusted the central parity system to better track the exchange rate of the yuan against the U.S. dollar.
Daily central parity quotes are now based on the closing rate of the interbank foreign exchange rate market the previous day, supply and demand in the market, and price movement of major other currencies.
To coordinate monetary and financial regulations, in 2013 a ministerial meeting mechanism headed by the central bank was formed, bringing together representatives of banking, securities, insurance and foreign exchange regulators, with those of the National Development and Reform Commission, the Ministry of Finance and other government bodies, whenever necessary.
The 1997 Asian financial crisis was a wake-up call for all. No nation can afford to stand by and take financial risk lightly. Since then, China has succeeded in defending its financial stability and addressing regional risks.
