The China Development Bank Model - An Incomplete Narrative of a Fragile Property and Banking System

Bryane Michael and Simon Zhao (bryane.michael@eueconomics.org)
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Simon Zhao: University of Hong Kong

Review of Development Finance Journal, 2022, vol. 12, issue 1, 1-14

Abstract: The China Development Bank model seems foolproof. Have a government development bank finance property and infrastructure, hold shares in those investments, and watch the revenues come in. Yet, the model creates particularly risky economic structures -- which we characterise as Bubble Economies. The macroeconomics of such Bubble Economics (as we stylize it) make economies like China fragilized by the model susceptible to crashes which other economies do/would not experience. We show the way the banking, construction, savings-investment, and equities markets interact with local government - resulting in our self-stylized Bubble Economics in a Bubble Economy.

Keywords: China Development Bank Model; China recession; bubble economics; five sector model; government property purchases (search for similar items in EconPapers)
JEL-codes: D58 G01 L85 N15 (search for similar items in EconPapers)
Date: 2022
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Persistent link: https://EconPapers.repec.org/RePEc:afj:journ3:v:12:y:2022:i:1:p:1-14

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