Chinese banks suffer from serious financial fragility manifested by high proportions of non-performing loans and low capital-adequacy ratios. A key policy introduced recently by the Chinese government to reduce financial risks is the establishment of four asset management companies (AMCs) for...

Although China successfully averted the collapse of the currency system during the recent East Asian crisis, its banking sector is quite fragile measured by undercapitalization, loss-making and huge nonperforming loans (NPLs). The growing financial fragility during the reform period was...

English Abstract: This study examines how financial friction in a situation with foreign currency- denominated debt could affect the Chinese economy and social welfare using a small open economy model with Chinese characteristics. We find that the financial channel, as well as the trade channel,...

Should China accelerate financial liberalization in order to avoid the middle-income trap? And, if the answer is yes, which specific reform steps should the government undertake? In this study we attempt to shed light on these questions by examining experiences of 80 countries during the period...

Asian economies have undergone significant transformation since 1997/98 financial crisis. In order to reduce risks of balance of payment crisis, Asian policymakers introduced a number of policy reforms, including promotion of current account surpluses, accumulation of foreign reserves and some...

We examine determinants of inflation in China. Analyses of both yearonyear and monthonmonth growth data confirm excess liquidity, output gap, housing prices and stock prices positively affecting inflation. Impulse response analyses indicate that most effects occur during the initial five months...

We apply a computable general equilibrium framework to assess likely impacts of the Lewis turning point on China and the rest of the world. Modeling results suggest that China will probably transition from an abnormal economy to a normal economy with somewhat lower growth but higher inflation,...

Chinas large current account surpluses not only destabilize its macroeconomic conditions but also are also at the center of global rebalancing. The literature offered five explanations for such surpluses, most of which are important but fail to account for the recent surge and/or offer...

In this paper we attempt to explain the China Puzzle : coexistence of accelerating economic growth and worsening growth outlook. The root cause lies in Chinas unique liberalization approach, i.e., the combination of complete liberalization of product markets and continued distortions in factor...