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China’s Shadow Banking Sector: Wealth Management Products and Issuing Banks

Viral V. Acharya, Jun Qian, Zhishu Yang, Aug 09, 2017

The issuance of Wealth Management Products (WMPs) is an important form of shadow banking activities in China, especially after 2011. Viral Acharya, Deputy Governor of the Reserve Bank of India, Prof. Jun “QJ” Qian of Fanhai International School of Finance, Fudan University and Prof. Zhishu Yang of Tsinghua University examine the causes, main players and impacts on the banking system of China’s rising WMPs. They also compare the differences between the U.S. shadow banking sector and its counterpart in China.

Book Synopsis The Making of an Economic Superpower: Unlocking China’s Secret of Rapid Industrialization

Yi Wen, Sep 27, 2017

This book argues that China’s rapid industrialization since 1978 can be attributed to its rediscovery of the secret recipe of the original Industrial Revolution. The secret recipe is not based on institutional changes per se but rather the sequential creation of mass markets to support mass production. Market creation requires a strong state and appropriate industrial policies because mass markets are a public good that is extremely costly to create and can only be created through stages and under enormous political stability and social trust.

Industry/Policy View China’s Digital Economy: Opportunities and Risks

Longmei Zhang, Sally Chen, Aug 28, 2019

China’s digital economy has expanded rapidly in recent years, including both the emergence of new digital industries and the digitalization of traditional sectors. This brings significant opportunities but also potential risks. The blog discusses the pros and cons of digitalization and how the government can do better in maximizing the benefit while minimizing the risks.

Industry/Policy View The US-China Trade War Is Based on Misleading Statistics

Zhiwei Zhang, Yi Xiong, Xinyu Ji, Jul 11, 2018

General Motors and Apple sold more cars and iPhones in China than in the US, but their sales were not counted as US exports to China, as these were made and sold in China. Policymakers should look at both trade and local sales by foreign firms (the FDI channel) to gauge bilateral economic balance. We estimate that US firms sold more goods and services to China than Chinese firms sold to the US in 2017, once the FDI channel is taken into account.

Rising Intergenerational Income Persistence in China

Yi Fan, Junjian Yi, Junsen Zhang, Jul 04, 2018

Although studies on economic inequality and intergenerational mobility have gained traction in the last decade, little is known about the temporal changes in the intergenerational association of economic status, especially in developing and transitional economies. We find an increasing pattern in intergenerational income persistence across China’s transitional period. To promote intergenerational mobility, the Chinese government should continue to remove rural-urban migration barriers and initiate various programs to subsidize the education of children from disadvantaged families, known as the “left-behind” children.