Harnessing sovereign money for development finance and solving the debt conundrum: the case of China

Yan Liang

Chapter 25 in The Elgar Companion to Modern Money Theory, 2024, pp 329-341 from Edward Elgar Publishing

Abstract: This chapter employs a Modern Money Theory approach to show that the State and public money play an indispensable role in creating development finance. It demonstrates that the Chinese State has utilized its sovereign monetary power to provide development finance and promote economic growth in the past decades. The State engages in large-scale public investments and sets up policy banks and state-owned commercial banks to create and extend credit to finance infrastructure, industrial production and other developmental projects. However, the rapid expansion of public investment in infrastructure and private investment in real estate since the Global Financial Crisis have generated excessive debt in the real estate sector and in the local governments. To deleverage private and local government debt, the central government must leverage up, increasing fiscal spending and fiscal transfers to local governments.

Keywords: Economics and Finance; Politics and Public Policy (search for similar items in EconPapers)
Date: 2024
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.elgaronline.com/doi/10.4337/9781788972246.00035 (application/pdf)
Our link check indicates that this URL is bad, the error code is: 503 Service Temporarily Unavailable

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:elg:eechap:18498_25

Ordering information: This item can be ordered from
http://www.e-elgar.com

Access Statistics for this chapter

More chapters in Chapters from Edward Elgar Publishing
Bibliographic data for series maintained by Darrel McCalla ().