Social Sciences in China (Chinese Edition)

No.3, 2018

 

Statistics and Analysis of Capital Stock Tables in China

(Abstract)

 

Yin Jianfeng

 

We use two types of financial instruments, deposits and credits, to set up the sectoral quarterly capital stock tables of seven sectors since 2007, with a view to exploring the mechanisms underlying money and credit creation in China in recent years. The Chinese financial system, formerly a relatively closed system dominated by banking and indirect finance, has undergone a major structural change since 2009. This change is strikingly evident in the rapid increase in the scale of debt and net borrowing on the part of nonfinancial enterprises and the rapid increase in the scale of assets and net lending of non-banking financial bodies. Using the matrix method, our analysis of inter-sectoral transactional relationships shows that all sectors have direct and indirect financial transaction relationships and thus participate in the creation of money and credit. It is noteworthy that the financial multipliers promoting the expansion or contraction of total financial activity are significantly procyclical with nominal GDP. Banks remain at the heart of the system, with the mutual reinforcement of banks and enterprises being the most critical element.