China has also accomplished huge progress in changing the financing structure of its financial market, with the proportion of its bank credit to the country's whole financing volumes declining from 90 percent a decade ago to the current 60 percent. Such financing channels as entrusted loans and cooperation between banks and trust companies have also played an increasingly important role.

Remarkable progress has also been achieved in China's bid to push for diversification of its financial market players since its entry into the World Trade Organization. However, the country's financial market is more open to foreign capital than to domestic non-governmental capital. Foreign capital is now allowed to hold shares in China's insurance sector and the upper ceiling for their shareholding in the domestic banking and securities sectors has been raised by a large margin. Compared with the raised shareholding ceiling of qualified foreign institutional investors in 2012, China's private capital still faces numerous restrictions in access to the domestic financial market, as indicated by the lack of essential progress in the push for the establishment of more flexible township banks and small-amount lending institutions.

For the sake of long-term and sustainable development of its financial market, China should open its financial market to domestic private capital before foreign capital, a move that will prevent its fledging and less powerful non-governmental capital from being squeezed jointly by State-owned financial bodies and foreign giants. Compared with their State-owned counterparts, non-governmental financial bodies are usually more motivated to follow the rhythms of the market and improve their efficiency through innovation. The government should not only open its financial sector to private capital, but should also take essential measures to reduce hidden obstacles, such as the "glass door" that private financial bodies now face. Continuing efforts to push for structural reforms in China's financial market will also facilitate the transformation of its economic growth model.

Before fully opening the financial market to private capital, it is necessary for China to maintain appropriate capital account regulations as an effective firewall to ward off the impacts of external financial risks on the national economy. At a time when monetary easing has been embraced by developed countries the Chinese authorities should keep a particularly cautious attitude toward calls for accelerated steps to open its capital accounts in order to prevent the possible large-scale influx and outflow of short-term capital from having unwanted repercussions on the domestic financial market.

The author is a researcher with the Institute of World Economics and Politics under the Chinese Academy of Social Sciences.