11 Financial Growth and Macroeconomic Stability in China, 1978-92: Implications for Russia and Eastern Europe
Language:
English
Print Publication Date:
15 Sep 1994
Keywords:
BOOK; government; country; FSU country; liberalization; market; communist party; revenue position; market economy; budget constraint; free market; Price controls; Inflation; Public sector; Producer prices; Currencies; Eastern Europe

Abstract

From 1978 to 1992, China’s liberalization was gradual, with a fairly stable price level and extraordinarily rapid output growth. Since 1989, rapid liberalizations in Eastern Europe and the former Soviet Union (FSU) attempted in the face of falling real output have generated much higher inflation. Yet both regions’ fiscal policies have been surprisingly similar. Like its socialist counterparts in Europe, the Chinese Government has seen its revenue share in GNP fall sharply; in 1991-92, its fiscal deficit approached 10 percent of GNP, as illustrated below. How did China manage to avoid inflation when its government was such a heavy borrower from the state banking system?

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Cover Coordinating Stabilization and Structural Reform
Coordinating Stabilization and Structural Reform
Proceedings of the Seminar Coordination of Structural Reform and Macroeconomic Stabilization, Washington, D.C., June 17-26, 1993
ISBN:
9781557754301
Publication Date:
15 Sep 1994
Publisher:
International Monetary Fund
DOI:
https://doi.org/10.5089/9781557754301.071
Pages:
284