Credit Expansion And Changes In Production Structure:China's Cyclical Economic Fluctuation During 2001-2015

The business cycle,also known as the economic cycle,business cycle,is the phenomena that there is a cyclical economic expansion and contraction of alternate in the operation of the economic.Since the reform and opening up,the development of China's economic has been in a state of fast growth,it has shown cyclical fluctuations obviously.Face the background of China's new normal that has new features,how to correctly understand the business cycle and the change of time structure of production,then take appropriate measures,it is the important tasks and challenges for our government and researchers.The studies of China's business cycle mainly focus on three issues:the division of different stages of cycle;the characteristics of each stages;the forecast of the economic.There are many studies of the mechanism of China's business cycle wrote by domestic and foreign scholars,which in general are based on Keynesian economics or the real business cycle theory framework with total analysis methods.Those studies are the analysis of what is the influence of monetary policy,fiscal policy and financial markets on the fluctuation of business cycle.Although these studies have provided some inspects of China's business cycle,not only their assumption are different from or in contract the fact,but also there are hardly about the relative changes in the various stages of the business cycle.So the conclusions of those studies are very different or just opposite.This study based on the Austrian business cycle theory which on the micro level,focusing on research the influence of an exogenous shock--the credit expansion to the economy,the shock cause relative changes of the output and prices in each stages of time structure of production,then distort the time structure of production,it is an unsustainable expansion.It is a new view to understand the business cycle of China and the reason of business cycle of economic.First of all,this study will begin to analysis the research status of the business cycle.Then according to the research status,we will summary some related concepts of the Austrian business cycle theory.The credit expansion will cause relative changes of the output and prices in each stages of time structure of production,then distort the time structure of production,it is an unsustainable expansion.Secondly,This study aims to explain China's cyclical economic fluctuation during 2001-2015 based on the Austrian business cycle theory(ABCT),which uses artificial credit expansion as a starting point,and distortions in production structure as the transmission mechanism.After extracting three theoretical hypothesis according to ABCT,we divide the production structure into the higher-order,the intermediate-order,and the lower-order stages successively,and construct econometric models based on available data to test the impacts of credit expansion.The results indicate that credit expansion leads the production structure to lengthen at first and to shorten after a period of time.The price index of the higher-order stages is more fluctuant,while the price index of the lower-order stages is less fluctuant,than that of the intermediate-order stages.On the output side,both the higher-order stages and the lower-order stages are more volatile than the intermediate-order stages.Overall,this study verifies ABCT's applicability in explaining China's economic fluctuation in recent years.Finally,according to the conclusion,there are some proposal and analysis of the hot topics like supply-side structural reform.Keywords:Austrian Business Cycle Theory,Time Structure of Production,Credit Expansion,Industry.