Financial liberalisation and growth in China's economic reform

This paper analyses the efficiency of financial capital to economic growth in China. We estimate the effect of total and individual sources of fixed asset investment (state budget appropriation, national bank loans, self-raised funds, and foreign investment) on the growth of GDP and industrial production. Section 2 summarises China's financial liberalisation experience since reform. Section 3 discusses the four sources of financial investment. Sections 4 and 5, respectively, present the econometric model and show the empirical result. Section 6 discusses the various financial and policy implications, while the final section concludes the paper. © Blackwell Publishers Ltd 2001