Description
Book SynopsisIs China's growth sustainable, or has China relied too much on investment, which is subject to diminishing returns, and not enough on technological change? Dealing with the relation between investment, finance, and growth in China, this book dismisses this concern.
Trade Review"Using rich and much updated graphs and tables, the authors convincingly argue that China's spectacular growth has been driven mainly by its ability to channel domestic and foreign savings into restructuring its economy since the late 1970s."--G.J. Wen, Choice "Some parts of this work, especially the equation-heavy chapter on savings processes and investment rates, are best appreciated by those with solid economics backgrounds, but even non-experts interested in China's growth will appreciate the arguments made here."--Marc Lanteigne, International Affairs "Overall, this is a very valuable book which systematically examines and analyzes the relationship between investment and growth in China over the past three decades. Using rich and up-to-date data and materials, it argues convincingly that China's spectacular growth has been driven mainly by its ability to channel domestic and foreign savings into restructuring its economy since 1978... This book not only contributes to the existing academic literature in development finance but also provides valuable policy suggestions on China's financial sector reform and liberalization. Although it includes some technical economic analysis, it is written in a way that is easy to read and to understand. It is accessible to a broad range of readers, including academics, policy-makers, business people, students and non-economists. The book will benefit anyone who is interested in development finance in general and in China's economic growth and financial market development in particular."--Chunlai Chen, The China Journal "The book is accessible and informative to a broad readership: from a lay reader to those who work in the field of finance and development, China specialists and policy makers."--Yu Chen, Progress in Development Studies "The book does not break new ground, but its conceptual approach, its empirical analysis and its detailed up-to-date account of the ongoing reform programs and their policy background in China make it highly recommended for those working on or studying the Chinese economy. The book is especially useful for those interested in financial sector reform in China. As claimed by the authors, policy-makers in China will also find this book useful."--Ligang Song, Economic Record "It is an excellent overview of the development of the financial system to date... What is new and surprising is how succinctly and effectively the authors have brought together the technical literature with laymen's language to make this argument. It is one of the best treatises I have seen on financial reform."--Doug Guthrie, China Quarterly "This book will be well received by researchers and policy makers. The focus of the book--how the Chinese economy has grown so far, and whether or not this growth will be sustainable--is an attractive topic given the great importance of the Chinese economy in the world, but also because the authors of the book provide an unconventional method of analysis."--Asian Affairs "Although it includes some technical economic analysis, How China Grows is accessible to noneconomists and will benefit anyone who is interested in development finance in general and in China's economic growth in particular whether economists, political scientists, bankers, or business people."--World Book Industry
Table of ContentsPreface ix Acknowledgments xi Chapter 1: Overview of Economic Reforms and Outcomes 1 1.1 Agricultural Reform: 1979-85 4 1.2 Industrial Reform: 1978-93 6 1.3 Transition to a Market Economy: 1994-2003 11 1.4 Foreign Trade and Investment 13 1.5 Financial Sector 16 Chapter 2: The Source of Growth and the Role of Investment 18 2.1 Methodology of Growth Accounting 18 2.2 Measurement of TFPG in China 20 2.3 Production Function Estimates of TFPG in China 23 2.4 Explaining TFPG in China 25 2.5 The Contribution of Investment Reconsidered 28 2.6 Technological Change Reconsidered 32 2.7 Postscript: Investment versus Domestic Demand as a Source of Growth 35 Chapter 3: Saving and the Financing of Investment in China 36 3.1 Investment 38 3.2 Financing Investment 42 3.3 Financial Flows between Sectors 45 3.4 Household Saving 47 3.5 Government Saving and Investment 54 3.6 Foreign Saving 60 3.7 Summary and Conclusions 65 Chapter 4: Financial Sector Repression 70 4.1 Why Repress the Financial System? 71 4.2 How Repressed Is China's Financial System? 74 4.3 Finance and Growth in China 84 4.4 Strategy of Financial Development 90 Chapter 5: Banking Sector Reform 93 5.1 Key Features of the Banking Sector 93 5.2 Problems of the Banking Sector 95 5.3 Measures Taken to Strengthen the Banking Sector 101 Chapter 6: Developments in the Bond Market 115 6.1 The Role of a Bond Market 115 6.2 The Bond Market in China 116 6.3 Government Bonds 118 6.4 Corporate Bond Market 131 6.5 Conclusion 132 Chapter 7: The Rise and Fall of the Stock Market 134 7.1 The Rise 135 7.2 The Fall 140 7.3 Conclusion 148 Chapter 8: Macroeconomic Policy and Performance 150 8.1 Ups and Downs in the Macro Economy 151 8.2 Investment Spending as the Proximate Cause of Macroeconomic Cycles 152 8.3 Anatomy of Macro Cycles in China 155 8.4 Monetary Policy 165 8.5 Capital Flows and Exchange Rate Policy 171 8.6 Fiscal Policy 179 8.7 Conclusion 186 References 189 Index 199
