In 1974, the future Chinese premier Deng Xiaoping led a large delegation to the United Nations in New York. Chinese officials discovered, as they prepared for the expensive trip, that the could muster only $38,000 in foreign cash. In those days there were no banks in China except the People’s Bank of China, then a department of the Ministry of Finance. Today China’s foreign-exchange reserves are fast approaching $3 trillion, and its banks are among the world’s most valuable companies. This remarkable success story has occurred against a background of more or less continuous worries about the stability of China’s financial system. Lately those concerns have been greater than ever.

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