China Alone, the Emergence Form, and Potential Return to Isolation
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Anne Stevenson-Yang China Alone The Emergence from, and Potential Return to Isolation By Anne Stevenson-Yang Cátedra Extraordinaria México-China Universidad Nacional Autónoma de México China Alone The Emergence from, and Potential Return to Isolation Anne Stevenson-Yang. Cátedra Extraorinaria México-China. Centro de Estudios China-México, Universidad Nacional Autónoma de México. “Cátedra Extraordinaria México-China” (Extraordinary Chair on Mexico-China) is supported by Agendasia. Design of the book: Wallys González Dorantes Universidad Nacional Autónoma de México Dr. José Narro Robles Rector Dr. Eduardo Bárzana García Secretario General Lic. Enrique del Val Blanco Secretario Administrativo Dr. Francisco José Trigo Tavera Secretario de Desarrollo Institucional Mtro. Miguel Robles Bárcena Secretario de Servicios a la Comunidad Lic. Luis Raúl González Pérez Abogado General Facultad de Economía Dr. Leonardo Lomelí Vanegas Director Mtro. Eduardo Vega López Secretario General Lic. Javier Urbieta Zavala Secretario Administrativo Dr. Arturo Huerta González Jefe de la División de Estudios de Posgrado Dr. Cesar Octavio Vargas López Jefe de la División de Estudios Profesionales Ing. Alejandro Pérez Pascual Jefe de la División del Sistema Universidad Abierta Centro de Estudios China-México Dr. Enrique Dussel Peters Coordinador Dra. Yolanda Trápaga Delfín Responsable DR© Centro de Estudios China-México Facultad de Economía Universidad Nacional Autónoma de México Facultad de Economía, Edficio B, Segundo piso, Ciudad Universitaria, 04510, DF Tel. 55-56222195 http://www.economia.unam.mx/cechimex ISBN: 978-0-9911451-0-2 Printed in Mexico Impreso en México Table of contents Preface ........................................................................................................................................................11 Abbreviations ............................................................................................................................................13 Introduction ...............................................................................................................................................15 Chapter 1: The Historical Prism .................................................................................19 1.1. The lost promise of reform ......................................................................................................22 1.1.1. The socialist-market economy ......................................................................................23 1.1.1. 1. Multiverses .................................................................................................................23 1.1.1.2. Vision and reality .......................................................................................................24 1.1.1.3. A brief historical review ..........................................................................................24 1.2. Morphing .......................................................................................................................................26 1.2.1. Amassing capital ................................................................................................................26 1.2.2. Special zones .......................................................................................................................27 1.2.3. Limited privatization .........................................................................................................27 1.2.4. Repressing consumption ................................................................................................28 1.2.5. Proliferating businesses ...................................................................................................29 1.3. Tiananmen’s challenge to stability .......................................................................................33 Chapter 2: China’s Gilded Age ...................................................................................35 2.1. The 1990s .......................................................................................................................................35 2.1.2. Deng’s tour ...........................................................................................................................36 2.2. Rise of the blooded elites ........................................................................................................37 2.2.1. Neither State nor private .................................................................................................38 2.2.2. Breaking monopolies .......................................................................................................38 2.2.3. Sharing out ownership ....................................................................................................40 2.3. Dismantling State industry ......................................................................................................40 2.3.1. 1993-1994: Reforming the financial system .............................................................42 2.3.2. Tax reform .............................................................................................................................42 2.3.3. The supporting infrastructure .......................................................................................43 2.3.4. Banking ..................................................................................................................................44 2.3.5. Corporate structures .........................................................................................................45 Chapter 3: Unintended Consequences .....................................................................47 3.1. Local versus central ....................................................................................................................47 3.1.1. A private housing market ...............................................................................................47 3.2. New financing mechanisms ....................................................................................................48 3.2.1. The Olympics .......................................................................................................................49 3.3. Credit, credit, credit: The impact of the 2008 financial crisis .......................................50 3.4. The local government-financing platform.........................................................................53 3.5. Subsidies ........................................................................................................................................53 3.6. Other means of support ...........................................................................................................59 3.6.1. Using statistics to recruit capital ..................................................................................60 Chapter 4: Housing: The New Asset Class .................................................................65 4.1. The second Great Leap: China’s property market ...........................................................65 4.1.1. What the data tell us .........................................................................................................66 4.1.2. The urban/rural dichotomy ............................................................................................71 4.1.3. Funding urbanization .......................................................................................................72 4.1.4. A town in Shaanxi ..............................................................................................................73 4.2. Private-LGFV cooperation ........................................................................................................74 4.3. The Northeast ...............................................................................................................................75 4.4. Boom! Bust! ...................................................................................................................................76 4.5. The next dominoes .....................................................................................................................80 Chapter 5: Financial Innovation ................................................................................87 5.1. Banking and shadow-banking ...............................................................................................87 5.2. Taxonomy ......................................................................................................................................89 5.3. Asset Management ....................................................................................................................89 5.3.1.1. Wealth Management Products ............................................................................89 5.3.1.2. Bancassurance ...........................................................................................................93 5.3.2. Credit creation ....................................................................................................................93 5.3.2.1. Trusts..............................................................................................................................93 5.3.2.2. Brokerage funds ........................................................................................................94 5.3.2.3. Bonds .............................................................................................................................94