The State’s Role in a Strategic Industry—China’s Banking Sector

China’s state-owned banking sector’s designation as a strategic sector has seen it experiencing a slower pace of reforms compared with non-financial state enterprises. The reasons for this divergence are historical, being rooted in China’s unhappy experience during the early years of its modern banking history. This chapter charts China’s turbulent banking history, and reviews how the sector responded to the state’s reform policies. Major policies and external circumstances impact the performance of China’s state-holding banks. The major policies are China’s entry into the World Trade Organization in 2001 and the state’s decision to expand its global role around the same time. The external development discussed is the onset of the Global Financial Crisis in late 2008. Some concluding remarks about this sector are offered.