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This study aims to reassess the finance-growth nexus debate in

China, and consequently illustrate the channels through which

financial development gives impact on China’s economic growth

after 1978.

Defect of the journal:


The author researched the date from 1978-2004, but the author

didn't notice that there may be a problem in the data choosing.

Financial development gives impact on China’s economic growth

after 1978 may only be a special case.The conclusion may not

apply to other cases.

Firstly,

Does economic statistics released by China credible? This

question is not only linger in the minds of Chinese, but also it is

facing international challenge. Because the statistical system and

statistical methods is not perfect, especially for some statistics of

crude and statistical man-made fraud, so that the accuracy and

reliability of statistical data has been challenged,

The data are always arbitrarily altered by the Chinese government,

so the data released by them may be distorted and does not reflect

the real situation. As GDP growth is the key assessment indicator


to government officers, many officers require the local statistical

offices to fabricate data in order to get promotion.

Secondly,

As the Chinese government said, China is a socialist

country.Chinese economic structure is very different from other

countries.

In the 24 years since the cause of inflation, a large range of price

changes, the prices are already several times the previous years’.

Before 1978, China adopted a non-market economy. After 1978,

China has gradually changed the economic model from the non-

market economy into a market economy. This development is

particularly rapid in the 30 years.

And there are some specific economic features:

(1) The over-concentration of Big Four banks in the financial

system; Although China has joined the World Trade Organization,

there are still so many restrictions on banking, private banks and

foreign banks are still difficult to access, or only small-scale entry

(2) the over-lending to inefficient state-owned enterprises, while

good private enterprises left without access to external finance.

(3) Private capital is not allowed to invest in many areas.

Almost all the energy industry are controlled by the government.

State-owned enterprises control the country's economy. Forty-one


Chinese enterprises are listed in the World Top 500 in 2009.Thirty-

nine of the forty-one are state-owned enterprises.

From the information above, it is obviously that China's economic

structure has its own particularity, it is definitely from other

countries’. And all the information above has a significant impact in

the data used by the author. So , the conclusion proved by the

author may be wrong or may not apply to other countries.

Good point of the journal:

The author found that the decomposition approach of Hall and

Jones (1999) was performed on levels, and the consequent

regression analyses were conducted using level terms of growth

variables. While, the decomposition approach of Wong (2007) was

performed on growth, and the consequent regression analyses

were conducted using growth terms of growth variables.

Accordingly, the approaches of Wong (2007) and Hall and Jones

(1999) differ from each other in whether the analysis is conducted

on levels terms or on growth terms.”

Combining Wong (2007) and Hall and Jones (1999)’s approaches,

The author proposes a framework which conducts the

decomposition of output on both level and growth terms

By using this framework, the current study overcomes three


problems observed in the literature as mentioned by the author.

Good point of the journal: