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China\u2019s financial system is developing rapidly, swelling the country\u2019s bank assets to become the largest in the world, and there are worrying similarities with the global dominance of Japan\u2019s banks in the late 1980s.\n\nJapan\u2019s experience ended in tears with the bursting of a domestic and international financial and real asset bubble, heralding the economy\u2019s descent into on-and-off recessions for the next 3 decades and stubborn deflation.\n\nResearch done for the Asian Development Bank Institute found that, despite the rapid development of capital markets since the 1990s, China\u2019s financial system continues to be dominated by bank lending. \n\nRead the transcript\nhttps://bit.ly/2z8u1sp\n\nRead the working paper\nhttps://www.adb.org/publications/development-and-transformation-prc-financial-system\n\nAbout the authors\nDamian Tobin is a lecturer on Chinese business and management at the School of Finance and Management, SOAS University of London.\nUlrich Volz is head of the Department of Economics at the same institution.\n\nKnow more about ADBI\u2019s work on the People\u2019s Republic of China\u2019s financial system:\nhttps://bit.ly/2KuB9o4\nhttps://bit.ly/2lUj0BD