An Analysis Of The Reasons For The Structural Disequilibrium Of Chinese Economy

In recent years,especially since the global financial crisis in 2008,mainstream macroeconomic theory(Including Keynesianism and Neoclassicalism)has been in trouble.The Austrian Business Cycle Theory studies macroeconomic issues based on a micro and structural perspective and presents a series of insights and claims on economic realities in a way different from mainstream economics.It is very worth learning.At present,the structural disequilibrium of Chinese economy is prominent,which has become the shackles of sustainable and healthy development of the economy.Most of the existing research for economic structural disequilibrium are based on the mainstream economic theory framework,which seems a bit of some aging back.A small number of analysis on Chinese economic issues,using the Austrian business cycle theory,are general,not deep enough,or directly apply the traditional Austrian business cycle theory analysis to Chinese economic problems,regardless of the differences between Chinese and western economic system.And they also failed to form a truly convincing theoretical commentary.This paper attempts to combine the traditional Austrian business cycle theory with Chinese unique national condition to construct the Austrian school business cycle theory in China,and use this theoretical framework to analyze the structural disequilibrium of Chinese economy in order to form a new research angle and theoretical framework on Chinese economic reality,and get useful policy implications.First of all,this paper explain the details of the theory and the challenges of the theory based on the core concepts of Austrian business cycle theory.Showing out the traditional theory paves a way for the applying for Austrian business cycle theory under Chinese scenario.Secondly,it introduces the particularity of Chinese economic system and tries to construct the theoretical circle of Austrian School business cycle in China.Under the western capitalist market economy system,credit expansion is carried out through the interest rate mechanism to the real economic sector.In this case,the higher the degree of capitalization is,the more sensitive that those more productive the industry react to changes in interest rates.When credit expands,new currencies will flow through interest rate mechanisms into these industries,which are given priority to capital to expand production.However,China's monetary policy transmission is based on credit channels,supplemented by interest rate channels.The flow of currencies is affected by the dual effects of credit preferences and interest rate mechanisms.Under the combined action of the dual mechanisms,the currencies released by the authorities flow to specific industries or sectors.Capital mismatch caused the distortion of the production structure,and the market can not achieve cross-sector coordination across time.Once the currency expansion is limited,the market interest rates will rise,then improper investment caused by capital mismatch will be out,and the economy will get into trouble.The above is the basic logic of the Austrian business cycle theory in Chinese scenario.Then,this paper studies the structural disequilibrium of China's economy with the Austrian School business cycle theory analysis framework under the Chinese scenario.At present,Chinese economic structural disequilibrium is mainly reflected in three aspects:first,the debt structure is disequilibrium with a high debt rate of state-owned enterprises;second,the problem of excess capacity;third,the real estate bubble squeeze on other economic sectors obviously.According to the Austrian business cycle theory in China,the structural disequilibrium of Chinese economy are rooted in credit expansion.The currency flows unevenly through both credit channels and interest rate channels to the various economic sectors.Banks have credit preferences in credit allocation,the state-owned enterprises,local governments,real estate industries and other economic entities or departments are more likely to obtain credit resources.In addition,China's state-owned enterprises concentrated in the construction decoration,mining,utilities,transportation,steel,chemical and defense industry and other industries.The problem of excess capacity are the hardest to be solved in these industries.At the same time,overcapacity industry generally belongs to the high circuitous industry.The real estate industry is also an industry not only preferred by bank credit but also of high circuity.Therefore,the high debt rate of state-owned enterprises,excess capacity and real estate bubble and other phenomena,are caused by monetary expansion through credit and interest rate channels.These phenomena are rooted in credit expansion.Finally,this paper draws conclusions from the above research.First,the Austrian business cycle theory under the Chinese scenario has explanatory power to the structural disequilibrium of Chinese economy;secondly,the structural disequilibrium of Chinese economy is rooted in credit expansion and chronic flaws in the institution.According to the conclusion of the study,this paper provides policy implications based on the perspective of the Austrian School of Business Cycle Theory in China.First is to keep a total monetary stability.The second is to reduce government intervention and optimize the credit structure.The third is to continue promoting the process of interest rate marketization.Finally,adhere to combining the market-oriented cut production capacity with state-owned enterprise reformation.