Sir: China is an enigma of economic development. It should not be analysed in terms of Rostov’s Stages of Economic Growth or economic models like Harrod-Domar’s or Solows’. The key to China’s rapid growth lies in its 17-tier banking system. The system needs overhaul to dovetail with China’s internal investment and production policy and external trade. Realising the need for reform, Bank of China has established yuan settlement and clearing arrangement in Pakistan for payments in Chinese currency. This step would strengthen trade relations between both countries. This step is follow-up to an earlier agreement relating to currency swap with the People’s Bank of China. To benefit from alignment with Chinese banking system, Pakistan needs to dovetail its places such that they boost production and export. The Chinese banking system needs reform less it stagnates. Pakistani traders need to understand complexity of the Chinese system. It includes tier-one banks. They include four main state commercial banks, Agricultural bank of China, China Construction Bank and Bank of communications, besides joint-stock banks, state-policy banks. Second-tier banks include commercial and municipal banks, urban cooperative banks, rural credit cooperatives, trust and investment corporations, micro-finance institutions and venture capital funds. China needs to reform its system to bring it in sync with domestic capital market, rural bond market (hukou), procurement and contracting state-owned enterprises, exchange-rate liberalisation, convertibility and internationalisation of renminbi. Anti-Pakistan debates in US Congress do not augur well for Pakistan’s financial future. At home, prime minister hopefuls are determined to freeze development projects in Pakistan. There are calls to run the country without a budget, even if it results in shutting down the government business. The portents are Pakistan’s dependence on China is likely to grow further. We also need to dovetail our credit and investment policies like China. MOHAMMAD SA’AD MALIK Rawalpindi Published in Daily Times, April 16th 2018.