Crunch time for financial reforms

To keep pace with the prospering banking sector regulations should focus on quality and structural optimization

widespread drastic slump in the prices of financial stocks has sparked grave concerns and intense speculation about whether the world's second-largest economy is suffering a money squeeze.

However, according to data released by China's central bank, the country's M2 supply grew 15.8 percent year-on-year in May and its deposit balance approached 100 trillion yuan ($16 trillion). The volume of its social financing reached 9.11 trillion yuan in the first five months of this year, an increase of 3.12 trillion yuan from the same period last year. China's lending balance had reached 67.22 trillion yuan, a 14.5 percent rise year-on-year by the end of May, and its funds outstanding for foreign exchange held by financial institutions was more than 1.5 trillion yuan from January to April, in sharp contrast with the 494 billion yuan in the whole of 2012. All these indicate that China's financial liquidity is still at a high level and the recent "funds shortage" has been mainly caused by structural factors.