Since the early 1980s, China has gone through dramatic economic growth through reform and market opening policy. The Chinese economy has achieved an exceptional result, in fact it has maintained a continuous annual growth rate above 9% for 30 years (Zhang et al., 2012: 393). Furthermore, China surpassed Japan to become the second largest economy when measuring purchasing power parity by the end of 2010 (Yao and Zhang, 2011: 206). However, in the meantime, during the transition period of China's economy, it seems a fact that the traditional financial growth theory and research literature is contrasted, in particular, with rapid economic growth with a low-efficiency financial system. This essay will argue that a poor financial system can promote rapid economic growth in China, unlike common findings in the empirical literature. This essay is organized as follows. First, it will briefly introduce the Chinese financial system and its problems, and then examine possible reasons for the rapid growth. Finally, it will analyze the relationship between the financial system and the Chinese economy through the use of the AK model. The Chinese financial system roughly involves two segments, the banking sector and the stock market respectively. Although China has a long history, the banking system was rarely built around 60 years ago. Before the transition in 1978, the Chinese banking system was characterized by the high leadership of a single bank, the People's Bank of China, in both political and commercial activities (Guizot, 2007: 19). It is also mentioned that in the late 1970s, China re-established a new system that involved the division of commercial work among the four large state-owned banks ("Industrial and Commercial Bank of China, Agricultural Bank of Chi...... paper middle ......ment and total factor productivity growth: Evidence from mainland Chinese provincial panel data, 2, 868-873.Yao, Y., and Yueh, L. (2009). : an introduction to global development, 37(4), 753-762, Yao, S. and Zhang, J. (2011). Sobreira and J., L., Oreior (eds.), An Assessment of the Global Impact of the Financial Crisis (pp.182-208). London: Palgrave Macmillan. Young, A. (2000). : Productivity growth in the People's Republic of China during the reform period. Retrieved 6 November 2013 from: http:/ /www.stanford.edu/~klenow/Gold%20into%20Base%20Metals.pdf Zhang, J., Wang, L., & Wang, S. (2012). Financial Development and Economic Growth: Recent Evidence from China comparative economics, 40, 393-412.