Yearly Archives: 2015

The Political Economy of State Capitalism and Shadow Banking in China

The Xi-Li administration faces the dual challenge of managing state capitalism and shadow banking as China enters a phase of more moderate economic growth. During China’s first three decades of reform, private sector development occurred in parallel with prioritization of state-owned enterprises in strategic industries, and growth surged. This pattern of state capitalism rested on an unarticulated bifurcated financing arrangement whereby the formal banking system primarily served public enterprises, while private businesses relied primarily on informal finance. However, China’s response to global financial crisis disrupted the preceding equilibrium of financial dualism under state capitalism. Unprecedented expansion of bank lending after 2008 created opportunities for a host of state economic actors—including SOEs, state banks, and local governments—to expand their participation in off-balance sheet activities. Continue reading

Hong Kong Political Reform: Is ‘Chinese Democracy’ The Best The Region Can Get?

IEMS’ David Zweig spoke to the International Business Times on the prospects of Hong Kong’s electoral reform, in which each citizen would be granted a vote for the city’s next chief executive. While many Hong Kong citizens and legislators want the freedom to cast their vote for whomever they wish, the Chinese Central Government is pressuring local legislators to enact legislation which would confine potential candidates to a pool of those selected by a largely-unelected group of legislators, many of whom are thought to be extremely pro-Beijing. Continue reading