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2. Business Environment CASE STUDY (20 Marks) China embarked on its ‘open door policy’ in 1978 under the leadership of Deng Xiaoping. The purpose was to bring about a transition in its centrally planned economy towards a market economy. The banks were supposed to play a major role in carrying out the reformist agenda of the country.

3. Since then the country has achieved a phenomenal Gross Domestic Product (GDP) growth rate making it the fastest growing economy of the world. There was tremendous effect of Chinese economic reforms on the country’s banking sector. It also helps in analyzing the role of banking system in implementing monetary policy and its reaction to spiraling inflation.

4. Answer the following question. Q1. Analyze the process of economic reforms in China and their effectiveness on the banking sector Q2. Explain about monetary policy and money multiplier effects on the economy. Q3. Analyze the reasons for the overheating of the economy Q4. Analyze the measures taken by the government in order to restructure the banking system.

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