Animal Spirits with Chinese Characteristics: Investment Booms and Busts in the World's Emerging…

Hardcover | December 24, 2012

byMark A. DeWeaver

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Animal Spirits with Chinese Characteristics is the first detailed account of the investment booms and busts that drive China's business cycles. This exciting new volume looks first at the causes of these fluctuations, then examines the central government's countercyclical policy responses. DeWeaver shows that the volatility of Chinese investment is primarily the result of perverse incentives inherited from the command-economy era. Beijing's most effective countercyclical policies therefore still take the form of ad hoc administrative interventions. Contrary to popular belief, Beijing cannot 'fine tune' the economy. It also stands little chance of transitioning to a less volatile 'mode of growth.'

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Animal Spirits with Chinese Characteristics is the first detailed account of the investment booms and busts that drive China's business cycles. This exciting new volume looks first at the causes of these fluctuations, then examines the central government's countercyclical policy responses. DeWeaver shows that the volatility of Chinese ...

Mark A. DeWeaver, PhD, manages Quantrarian Asia Hedge, an emerging markets fund he cofounded in 1999. He lived and worked in China from 1985-1994, first as a student at Sun Yatsen University in Guangzhou, later as a research analyst for Peregrine Brokerage (now part of BNP Paribas). He has written for Project Syndicate, Asia Times Onl...
Format:HardcoverDimensions:246 pages, 8.5 × 5.5 × 0.62 inPublished:December 24, 2012Publisher:Palgrave MacmillanLanguage:English

The following ISBNs are associated with this title:

ISBN - 10:0230115691

ISBN - 13:9780230115699

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Table of Contents

Contents
Preface
Acknowledgements
PART I: INTRODUCTION AND CHAPTER OUTLINE

Chinese Investment Cycles And The World Economy
Models Of China
Truth From Facts
Chapter Outline
PART II: INVESTMENT WITH CHINESE CHARACTERISTICS

Investment In The Chinese Economy: A Long Look Back At Theory And Practice
The Meaning Of Public Ownership
State-Owned Inputs: Land, Credit, And Public Goods
The State As Investor
Controlling The Commanding Heights
Wither The Private Sector?
Freewheeling Socialism
PART III: SOCIALIST BOOMS AND BUSTS

Models Of The Cycle
Obstacles To Central Planning
Booms And Busts Under Socialism
Investment Fluctuations In Pre-Reform China
Small-Scale Industry And Decentralized Planning
Self-Sufficiency As Mercantilism
Reestablishing Central Control
Socialist Animal Spirits
PART IV: A HISTORY OF THE CYCLE

Leaping Outward And Pulling Back (1978-1983)
Clambering Out Of The Plan (1984-1992)
From Southern Tour To Long Landing (1993-2002)
Overheating And Magic Weapons (2003-2008)
Growth At Any Cost (2009)
Investment As An Engine Of Growth
PART V: WARPED INCENTIVES AND 'SECOND-BEST' EFFICIENCY

Tax-Revenue Maximization And 'Track-Record' Building
Redundant Capacity And Inefficient Investment
Competing For Investment
Investment As A Vehicle For Corruption
A 'Second-Best' Case For Intervention
PART VI: BANKING AND FINANCE RUN AMOK

Policy-Driven Lending
The Failure Of Governance Reform
Lax Due Diligence And Speculative Investment
Collusion, Risk Management, And Prudential Supervision
Money As A Creature Of The State
PART VII: TAKING AWAY THE LADLE

Interest Rate Dilemmas
Sterilizing Hot Money
Differential Liquidity Management
Controlling Credit By Fiat
The Future Of Chinese Monetary Policy
PART VIII: SUPPRESSING 'BLIND' INVESTMENT

Industrial Policy: Beijing's Paper Tiger
Real Estate: Treating The Symptoms
Political Competition: A Substitute For Market Forces
The Limits Of Direct Intervention
PART IX: SCIENTIFIC DEVELOPMENT: MASTER PLAN OR MYTH?

Indigenous Innovation And Intensive Growth
Getting The Incentives Wrong
Income Inequality And Consumption
Chinese And Soviet Precedents: A History Of Failure
'Fifth-Generation' Computers: A Japanese Precedent
Theories Of Intensive Growth
Unscientific Socialism
PART X: CONCLUSION 
Politics In Command
Development Without Freedom
Bibliography

Editorial Reviews

"If you want to understand China's economy, or the political system that's attached to it, you should read this book. DeWeaver's account of the business cycle as it operates in that country's system of state capitalism will be extremely useful to academic economists, policymakers, investors, and anyone else who wants to understand how the world's second-largest economy really works in detail. The book's focus on inefficiencies, and on the political aspects of the process that produces policy, make it invaluable both as a guide to the country's present economic system, and a warning about its future. The author's scholarship is profound – the book draws extensively on information unavailable in English – but his practical experience in the Chinese business world gives the discussion a realism and depth that are very unusual in Western accounts of modern China, and his dry wit makes reading it a pleasure." - Daniel Cloud, author of The Lily: Evolution, Play, and the Power of a Free Society