The Pattern of Financing Industrialization in China: Understanding Sources of Fixed Investment

This paper explains a puzzling feature of China's industrial financing, i.e., an extremely low share of domestic loans and an unusually high share of 'self-raised funds and others' in a developing country. After an overview of historical patterns of financial industrialization in other countries, it looks into the details of sources of industrial finance in China and suggests some explanations on the country's unique pattern of financing industrialization based on data available. It also discusses implications to the future of China's industrial financing.