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Dynamics of Trade Credit in China

Author

Listed:
  • Wukuang Cun
  • Vincenzo Quadrini
  • Qi Sun
  • Junjie Xia

Abstract

We use Chinese manufacturing data to show that upstream manufacturing industries received higher credit during the monetary expansion of 2005–11. However, the higher credit received by upstream industries did not generate a similar increase in ‘trade lending’ to downstream industries, which limited the transmission of the credit expansion to the whole manufacturing sector. We develop a model that formalises some of the key features of the Chinese economy, and show why a credit expansion tilted toward the upstream sector may not fully cascade to the whole economy.

Suggested Citation

  • Wukuang Cun & Vincenzo Quadrini & Qi Sun & Junjie Xia, 2022. "Dynamics of Trade Credit in China," The Economic Journal, Royal Economic Society, vol. 132(648), pages 2702-2736.
    • Handle: RePEc:oup:econjl:v:132:y:2022:i:648:p:2702-2736.
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    File URL: http://hdl.handle.net/10.1093/ej/ueac036
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