Economic reforms under the Four Modernizations program adopted in 1978 brought major changes in China's highly centralized and tightly controlled banking system. In 1982, the People's Bank of China (PBOC) became the central bank and turned over its commercial operations to the new Industrial and Commercial Bank. The State Administration of Foreign Exchange (SAFE) helps set foreign exchange policy. Other specialized agencies include the People's Construction Bank, the Agricultural Bank of China, the Bank of China, the Bank of Communications, the China Development Bank, and the Export-Import Bank of China. The China Construction Bank (CCB) makes payments for capital construction according to state plans and budgets. The Agricultural Bank of China finances agricultural expansion, grants rural loans, supervises agricultural credit cooperatives, and assists in the modernization of agriculture. The Bank of China (BOC) handles foreign exchange and international settlements for the PBC. It has branches throughout China as well as in Singapore, Hong Kong, Paris, London, Luxembourg, New York, and Tokyo. The BOC is charged with financing China's foreign trade and also acquiring and channeling into appropriate areas the foreign capital needed for imports of industrial equipment and other items for modernization.
The foreign-owned Standard Chartered Bank maintains long-established offices in China. Over 90 foreign banks, representing Japan, the United States, France, Italy, Pakistan, and the United Kingdom, received permission to establish offices in Beijing in the early 1980s. In 1985, for the first time, foreign banks were allowed to do business in the four special economic zones (established to attract foreign investment) in foreign currency. In mid-1997, 10 foreign banks were given permission to operate outside of the special zones; and in 1996, foreign banks were given limited authority to do business in rembi (the local currency at the time).The International Monetary Fund reports that in 2001, currency and demand deposits—an aggregate commonly known as M1—were equal to $745.3 billion. In that same year, M2—an aggregate equal to M1 plus savings deposits, small time deposits, and money market mutual funds—was $1,889.7 billion. The discount rate, the interest rate at which the central bank lends to financial institutions in the short term, was 3.24%.
In 1987, stock exchanges opened in Shanghai and several other cities, and several stock and bond issues were floated domestically. Securities exchanges are controlled by the PBC, and trading in securities is very limited. In 1997, China accelerated stock-market listings of about 50 large and medium-sized state-owned enterprises (SOEs) and considered raising the number of enterprises piloting group holding structures from 57 to 100. In November 1996, the Shanghai Stock Exchange President, Yang Xianghai, predicted that China's two exchanges (Shanghai and Shenzhen) would number in excess of 1,000 companies by 2000. At the time he was speaking, there were 472 companies listed on the stock exchanges. By 2003, there were 746 listed comanies and 871 listed securities being traded on the exchange. In 2001, China's stock market had a value of RMB 27.6 trillion, Asia's second largest behind Tokyo. The stock exchange is split into two sections, the "A" share market and the "B" share market. Foreigners may only participate in the B-share market, denominated in foreign currencies and consisting predominantly of foreign private companies. The A-share market is reserved for domestic investors (who are not allowed to participate in the B-share market) and dominated by state enterprises.