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Shadow Banking: China’s Dual-Track Interest Rate Liberalization

Hao Wang, Honglin Wang, Lisheng Wang, Hao Zhou, Jul 26, 2017

Professors Hao Wang and Hao Zhou, both of Tsinghua University, Honglin Wang formerly of Hong Kong Institute for Monetary Research (HKIMR) and Lisheng Wang of Chinese University of Hong Kong, argue that the shadow banking explosion in China may constitute a dual-track reform mechanism to liberalize the country's rigid interest rate policy.

The Financing of Local Government in China: Stimulus Loans Wane and Shadow Banking Waxes

Zhuo Chen, Zhiguo He, Chun Liu, Jinyu Liu, Jul 05, 2017

The shadow banking activities in China surged in 2012-2013. Prof. Zhuo Chen and Prof. Chun Liu from Tsinghua University, Prof. Zhiguo He from Chicago Booth and Prof. Jinyu Liu from the University of International Business and Economics provide empirical evidence showing that the “barbarian growth” of China’s shadow banking during this period constitute a “hangover effect” from the four trillion RMB stimulus package in 2009.

Equilibrium Consequences of Corruption on Firms: Evidence from China’s Anti-Corruption Campaign

Haoyuan Ding, Hanming Fang, Shu Lin, Kang Shi, Aug 23, 2017

The announcement on May 17, 2013 that CPC’s Central Commission for Discipline Inspection (CCDI) would start to conduct several rounds of inspections of provincial governments, may serve as a rare natural experiment to examine the equilibrium consequences of corruption on firms. Professors Haoyuan Ding of Shanghai University of Finance and Economics, Hanming Fang of the University of Pennsylvania, and Shu Lin and Kang Shi, both of The Chinese University of Hong Kong exploit event studies to show that the stock market overall reacted positively to the CCDI announcement, and they also show that there is interesting heterogeneity across firms in their reactions to the news. They argue that the CCDI announcement on May 17, 2013 has likely triggered an expectation of norms change of bureaucratic behavior.

Book Synopsis Why Does China Need a New Breed of Companies?

Qiao Liu, Sep 06, 2017

Understanding corporate China and its future dynamics is the key to understanding the Chinese economy and its undergoing transformation. The intellectual framework proposed in this work can be summarized by a simple identity: Growth Rate = Return on Invested Capital (ROIC) X Investment Rate. To successfully achieve China’s economic transition without losing a lot of growth at the same time, China needs to improve ROIC at the aggregate level.

China Caught in the “Middle-Income Trap”?

Linda Glawe, Helmut Wagner, Nov 22, 2017

Since 2010–2011, China’s economy has slowed considerably, raising concerns that the country could fall into the so-called “middle-income trap” (MIT). Obviously, an MIT in China would have serious negative consequences not only for the Chinese population but also for the world economy as a whole. We examine whether China is or will be in an MIT by focusing on the empirical MIT definitions and the MIT triggering factors identified in the literature. We show that dependent on the choice of MIT definition, different MIT statements can be derived. Our triggering factor analysis reveals that while China performs quite well regarding its export structure, it must improve human capital accumulation and total factor productivity to avoid falling into an MIT.