This study focuses on whether China’s financial system still needs market-oriented transition after the recent global financial crisis, which suggests financial liberalisation may weaken financial stability. We analyse the structure of the financial system and highlight the fact that the current system is not well configured for dealing with fluctuation. The good economic performance over the crisis is mainly built on the administrative resources deployed that counterbalanced the negative effect of short-term fluctuation. The high cost of this makes market liberalisation reform imperative. We take the German financial model as an example to indicate how financial liberalisation and stability can coexist under certain conditions.