Abstract
Since entering the new century, China’s national and sovereign balance sheets have been showing a rapidly expanding trend.
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Notes
- 1.
The proportion of processing trade to exports maintained above 50% for a long time, but with the outbreak of the international financial crisis in 2008, the proportion of processing trade fell to less than 50%, while the proportion of general trade to exports increased.
- 2.
The People’s Bank of China overtook the central banks of the United States, Europe and Japan in June 2004, September 2005 and January 2006 respectively and became the central bank with largest assets in the world.
- 3.
We have added up the following categories of data on investment in fixed assets given by “Statistical Yearbook of China”: electric power, gas and water production and supply, transportation, postal services, telecommunications and other information transmission services, and public facilities management (including urban public transportation, rail transportation, urban roads, drainage and sewage treatment and other municipal utilities, waste treatment and other environmental health industries, and landscaping etc.). The tax threshold for investment in fixed assets was substantially adjusted in 2011, the data have poor comparability with those of the previous years, so here we have only used the data for 2010 and before.
- 4.
It should be noted that, in the current investment and financing system, private capital can hardly enter the infrastructure sectors, especially the sectors managed by the central government, and the phenomenon of state-owned capital as “one single-large shareholder” still exists. Especially in the railway sector where there is no a clear line between the functions of the government and enterprises, there was only a very small amount of private capital (based on the statistics in 2010, the privately held part only accounted for 2% of the fixed assets investment in railway transportation). This means that a large amount of infrastructure assets accumulated in the acceleration of urbanization have actually constituted an important part of state-owned operating assets. This has also to a certain extent explained the cause for rapid increase of non-financial state-owned assets we’ve discovered in the process of preparation of sovereign balance sheets.
- 5.
Theoretically, China has been regarding “constructive” as the main feature distinguishing a socialist country and its government from a capitalist country and its government. Accordingly, investment takes precedence over consumption, and production takes precedence over life. This is regarded as the guide line in various fields. Judging from the state budget, constructive expenditure has always constituted a major item of the spending of the Chinese government. In recent years, with the popularization of the concept of “people orientation” and the proposal of increasing the proportion of consumption in GDP, the feature of “construction precedence” in China’s economy has just slowly subsided. In the last century, China’s financial sector began to propose the goal of building “public finance”, in which an important change direction is to reduce investment (constructive) expenditure and increased public consumption expenditure.
- 6.
The mismatch between routine power and financial power (mainly inadequate financial power) is a problem the local governments in China should always face. Therefore, the local governments always bypass the central government’s regulations and make every endeavor to “hunting the ministries” for money. Keenly finding and seizing all new funding sources has become an important economic behavior of the local governments. Before the “financing platforms” became popular in 2009, “packaged loans”, “land finance” and the like have become important financing channels and means of local governments.
- 7.
In addition, they also include the forms of financing such as “credit-government cooperation” and “bank-government cooperation”. But due to incomplete data available, the amount of money raised through local government financing platform companies is still unclear.
- 8.
Providing implicit guarantee from the government for the financial sector is not a phenomenon unique to China, and it is also very common in mature market economies.
- 9.
The data are from “China Compendium of Statistics 1949–2004”, Department of Comprehensive Statistics, NBS (2005).
- 10.
The data are from “Statistical Yearbook of China” in 1981.
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© 2017 China Social Sciences Press and Springer Science+Business Media Singapore
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Li, Y., Zhang, X. (2017). Expansion of Balance Sheet with Chinese Characteristics. In: China's National Balance Sheet. China Insights. Springer, Singapore. https://doi.org/10.1007/978-981-10-4385-7_5
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DOI: https://doi.org/10.1007/978-981-10-4385-7_5
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