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GDP). On this score, such a call cost US$12.31 in China, giving it a ranking of 60. China ranked behind the Philippines (free, 1), Ukraine ($1.27, 8), Russia ($1.94, 9), Indonesia ($6.67, 43), India ($7.55, 45), Hungary ($7.71, 48), the Czech Republic ($9.63, 54), and Thailand ($11.68, 58). China’s ranking was above that of Vietnam ($12.73, 61) and Romania ($17.36, 71). The costs of a three-minute off-peak local cellular call in China were also higher than in most countries. The mean cost, weighted against GDP, was $0.68 in the eighty-two countries. With such a call costing $1.09, China was ranked 68, behind Russia ($0.03, 1), the Czech Republic ($0.14, 19), Hungary ($0.25, 34), Indonesia ($0.48, 44), and the Philippines ($0.68, 54). Such a call was more expensive in Vietnam ($1.21, 71), India ($1.71, 76), and Ukraine ($2.07, 78). Soumitra Dutta et al., cds., The Global Information Technology Report 2002-2003 (New York: Oxford University Press, 2003), 285-304.

48 One example was the MII’s decision not to reform the rate structure in the mobile phone market out of fear that such reform would cause a plunge in the share prices of China Mobile (HK). China Telecom raised its monopoly long-distance rates before its IPO in 2002 to boost its business prospects.

49 Lardy’s China’s Unfinished Economic Revolution provides the most comprehensive description and analysis of the weakness of China’s banking sector. OECD’s survey of the Chinese economy in 2002 paints a gloomy picture of its banking sector. See OECD, China in the World Economy, 233-268.

50 State Planning Commission, “Zhongguo ziben shichang de peiyu he fazhan zhengce yanjiu” (A Study of the Policy of Developing Capital Markets in China), Jingji yanjiu cankao 5 (2001): 3. Researchers at the IMF also agreed that the pace of financial deepening in China during the reform era was impressive. See Jahangir Aziz and Christoph Duenwald, “Growth-Financial Intermediation Nexus in China,” IMF Working PaperNo. 194, (Washington, D.C.: International Monetary Fund, 2002).

51 Lardy, China’s Unfinished Economic Revolution, 95.

52 For a description of the evolution of the banking system, see Minxin Pei, “The Political Economy of Banking Reforms in China: 1993-1997,” Journal of Contemporary China 7(18) (1998): 321-350.

53 Wu Jinliang, “Guanyu jiakuai jinrong tizhi gaige de shexiang” (Ideas on Accelerating the Reform of the Financial System), Gaige 5 (1993): 93-97.

54 Ibid.

55 The government also allowed joint-stock banks and Minsheng to be listed on the domestic stock markets.

56 The performance of the four AMCs was mixed. They used both dcbt-for-equity swaps (taking stakes in indebted SOEs) and sale of impaired assets to dispose of the 1.4 trillion yuan in NPLs. As of 2003, about 35 percent of the NPLs was disposed of, with a cash recovery rate of 17 percent. TheWall Street Journal, January 15, 2004, A12. But the real recovery rate was likely lower. In Orient Asset Management (tied to BOC), the real recovery rate was only 12 percent, not the 19 percent it reported. The rate of disposing of bad assets was too slow, and at the current rate, could take fifteen years. Xinwenzhoukan, August 4, 2003. www.chinanewsweek.com.cn. The debt-equity swap was also deferring the real costs of the bailout to the future because NPLs were transferred at par value and the valuation of equity in SOEs was unrealistic. In addition, debt-equity swaps had no impact on corporate restructuring. See Edward Steinfeld, “Market Visions, Market Illusions: Debt-Equity Conversion and the Future of Chinese State Sector Reform,” CLSA Emerging Markets (2000).

57 www.chinanews.com.cn, January 12, 2004.

58 The Financial Times, January 16, 2004, 16.

59 Caijing (Business and Finance Review), January 11, 2004, www.caijing.com.cn.

60 The bail-out costs could balloon further if the NPLs in rural and urban credit cooperatives are written off. These small financial institutions were in even weaker conditions than the SCBs. In 2001, according to the Ministry of Agriculture, liabilities exceeded