Factions and Finance in China: Elite Conflict and Inflation

摘要

The weakest link in the rising economic superpower of China, as conventional wisdom states, seems to lie in the banking sector, which after three decades of economic transition remains dominated by poorly performing state-owned banks. What accounts for the lack of genuine liberalization in the banking sector? If the banking sector performs so badly, with massive non-performing loans (NPLs) and seemingly unscrupulous government intervention, how could the Chinese economy keep macroeconomic stability (low inflation) without which the miraculous growth in the past three decades would be impossible?