برنامه های پنج ساله: امور مالی چین
Abstract
1- Introduction
2- Literature
3- China and its five-year national plan program
4- Research questions
5- Data and empirical analyses
6- Conclusion
References
Abstract
An important factor influencing corporate finance and economic growth in China lies in its government sponsored industrial policies. Examining China’s five-year plans during 1991–2010, we find that state-owned firms in government supported industries enjoy faster growth in initial public offerings and higher offer prices. Further, they enjoy faster growth in loans granted by major national banks. However, this preferential access to capital by state-owned firms appears to be achieved at the expense of non-state-owned firms which are crowded out. Government support induces more investment but also brings more overinvestment, which mainly comes from the non-state sector. Finally, supported industries have higher stock market returns and cash flow growth that dampen when state ownership increases.
Introduction
While the first three decades after the establishment of the communist China in 1949 were marred by political turmoil, instabilities, ideological rigidness and natural and human-made disasters, China’s economy has been growing rapidly since the start of its economic reform in 1978. Its GDP reached about USD8.34 trillion (RMB51.93 trillion) in 2012 (National Bureau of Statistics of China, 2013), exceeding Japan to become the second largest economy in world in 2010. It currently has the largest foreign currency reserve in the world, reaching USD2.85 trillion in 2011, representing 30% of the global reserve (State Administration of Foreign Exchange, 2011). China’s securities market was established just two decades ago. However, by the end of 2010, its total market capitalization reached USD4.01 trillion (RMB26.54 trillion), representing 66.69% of China’s GDP (China Securities Regulatory Commission, 2011). By the end of 2012, its total capitalization was RMB22.97 trillion. On the other end of the spectrum, China’s rapid economic growth appears to contradict and defy mainstream economic and finance theories. China is a highly politically centralized country. Its government has the power to nominate provincial and ministerial level officials and owns a significant portion of the national economy. China’s leaders have the authority to directly interfere with almost all aspects of China’s economic, civil, and political affairs. China lacks the rule of law that is considered essential for the development of the capital markets (La Porta, Lopez-de-Silanes, Shleifer and Vishny, 1997, 1998, 2002a).