What Does the Future Hold for Shadow Banking?

  • Andrew Collier


The chapter describes the role of LGFVs in Chinese capitalism. It details the data on the use and misuse of capital by LGFVs. It explains access to capital by small business and the role of Shadow Banking in SME loans. Moral hazard and the risks of defaults in the private lending market are also mentioned. It describes interbank markets and Shadow Banking and the problem of maturity mismatch. It explains deleveraging in China and the ability of the state to recapitalize financial institutions. It also mentions the “Tightening Circle of Capital” and Shadow Banking. It gives the example of Dongbei Steel in Liaoning province and the relationship to Shadow Banking. It draws on comparisons with the US crisis and describes the regional differences in capital flows.


State Council State Bank Private Entrepreneur State Firm Credit Cooperative 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.


  1. Bank of China. (2013). Author Interview.Google Scholar
  2. Bloomberg News. Death and despair in China’s rustbelt, March 1, 2016.Google Scholar
  3. Borst, N. (2014, February 21). A map of china’s shadow banking exposure. Peterson Institute.Google Scholar
  4. Charlene Chu, Autonomous Research, cited in Bloomberg. China default chain reaction threatens products worth 35% of GDP, May 30, 2016.Google Scholar
  5. Financial Times. China’s banking Weapons of Mass Ponzi problem pops up again. December 11, 2012.Google Scholar
  6. Gatley, T., & Long, C. (2014, April). Defaults are coming—Where, when and how. Gavekal Dragonomics.Google Scholar
  7. Geithner, T. (2014b). Stress test: Reflections on financial crises. New York: Crown Publishing Group.Google Scholar
  8. Huang, Y., & Bosler, C. (2014, September). China’s debt dilemma. Washington, DC: Carnegie Endowment.Google Scholar
  9. Lu, Y, & Sun, T. (2013). Local government financing platforms in China: A fortune or misfortune? (IMF working paper). Washington, DC: IMF.Google Scholar
  10. Macgillis, A. (2016, September). The original underclass. The Atlantic. Google Scholar
  11. Naughton, B. (2016, Summer ). Two trains running: Supply-side reform, SOE reform and the authoritative personage (China Leadership Monitor, No. 50).Google Scholar
  12. Rithmire, M. (2013, November). Land politics and local state capacities: The political economy of urban change in China. China Quarterly, p. 9.Google Scholar
  13. Ru, H. (2015). Government credit, a double-edged Sword: Evidence from the China development bank (p. 70). Hong Ru, MIT.Google Scholar
  14. South China Morning Post, Huaxia scandal spotlights China’s Ponzi crisis. December 10, 2012.Google Scholar
  15. Tsai, K. (2015a, March). The political economy of state capitalism and shadow banking (Issues and Studies, Vol. 51, pp. 55–97). Taipei: Institute of International Studies.Google Scholar
  16. Tsai, K. (2016, May 27). Presentation, workshop on “Shadow banking and alternative finance in China,” China Studies Centre, University of Sydney.Google Scholar
  17. Wright, L. (2014). Deliquification and China’s deflationary adjustment. New York: Medley Global Advisors.Google Scholar

Copyright information

© The Author(s) 2017

Authors and Affiliations

  • Andrew Collier
    • 1
  1. 1.Orient Capital ResearchHong KongHong Kong

Personalised recommendations