Abstract:
Some of China's policies aimed at preventing financial risks have damaged the traditional channels of credit expansion. In the absence of new channels of credit expansion, China's economy is facing a credit contraction. Therefore a new mechanism must be established to avoid economic downturn and potential debt crisis. Such a new mechanism should include effective financing arrangements, a multi-layer capital market, and adequate supply of residential land and related infrastructure in cities with high population inflow. In particular, as part of the effort to develop a multi-layer capital market, establishing personal pension accounts, rolling out more equity financing products (e.g., REITs) and developing professional investment institutions and related financial infrastructure would be indispensable measures.
Keywords: credit expansion, equity financing, financial infrastructure
