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State Intervention, Local Indebtedness, Investment Overheating and Their Systemic Background During Global Crisis in China

Author

Listed:
  • Maria Csanadi

    (Institute of Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences)

Abstract

This paper focuses on the immediate economic and systemic reasons of steadily increasing local government indebtedness and investment overheating in China. These two phenomena emerged between 2008 and 2011 as a direct consequence of an external shock caused by the global crisis and the subsequent internal reaction in the form of intensified stimulating state intervention. New chances for resource distribution and investments through state intervention mobilized distribution priorities and politically rational economic behavior of actors, characteristic to party-state systems. Locations of mobilization were defined by the decentralized Chinese system specifics along the intertwined institutional party-state structure. Systemic characteristics and its Chinese specifics together resulted in investment overheating, and steadily growing local indebtedness through large and state-owned enterprises and local governments. This process was further amplified by the characteristics of transforming economy in China as actors in the private sphere were mobilized by the increased input demand of those privileged by the systemic priorities of state intervention.

Suggested Citation

  • Maria Csanadi, 2013. "State Intervention, Local Indebtedness, Investment Overheating and Their Systemic Background During Global Crisis in China," CERS-IE WORKING PAPERS 1340, Institute of Economics, Centre for Economic and Regional Studies.
    • Handle: RePEc:has:discpr:1340
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    References listed on IDEAS

    as
    1. Kam Wing Chan, 2010. "The Global Financial Crisis and Migrant Workers in China: ‘There is No Future as a Labourer; Returning to the Village has No Meaning’," International Journal of Urban and Regional Research, Wiley Blackwell, vol. 34(3), pages 659-677, September.
    2. Christine Wong, 2011. "The Fiscal Stimulus Programme and Public Governance Issues in China," OECD Journal on Budgeting, OECD Publishing, vol. 11(3), pages 1-22.
    3. Rawski, Thomas G., 2001. "What is happening to China's GDP statistics?," China Economic Review, Elsevier, vol. 12(4), pages 347-354.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    local indebtedness; crisis; party-state systems; resource distribution; state intervention; overheating;
    All these keywords.

    JEL classification:

    • F5 - International Economics - - International Relations, National Security, and International Political Economy
    • D78 - Microeconomics - - Analysis of Collective Decision-Making - - - Positive Analysis of Policy Formulation and Implementation
    • R58 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Regional Development Planning and Policy
    • J08 - Labor and Demographic Economics - - General - - - Labor Economics Policies
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity

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