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Animal Spirits with Chinese Characteristics Investment Booms and Busts in the World's Emerging Economic Giant

ISBN-10: 0230115691

ISBN-13: 9780230115699

Edition: 2012

Authors: Mark A. DeWeaver

List price: $109.99
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Will China eventually be able to eliminate its socialist animal spirits? This is an important prerequisite to achieving its long-sought transition from extensive to intensive growth. Such a transformation would clearly require removing much of the economic power now enjoyed by local governments while at the same time hardening the budget constraints of the current system’s principal beneficiaries. Such changes are unlikely in the absence of political reform. This title highlights the importance of China’s investment booms and busts for both the Chinese and the world economy, describes the origins and evolution of the investment cycle during the command economy period. It will show how the animal spirits of the command economy era have been transformed by the introduction of capitalist economic institutions. In order to do so, the author carefully considers the banking system, which more often than not is on the losing side of these bets, a major source of speculative flows into the stock and property markets and the counter-cyclical monetary policy. Concluding, DeWeaver analyzes the use of administrative measures to manage the economy, which still work in much the same way as they did during the command economy period. Ending an investment boom continues to be primarily a matter of introducing new policies or the more strict enforcement of existing ones. And stimulus remains mainly a matter of policy relaxation - particularly the relaxation of financial sector prudential regulation.
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Book details

List price: $109.99
Copyright year: 2012
Publisher: Palgrave Macmillan
Publication date: 12/5/2012
Binding: Hardcover
Pages: 224
Size: 6.00" wide x 9.00" long x 0.75" tall
Weight: 0.880
Language: English

List of Figures and Tables
Acknowledgments
Preface
Introduction and Overview
Chinese Investment Cycles and the World Economy
Models of China
Truth from Facts
An Overview of the Book
Investment with Chinese Characteristics
Investment in the Chinese Economy: A Long Look Back at Theory and Practice
The Meaning of Public Ownership
State-Owned Inputs: Land, Credit, and Public Goods
The State as Investor
Controlling the Commanding Heights
Wither the Private Sector?
Freewheeling Socialism
Socialist Booms and Busts
Models of the Cycle
Keynes' Animal Spirits Model
The Marxist Model
The Accelerator/Multiplier Model
The Austrian Model
The Lucas Imperfect Information Model
The Real Business-Cycle Model
Obstacles to Central Planning
Booms and Busts under Socialism
Investment Fluctuations in Pre-reform China (1949-1977)
Small-Scale Industry and Decentralized Planning
Self-sufficiency as Mercantilism
Reestablishing Central Control
Socialist Animal Spirits
A History of the Cycle
Leaping Outward and Pulling Back (1978-1983)
Clambering Out of the Plan (1984-1992)
From Southern Tour to Long Landing (1993-2002)
Overheating and Magic Weapons (2003-2008)
Growth at Any Cost (2009)
Investment as an Engine of Growth
Warped Incentives and "Second-Best" Efficiency
Tax-Revenue Maximization and "Track-Record" Building
Redundant Capacity and Inefficient Investment
Competing for Investment
Investment as a Vehicle for Corruption
A "Second-Best" Case for Intervention
Banking and Finance Run Amok
Policy-Driven Lending
The Failure of Governance Reform
Lax Due Diligence and Speculative Investment
Collusion, Risk Management, and Prudential Supervision
Money as a Creature of the State
Taking Away the Ladle
Interest Rate Dilemmas
Sterilizing Hot Money
Differential Liquidity Management
Controlling Credit by Fiat
The Future of Chinese Monetary Policy
Suppressing "Blind" Investment
Industrial Policy: Beijing's Paper Tiger
Real Estate: Treating the Symptoms
Political Competition: A Substitute for Market Forces
The Limits of Direct Intervention
Scientific Development: Master Plan or Myth?
Indigenous Innovation and Intensive Growth
Getting the Incentives Wrong
Income Inequality and Consumption
Chinese and Soviet Precedents: A History of Failure
"Fifth Generation" Computers: A Japanese Precedent
Theories of Intensive Growth
Unscientific Socialism
Conclusion
Politics in Command
Development Without Freedom
Notes
Bibliography
Index