Financial Stability Study Structure Optimization And Economic Growth In China

Since the reform and opening up, China’s economy sustained rapid growth. And thesocio-economic structure of the country is rapidly changing, facing multiplechallenges in transition pressure. So to improve the stability of economic growth,while maintaining a certain growth rate, has a special value and significance.Before the reform and opening up, China’s economic growth volatility andfluctuations gradually eased after the reform and opening up, and stability graduallyenhanced. Especially, China’s economy has been in a steady and rapid growth stageafter2000,.By the international comparison in the same period, China’s economicgrowth relative to the major Asian countries, emerging countries, transition economiesof each group also showed significant stability.At the same time, after years of reform and development in three decades, despite thefinancial structure in China a profound change, but overall, the current financialstructure in China is still showing such characteristics: the financial structure presentsgovernment-oriented and bank-oriented features, and has the characteristics of theformal financial and non-formal financial co-exist, the financial gap in urban and ruralareas to increase the "double duality".The empirical analysis shows that the whole banking system is the most importantfactor in promoting China’s economic growth, stock market development oneconomic growth have a certain impact, but a limited role, reflecting thebank-dominated financial structure in the process of promoting economic growthcharacteristics, but also to prove the non-balanced development of China’s financialstructure.In this paper quantitative analysis shows that there is a close correlation of investmentand economic growth, investment in the leading indicators of economic growth to aconsiderable extent, investment growth, the volatility of the investment is the maindirect cause of the fluctuations in China’s economic growth. The volatility ofeconomic growth can not be well explained by consumption volatility and net exportsvolatility, GDP growth is the reason that lead the consumption growth. Mitigation offluctuations in investment in China is the main reason for fluctuations in economicgrowth to slow down and increase the stability of economic growth. There two ways to achieve Smoothing of investment and economic growth. The non-state-ownedsector’s investment rational gentle investment fluctuations. The state-owned sectorinvestment to respond to the intention of the government regulation, played the role ofthe iron out fluctuations in economic growth.China’s economy is characterized by a state-dominated economy, the most importantelements of the state-dominated economy is state-led investment, state-led investmentneeds of the state-dominated bank-based financial structure corresponding. In thisstructure, the government can affect a considerable extent, the level of investment andthe size of credit in the past30years, although the market increasing degree, but thestate and government in economic life has always maintained a very strong efforts tocontrol economic growth stable proposition in various stages of facing different basicconditions and solve the path, the means and manner of the various stages ofgovernment regulation of investment and credit continue to change, substantive directregulation of the intent and ability to regulate and control are always present. On onehand, state-led or government-led investment is the main reason for fluctuations ineconomic growth, on the other hand, when the government is targeting economicstability, investment as government regulation and control tools, but also played therole of reducing the volatility of economic growth. The Government, through theinfluence and regulation of investment and credit, remained the real economicstability with rapid growth. At the same time, the economy has the following features:the nominal GDP growth volatility, long-term high growth of credit and currency,long-term high inflation.The boundary conditions of the above-mentioned arrangements and policy operationare:1, the high savings rate and the sustainable supply of labor.2, the government-ledinvestment is the production of nature at the macro level.3, high money growth,while residents of the price level should be avoided out of control. With theweakening of the basis for the existence of these boundary conditions, China’sfinancial structure is inevitable to adjust to evolution and change with the political andeconomic structure changing. The financial structure must be optimized and improvedto maintain the stability of economic growth.