Business Cycle and Stability of China’s Financial and Monetary System
DOI:
https://doi.org/10.52195/pm.v14i1.90Abstract
The importance of China’s economy and the instability of China’s fi-nancial system are in the spotlight recently. This paper uses Austrian Business Cycle Theory to gauge the potential risks of China’s economy. The approach of this paper is a sector analysis, focusing on China’s monetary and financial system, shipping industry, and real estate industry, especially the state-owned enterprises in those sectors. We conclude that China’s central banking system is hurting China’s economy and we also propose reforms to overhaul the system, according to the perspective of praxeology and Austrian School Econom-ics.
Keywords: Austrian Business Cycle Theory, China’s banking system, China’s economy.
JEL Classification: B53, D8, E310, E32, E52, H12, N15, N27, N45, N65, O53, P11, R3, R4, Y10.
Resumen: La importancia de la economía china junto con la reciente inestabili-dad del sistema financiero de China, preocupan al resto del mundo. Este artí-culo usa la Teoría Austriaca del Ciclo Económico para identificar los riesgos potenciales de la economía de China. En este artículo realizaremos un análisis sectorial, enfocado en el sistema monetario y financiero de China, el sector de la construcción, la industria marítima y, en especial, las empresas estatales de dichos sectores. Concluimos que el actual sistema de banca central en China está dañando a su economía y proponemos soluciones desde la perspectiva de la praxeología y la Escuela Austriaca de Economía.
Palabras clave: Teoría austriaca del ciclo económico, sistema bancario chino, economía china.
References
«21so.com.» «China’s 50 Ghost Cities in 2015». 2015. http://news.21so.com/2015/hongguan_1118/1408507.html.
BADKAR, MAMTA (2013): 2 Years after that Famous Report on Chinese Ghost Cities, Things Might be Getting even Worse. Business Insider.
CHEN, FENG (2013): Local Government in Inner Mongolia Could not Pay Project Payment for Ghost Cities (內蒙古再現新鬼城:政府拖欠百 億工程款無力支付). China Times.
— (2016): The Story after the Bankruptcy (向省委书记求助 保证“不 跑路、不跳楼” 百强地产商“被破产”之后). Chinatimes.com.
CHIVAKUL, M., W., Lam, R., LIU, X., MALISZEWSKI, W., and SCHIPKE, A. (2015): Understanding Residential Real Estate in China. IMF Working Paper.
COASE, R., and WANG, N (2012): How China Became Capitalist. Palgrave Macmillan.
CREDIT SUISSE (2011): «Financing risks: Developers with SOE background are not inmune».
CRISIS, ZHANG, J. (2015): Inside China’s shadow banking: the next subprime. n.d. CSI started facing bankruptcy, it’s hard to break the freeing point in market (我国航运业破产潮起 市场极度低迷难破). Cnhangyun.com.
DAOKUN, C. (2013): A Survey on Changzhou’s Ghost City (常州“鬼 城”真相调查：一条马路汇集500万平方米房源). National Business Daily.
DEL AMO LAMBORENA, J. (2012): La teoría del ciclo monetario endógeno y la economía china en 2011. Madrid: Procesos de Mercado.
DELOITTE, C. (2013): The Development of Chinese Shipping Industries (中國航運業發展). Deloitte China.
DONG, H., and ZHANG, J (2014): «Ghost City in Chengong, Kunming City after 1o-year building (昆明呈貢新區洋規劃水土不服 十年建設造出鬼城)».
DONG, J., and NEUT, A. (2016): Global prominence of China’s financial markets. BBVA Research.
ELLIOTT, D., KROEBER, A., and QIAO, Y. (2015): Shadow banking in China: A primer. Brookings.
EWORLDSHIP.COM. (2015):«Cumulative loss RMB 34.1 bn, the result of COASO’s audit (累計虧損341億 中遠集團審計結果出爐)».
GAN, A., and QU, L. (2010): Shipping Finance (航運金融學). Shanghai: Gezhi Press and Shanghai People’s Publishing House.
GUONAN, M., and BEN S.C.F. (2002): China’s asset management corporations. BIS.
HAS, J. (2013): «The secret of the mass loss and the mass layoff and pay drop in the second quarter of COSC0 (中遠巨虧隱情：二季 度裁員降薪)». China Times.
HAYEK, F.A (1990): Denationalization of Money: The Argument Refined. London: Institute of Economic Affairs.
— The Fatal Conceit: The errors of Socialism. London: Routledge, 1988.
HONGSONG WANG, W. (2014): How the Chinese Monetary Policy Influences Chinese Economy? Madrid: Universidad Rey Juan Carlos.
HUERTA DE SOTO, J. (2006): Money, Bank Credit and Economic Cycles. Ludwig von Mises Institute.
— (2010): Socialism, Economic Calculation and Entrepreneurship. Cheltenham, Edward Elgar.
— (2008): The Austrian School: Market Order and Entrepreneurial Creativity. Cheltenham, Edward Elgar.
— (2010): The Theory of Dynamic Efficiency. Routledge.
JIANG, W. (2015): The Future of Shadow Banking in China. Columbia Business School.
LAM, B., and CORNU, S.L. (2015): QE China Style: The intentions and impacts of Chinese monetary policy easing. Macquarie.
LI, G. (2013): «China’s New Ghost Cities (中国新“鬼城”)». Time-Weekly.
