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Has the Chinese growth model changed? A view from the credit market

  • Herrala, Risto

    ()

    (BOFIT)

  • Jia, Yandong

    (BOFIT)

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.

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File URL: http://www.suomenpankki.fi/bofit_en/tutkimus/tutkimusjulkaisut/dp/Documents/2012/dp0512.pdf
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Paper provided by Bank of Finland, Institute for Economies in Transition in its series BOFIT Discussion Papers with number 5/2012.

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Length: 26 pages
Date of creation: 22 Mar 2012
Date of revision:
Handle: RePEc:hhs:bofitp:2012_005
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  1. Claustra Bajona & Tianshu Chu, 2009. "Data Appendix to "Reforming the State-Owned Enterprises in China: Effects of WTO Accession"," Technical Appendices 06-12, Review of Economic Dynamics.
  2. repec:dgr:kubcen:2011006 is not listed on IDEAS
  3. Bernanke, B. & Gertler, M. & Gilchrist, S., 1998. "The Financial Accelerator in a Quantitative Business Cycle Framework," Working Papers 98-03, C.V. Starr Center for Applied Economics, New York University.
  4. Herrala, Risto, 2009. "Credit crunch? An empirical test of cyclical credit policy," Research Discussion Papers 10/2009, Bank of Finland.
  5. Nan-Kuang Chen & Hung-Jen Wang, 2008. "Identifying the Demand and Supply Effects of Financial Crises on Bank Credit—Evidence from Taiwan," Southern Economic Journal, Southern Economic Association, vol. 75(1), pages 26-49, July.
  6. Hasan, Iftekhar & Wachtel , Paul & Zhou, Mingming, 2006. "Institutional development, financial deepening and economic growth: Evidence from China," BOFIT Discussion Papers 12/2006, Bank of Finland, Institute for Economies in Transition.
  7. Steven Fazzari & R. Glenn Hubbard & Bruce C. Petersen, 1987. "Financing Constraints and Corporate Investment," NBER Working Papers 2387, National Bureau of Economic Research, Inc.
  8. Fungacova, Zuzana & Herrala, Risto & Weill, Laurent, 2011. "The Influence of Bank Ownership on Credit Supply: Evidence from the Recent Financial Crisis," BOFIT Discussion Papers 34/2011, Bank of Finland, Institute for Economies in Transition.
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