Last week, China Construction Bank, the world's second-largest lender by market capitalisation, said the government would deny it a bail-out for at least another decade.

News that Chinese banks need to be bailed out at all will come as a surprise to most people outside the industry, who rightly assume the country has escaped the worst of the global crisis. But CCB's problems stem not from the recent meltdown but the near-collapse of the country's financial system a decade ago, one that is still not adequately resolved.

After decades of government-directed lending to unprofitable state enterprises, the financial system reached the brink of collapse in the wake of the 1997 Asian crisis. Well over a third of loans were not being repaid and virtually every lender was technically insolvent.