LIU, G. (2015): The bankruptcy of Huaguang Real Estate may become the start of the collapse of CREI (曾跻身中国房企100强的华光地产破 产了，或拉开房企倒闭潮序幕). letscorp.net.
LU, Y. (2013): How to make ghost cities have lights (如何讓“鬼城”亮起 來). Shanghai: International Financial News.
MISES, L. (1998): Human Action. Ludwig von Mises Institute.
— (1957): Theory and History. Ludwig von Mises Institute.
NETEASE.COM. (2013): See a New Ghost City Built in Hebi, Henan (河 南鶴壁新區人煙稀少 成新“鬼城). NetEase.com.
PBOC. (2016):«Annual Report of PBOC 2015 (中國人民銀行2015 年報)».PEI, Y. (2016): The bankruptcy of CSI is approaching because of the downturn of shipping industry (受累航運低谷 造船業破產潮 臨近). China Business Journal.
Poor County spent RMB 6 Bn on Building a New City (內蒙貧困縣60 億建新城續:民眾不吃喝需4年還息). People’s Daily, 2010.
RAIFENG, D. (2014): China will Have 50 Ghost Cities According to Data (数据揭密 陆将出现50座鬼城). Taipei: China Times.
RUAN, M. (2009): The 30-year Empire of Deng Xiaoping (鄧小平帝國 三十年). Taipei: Yushan Publishing House.
SEBWEEKLY (2016): The COSCO Shipping Corporation you do not know (你所不知道的中國遠洋海運集團). hsdhw.com. See Yinkou, a New Ghost City (辽宁营口也变“鬼城” 18万㎡小区零入 住). China Business News, 2014.
SHENG, A., NG, C.S., and EDELMANN, C. (2013): Asia Finance 2020: Framing a New Asian Financial Architecture. Oliver Wyman.
SHEPARD, W. (2013): A Journey to China’s Largest Ghost City. Global Chronicle.
SHIPPINGCHINA (2015): «No bottom line: SOEs loses money in shipping market but still grabbing the market even facing losing money (完全沒有底線：航運國企虧本搶市場甚至零運費)». Chinaports.com, 2015.
SINA.COM (2013): How to make ghost cities? (“鬼城”是怎樣煉成的), .Sina.com.
STOCKECHANGE, Reading the Chinese. n.d.
SUN, C. (2014): SOSEs would try to become mixed-ownership companies (航運國企將實行混合所有制改革). 21st Century Business Herald.
SUN, L. (2015): «CSC loses RMB280 millions, the winter of CSI continues (中海集运预亏28亿元 航运业寒冬延续)». China Business Journal, 2015.
THE ECONOMIST (2013): «The Shibor shock». The Economist.
TORRAS, L. (2013): El despertar de China. Instituto de Estudios Económicos.
TRIVEDI, A. (2016): «Why China’s Bad Banks Needs Another $5 Bn.» The Wall Street Journal.
VEGAS GARCÍA, A. (2013): La sombra de la prosperidad china. Madrid: Universidad Rey Juan Carlos.
VOGEL, E. F. (2011): Deng Xiaoping and the Transformation of China. Cambridge, Belknap Press of Harvard University Press.
WALTER, C., and HOWIE, F. (2011): Red Capitalism: The Fragile Financial Foundation of China’s Extraordinary Rise. Singapore: John Wiley & Sons Singapore.
WANG, W. (2015): Three bankrupted in one month CSI is facing the worst situation in the last 30 years (一個月破產三家 航運業三十年 來最糟). Jiemian.com.
WANG, X. (2015): The Top 100 Huaguang Real Estate is facing bankruptcy (全国百强常州华光地产遭破产清算 多楼盘烂尾). Beijing: People’s Daily.
WANG, Y. (2013): The Warn on New Cities Plans from Chinese Central Government. EnnWeekly.
XIAO, F., and KIMBALL, D. (2005): Effectiveness and Effects of China’s Capital Controls. China & World Economy.
XIAO, N. The Myth of the Bankruptcy of Ayeshan Real Estate (山東日 照：“僵屍企業” 阿掖山房地產破產之謎). ifeng.com, n.d.
XIAOPING, D. (1993): «Volume 3 of Selected works of Deng Xiaoping ». YANG, H. (2008): The Study of the China’s Real Estate Bubble and the Solutions (我國房地產泡沫研究及應對措施). house.china.com.cn.
YANG, J. (2015): «If Maersk Lays off Employees, What Will COSCO and CSC Do (馬士基都裁員了，中遠中海的裁員還有多遠？). ship.sh.
ZHANG, H. (2013): «The Ghost Cities in China» (中國的一座座鬼城) . Apple Daily.
ZHANG, J. (2013): The Ghost City in Shiyan, Hubei Province (湖北十堰 现“鬼城”魅影 住房空置率畸高). China Business.
ZHANG, L. (2014): Chinese Local Government Debt Crisis and Opportunity (中國地方政府債務危與機). London: Financial Times Chinese.
ZHANG, (2015): «The Predestination of China’s Shipping Industry» Wallstreetcn.com, (2015).
ZHANG, Y. «When CSI is in such a hard time, the senior executive of COSCO and CSC are raising up their own salaries (海運業日 子過得這麼艱難 中國遠洋和中海集運的高管們還大幅加了薪).” Jiemian.com, (2016).
ZHU, J. (2012): From Laissez-faire to Monopoly, The Monetary Economy of China - Past and Present (從自由到壟斷 中國貨幣經濟兩千年). Taipei: Yuan-Liou Publishing, (2012).
