The contribution of financial liberalisation to rapid economic growth in China (1995-2005)
by Robert K. McCleery; Fernando De Paolis
International Journal of Economics and Business Research (IJEBR), Vol. 4, No. 6, 2012

Abstract: China's reported economic growth since 1979 has surpassed all sustained performances in recorded history. We ask how China's financial system changed and how large a role financial liberalisation played in China's growth over the 1995-2005 period, in part to contribute to the debate regarding China's long-term, sustainable growth rate. After separately estimating the comparative static effects of interest rate decontrol, improved efficiency of capital allocation, and foreign capital inflows as a result of financial liberalisation in a computable general equilibrium model, we conclude, conservatively, that 1.5 to 2 percentage points of China's annual growth rate of almost 10% is attributable to financial liberalisation.

Online publication date: Tue, 25-Nov-2014

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