China's financial institutions, however, are generally uncompetitive in the international market. Most of the overseas branches of Chinese banks do not have much influence in the local market. Some have even faced the danger of being marginalized.

Without a global network of competitive financial institutions, China will not be able to shift its focus to a finance-emphasized development strategy.

A modern financial regulation system is indispensable for a finance-focused development mode. It is a strong safeguard for financial security.

If a unified and workable financial regulation system was not put in place, the loopholes in the financial institutions would not only fail to help them appreciate the value of their capital, but may spiral out of control and threaten the overall economic security of the country.

Some branches of domestic financial institutions have lost millions of yuan in financial scandals as a result of loose internal management, which points to the country's unsatisfactory financial regulation.

Reform in the financial regulation must be accelerated; otherwise, a finance-focused policy would only open the door for foreign capital speculators to seize domestic financial market.

China also needs to foster talented financial professionals, whom it urgently needs.

Such professionals are the core part of the finance-focused strategy. In the international financial market, the rapidly changing situation requires the financial operators to be highly capable of making use of market fluctuations to make profits.

From the macro-economic perspective, a finance-focused strategy needs large financial reserves, predictable financial rules and peaceful international environment.

China has strong economic power and a fairly large pool of capital reserves. What it needs is to establish stable financial rules and set its development in a peaceful international environment.

From China's economic statistics, we can see that the growth of the Chinese economy is still pushed by traditional industries, such as energy, basic information industry and tobacco. If we cannot change our growth mode and make financial service our new pillar industry, our economic shift would suffer setbacks.

The author is a researcher with the Zhongnan University of Economics and Law, based in Wuhan, Hubei Province.

(China Daily 11/20/2006 page4)

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