Schumpeter in practice: The role of credit for industrial policy in China

Lisa Geissendoerfer and Thomas Haas

No 85-2022, FMM Working Paper from IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute

Abstract: Since the late 1970s, the Chinese government has been undertaking major efforts in developing their countries economy by means of industrial policy. However, a more narrow approach to industrial policy has been pursued only since 2010, with the initiation of the 'Strategic Emerging Industries' program. China's state-dominated banking system is seen as playing a vital role in the financing of these endeavors. Based on a self-constructed data set originating from Chinese official statistics, we show in this paper that (1) there is generally a positive relationship between credit provision to the corporate sector and GDP growth in China, (2) this relationship is non-linear in terms of Chinese regions and credit-to-GDP ratio, and (3) that industrial policy targeting could have led to more investment and GDP growth, however, there are differences among industries and firm types. We thus show that the Chinese economic model could be seen as a practical implementation of Schumpeter's growth theory.

Keywords: Bank-led Growth; Industrial Policy; China; Strategic Emerging Industries; Finance-growth nexus; Finance; Economic growth; Economic development; Bank credit (search for similar items in EconPapers)
JEL-codes: E22 E65 G21 H81 L52 L62 L9 N15 N4 N65 N75 O11 O25 O47 O53 (search for similar items in EconPapers)
Pages: 101 pages
Date: 2022
References: Add references at CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://www.boeckler.de/pdf/p_fmm_imk_wp_85_2022.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:imk:fmmpap:85-2022

Access Statistics for this paper

More papers in FMM Working Paper from IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute Contact information at EDIRC.
Bibliographic data for series maintained by Sabine Nemitz ().