Book contents
- Frontmatter
- Contents
- Preface
- Introduction: China Today and Lessons from the Past
- PART I CHINA'S EXCHANGE RATE REGIME AND MONETARY POLICY
- PART II THE IMPORTANCE OF INTERNATIONAL FACTORS, PAST AND PRESENT
- PART III THE PEOPLE'S REPUBLIC'S ROLE WITHIN GREATER CHINA AND ASIA
- 8 Asset Market Expansion and Shanghai vs. Hong Kong Listings of Chinese Firms
- 9 Economic Interdependence with Taiwan
- 10 Conclusions and Future Prospects for the Renminbi
- References
- Author Index
- Subject Index
8 - Asset Market Expansion and Shanghai vs. Hong Kong Listings of Chinese Firms
Published online by Cambridge University Press: 06 July 2010
- Frontmatter
- Contents
- Preface
- Introduction: China Today and Lessons from the Past
- PART I CHINA'S EXCHANGE RATE REGIME AND MONETARY POLICY
- PART II THE IMPORTANCE OF INTERNATIONAL FACTORS, PAST AND PRESENT
- PART III THE PEOPLE'S REPUBLIC'S ROLE WITHIN GREATER CHINA AND ASIA
- 8 Asset Market Expansion and Shanghai vs. Hong Kong Listings of Chinese Firms
- 9 Economic Interdependence with Taiwan
- 10 Conclusions and Future Prospects for the Renminbi
- References
- Author Index
- Subject Index
Summary
[U]nlike pawnshops in most countries, the real business [in China] is a steady stream of people putting their houses in hock…Beijing residents [in 2006] pawned houses valued at Rmb 1.5bn, much of it in order to buy shares.
(Dyer, 2007, p. 3)Introduction
China's asset market development has lagged well behind the extraordinary growth in the real economy during the post-1978 period. Secondary markets for government bonds did not even exist until the latter half of the 1980s and the interbank market was established only in 1997. Although stock exchanges were opened in the early 1990s, market capitalizations remained quite low relative to the size of China's economy and, on average, market performance was rather poor relative to the robust growth registered elsewhere. Finally, bond and equity prices, as well as real estate prices, have been vulnerable to the effects of abrupt regulatory policy shifts by the government. All this helps explain why asset markets have historically played only a small role in the funds raised by China's nonfinancial institutions. Indeed, even in 2006, bank financing still accounted for over 85% of total finance raised within China (Table 8.1). A positive element, though – as discussed in the following section – was the increase in the importance of corporate bonds from a minimal 1% share of total financing in 2004 to above 5% in 2005 and 2006.
- Type
- Chapter
- Information
- China's Monetary ChallengesPast Experiences and Future Prospects, pp. 165 - 187Publisher: Cambridge University PressPrint publication year: 2008