Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/274241 
Year of Publication: 
2022
Series/Report no.: 
FMM Working Paper No. 85
Publisher: 
Hans-Böckler-Stiftung, Macroeconomic Policy Institute (IMK), Forum for Macroeconomics and Macroeconomic Policies (FMM), Düsseldorf
Abstract: 
Since the late 1970s, the Chinese government has been undertaking major efforts in developing their countries economy by means of industrial policy. However, a more narrow approach to industrial policy has been pursued only since 2010, with the initiation of the 'Strategic Emerging Industries' program. China's state-dominated banking system is seen as playing a vital role in the financing of these endeavors. Based on a self-constructed data set originating from Chinese official statistics, we show in this paper that (1) there is generally a positive relationship between credit provision to the corporate sector and GDP growth in China, (2) this relationship is non-linear in terms of Chinese regions and credit-to-GDP ratio, and (3) that industrial policy targeting could have led to more investment and GDP growth, however, there are differences among industries and firm types. We thus show that the Chinese economic model could be seen as a practical implementation of Schumpeter's growth theory.
Subjects: 
Bank-led Growth
Industrial Policy
China
Strategic Emerging Industries
Financegrowth nexus
Finance
Economic growth
Economic development
Bank credit
JEL: 
E22
E65
G21
H81
L52
L62
L9
N15
N4
N65
N75
O11
O25
O47
O53
Creative Commons License: 
cc-by Logo
Document Type: 
Working Paper

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