A Study On Relationship Between Economic Take-Off And Increase In Value Of Main Financial Assets And Its Reference For China

Due to a more than 11% growth in 5 straight years, China's GDP reached 24 trillion RMB in the end of the year of 2007. In the context of such a fast economic growth, the RMB begins to appreciate, estate price and the share price starts a continuance of rising. As a result, the financial assets become increasingly attractable, and an abundance of capital flew into the field of stock market, exchange market and real estate. Reviewing the developmental process of China's surrounding countries and areas, we can see that a long-term fast economic growth often comes together with a sharp rise in value of the financial assets.Basing on a theoretical study and summary of the relation between the economic takeoff and the appreciation of financial assets that have taken place in Japan, south Korea and TW area, and a demonstration study of such a relation through Granger Causality Tests verification method, this paper is trying to make an analysis of what eco development phase china are experiencing and the factors that would influence the trend of the appreciation in the value of financial assets. The fruits are as follows:Firstly, the appreciation in the value of the financial assets that has taken place during the economic take-off phase in Japan, South Korea and TW area indicates that every country would experience a period of fast economic growth, just as a man undergoes a fast growth when in adolescence. At this time, The economy will present some highly similar characters, for example, a GDP per capita that exceeds＄3,000, an industry structure that faces upgrade, an environment that is highly open, a great amount of foreign trade surplus, and so on. A long-term appreciation in the value of financial assets would take place together with the economic take-off.Secondly, there is a two-way causal relationship between GDP per capita and stock index, that is, GDP per capita is the Granger cause of stock index. Among them exists a positive relationship. The increase of GDP per capita will boost up the index, and vice versa, that is, a vigorous financial market will also contribute to the prosperity of economic development. There is a one-way causal relationship between GDP per capita and the level of the exchange rate, that is, GDP per capita is the Granger cause of exchange rate. Among them exists a positive relation. The increase of GDP per capita will decrease the level of the exchange rate but raise the local currency in value. On the contrary, it is not established.Thirdly, from the analysis of China's economic development stage in respects of substantive index and phenomenon index, we have come to the conclusion that China has reached the stage of economic take-off, and its financial assets have gone through the process of appreciation. Taking into consideration of the total effect of a big country, the improvement of labor productivity, China's urbanization process, and the demographic dividend effect at the present stage, the stage of economic take-off will last until from 2015 to 2020. However, the prices of financial assets may have some fluctuations due to such uncertainties as whether the technological upgrading of industry structure could be realized and other global political or economic uncertainties in the meantime.