China's transition to a market-based economy over the past quarter century has unleashed unprecedented economic growth, and the country's financial system had to develop fast to support that metamorphosis. But the transition hasn't been even, nor is it complete. Social tensions are rising, particularly in rural areas, where some people feel left behind by China's voyage to prosperity.

Over the past year, the country's leaders have made reducing the disparities among economic classes and pursuing balanced growth high priorities. But China must further develop and reform its financial system to achieve these goals, according to a new study from the McKinsey Global Institute (MGI). The full report, Putting China's Capital to Work: The Value of Financial System Reform, along with an interactive exhibit are available free of charge online. This research shows that China could not only raise its GDP by as much as 17 percent, or $320 billion a year, but also distribute its new wealth more evenly.

The chief tasks of any financial system are to attract savings and channel them to productive investments as efficiently as possible. China's financial system already does an outstanding job of mobilizing savings, but it could considerably improve its overall...