Financing Constraints on the Private Sector in Postsocialist China

Yasheng Huang

in Socialism Vanquished, Socialism Challenged

Published in print September 2012 | ISBN: 9780199895977
Published online September 2012 | e-ISBN: 9780199980116 | DOI:
Financing Constraints on the Private Sector in Postsocialist China

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This chapter argues that since 1989–when the rest of centrally planned economies started fundamental economic and political reforms–China went backward in one important aspect of reforms–financial liberalization. Financial liberalization is defined as easing credit constraints on private sector as well as lowering entry barriers toward private, informal financial intermediation. In the 1990s, as compared with the 1980s, credit constraints on private sector increased and in fact on the basis of cross-country survey data the private sector in China was among the most capital-constrained in the world. This chapter hypothesizes that this financial policy reversal contributed to the under-development of China's indigenous private sector.

Keywords: China; financial liberalization; private sector development; reforms; political economy; economic transition

Chapter.  6970 words. 

Subjects: Comparative Politics

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