Is China financialised? The significance of two historic transformations of Chinese finance

Shi, Yuning

Abstract

This article tackles the question of whether financialisation is present in the Chinese economy by analysing two key transformations of the country’s financial system. The first was a state-led reform process through which the Chinese financial system introduced market practices, similarly to the rest of the economy. The second was a market-led process, reflected in the emergence and rise of shadow banking, which originates from within financial markets with the aim of bypassing loan restrictions. The article shows that despite the two transformations and the enormous growth of finance during the past four decades, the underlying character of the Chinese financial system exhibits remarkable continuity. Namely, it remains bank based – albeit partially liberalised – with a predominant role for bank credit and a strong presence for the state. The relational and government-controlled structures of Chinese finance have not been replaced by arm’s length and private mechanisms. On these grounds, it is premature to consider the Chinese economy to be financialised.

Citation

Shi, Y. (2024). Is China financialised? The significance of two historic transformations of Chinese finance. New Political Economy, 29(2), 305-320. https://doi.org/10.1080/13563467.2023.2253158

• Journal Article Type: Article
• Acceptance Date: Aug 25, 2023
• Online Publication Date: Sep 12, 2023
• Publication Date: Feb 1, 2024
• Deposit Date: Oct 2, 2023
• Publicly Available Date: Oct 2, 2023
• Journal: New Political Economy
• Print ISSN: 1356-3467
• Electronic ISSN: 1469-9923
• Publisher: Taylor and Francis Group
• Peer Reviewed: Peer Reviewed
• Volume: 29
• Issue: 2
• Pages: 305-320
• DOI: https://doi.org/10.1080/13563467.2023.2253158
• Keywords: China; financial reform; financial system; financialisation; shadow banking
• Publisher URL: https://www.tandfonline.com/doi/full/10.1080/13563467.2023.2253158