BOFIT Discussion Papers, Institute for Economies in Transition, Bank of Finland
No 5/2012:
Has the Chinese growth model changed? A view from the credit market
Risto Herrala ()
and Yandong Jia
Abstract: A cornerstone of the Chinese growth model has been the
opening up of its economy to private competition. Some observers claim that
China has changed course since joining the WTO by increasingly promoting
‘state capitalism’, the large State Owned Enterprises, thereby compromising
a growth model that has served it well. Due to the opaqueness of the
Chinese system, even such a major shift in policy has been difficult to
verify. We are able to look inside the covert policy process by studying
the credit supply to Chinese listed companies, the drivers of the growth
miracle, of the past decade. The econometric analysis corroborates the
policy shift: we find a significant improvement in credit supply conditions
of government firms relative to other firms during the latter part of the
decade. The estimations also provide evidence of other major trends in
credit supply that reflect the Chinese government’s policy objectives.
Keywords: Chinese economy; credit constraints; corporate finance; (follow links to similar papers)
JEL-Codes: C58; E44; G30; O16; (follow links to similar papers)
26 pages, March 22, 2012
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