Factions and Finance in China
Elite Conflict and Inflation

Shih develops a framework with which to analyze the impact of elite politics on both monetary and banking policies.

Victor C. Shih (Author)

9780521106474, Cambridge University Press

Paperback / softback, published 23 March 2009

268 pages
23.3 x 15.4 x 1.6 cm, 0.38 kg

'… Shih's study is a welcome addition to an important but under-explored topic. Its quantitative treatment of biographical information is innovative and commendable. For these reasons, it deserves to be widely read by those interested in China's political economy and élite politics.' The China Journal

The contemporary Chinese financial system encapsulates two possible futures for China's economy. On the one hand, extremely rapid financial deepening accompanied by relatively stable prices are both manifestations of a vigorous growth trajectory that will one day make China the world's largest economy. On the other hand, the colossal store of non-performing loans in the banking sector augurs a troubling future. Factions and Finance in China inquires how elite factional politics has given rise to both of these outcomes since the reform in 1978. The competition between generalists in the Chinese Communist Party and politically engaged technocrats over monetary policies has time and time again prevented inflation from spinning out of control. Shih shows that elite politics has exerted a profound impact on monetary policies and banking institutions in contemporary China.

1. Introduction
2. China's financial performance in comparative perspective
3. The banking system: flexible institutions and party domination
4. Factional politics and its financial implications
5. Factional politics, distribution of loans, and inflationary cycles: several quantitative tests
6. The collapse of discipline: the first two inflationary cycles and the fiscalization of Chinese banks
7. The height of the politics of inflation, 1986–1996
8. The long cycle: 1998–2006
9. Concluding discussion.

Subject Areas: Political economy [KCP], Comparative politics [JPB], Politics & government [JP]