A Review of China's Institutions

The spectacular economic growth in China in the past four decades has inspired a large strand of research to understand China's unconventional growth path. This paper focuses on the recent development of China's institutions, financial markets, innovations and government-business relations in the context of their roles in supporting China's growth. The government's role in finance and the economy has advantages and disadvantages as compared to developed markets in the West. Alternative financing channels and governance mechanisms, rather than the markets and banks, continue to promote growth in the most dynamic sectors of the economy, despite the fact that China has passed the early-development stage. More research is needed to understand the Chinese experience and see whether similar mechanisms are behind the growth in other economies.