Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/212886 
Year of Publication: 
2018
Series/Report no.: 
BOFIT Discussion Papers No. 1/2018
Publisher: 
Bank of Finland, Institute for Economies in Transition (BOFIT), Helsinki
Abstract: 
Motivated by growing concerns about the risks and instability of China's financial system, this article reviews several commonly perceived financial risks and discusses their roots in China's politico-economic institutions. We emphasize the need to evaluate these risks within China's unique economic and financial systems, in which the state and non-state sectors coexist and the financial system serves as a key tool of the government to fund its economic policies. Overall, we argue that: (1) financial crisis is unlikely to happen in the near future, and (2) the ultimate risk lies with China's economic growth, as a vicious circle of distortions in the financial system lowers the efficiency of capital allocation and economic growth and will eventually exacerbate financial risks in the long run.
JEL: 
E02
G01
Persistent Identifier of the first edition: 
ISBN: 
978-952-323-207-5
Document Type: 
Working Paper

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