Factions and Finance in China
Factions and Finance in China discusses how the Chinese banking sector actually works. Nearly all financial institutions in China are managed by members of the Communist Party, yet economists and even those who engage the Chinese banking sector simply do not have a framework with which to analyze the links between banking and politics. Drawing from interviews, statistical analysis, and archival research, Factions and Finance in China is the first to develop a framework with which to analyze how elite politics impact both monetary and banking policies. This book serves as an important reference point for all subsequent work on Chinese banking.
"This impressive new book makes several important contributions: the case studies provide never before available accounts of elite politics, with vivid details of the personal and political differences among top leaders; the model of inflationary cycles provides new insights into how financial policy changed to cool an overheating economy. It is both a fascinating portrait of elite politics in China and a rigorous test of an analytical model. Most scholars are good at one approach or the other. Shih shows he is equally gifted at both."
— Bruce Dickson, George Washington University
"Shih offers a political-economic explanation of a dual feature of the post-reform Chinese financial system—an inflationary cycle and a large amount of non-performing loans. This book will make a valuable contribution to understanding the Chinese financial system and the reasons for the lack of reform thereof."
— Chung Lee, University of Hawaii at Manoa
"In this forthcoming book, Northwestern University Professor Victor Shih presents a compelling alternate framework for a key slice of Chinese politics-economic and financial policymaking. He argues that rather than a duel between conservatives and reformists, Chinese policymaking represents a series of compromises between a "generalist" faction that derives support from local provincial authorities vying with a "technocrat" faction supported by central government bureaucrats seeking to consolidate control in Beijing...Prof. Shih presents a statistical model that aims to prove his theory, but the book comes to life when he launches into a narrative depicting the post-1978 struggles among China's political elite...As China's role in buoying the global economy continues to deepen, building a proper framework for understanding that push and pull in elite politics-and using those tools to foresee possible outcomes of Chinese policy becomes essential. Prof. Shih's work makes an important contribution to that effort."
— Rick Carew, Dow Jones Newswires, Far Eastern Economic Review
"Shih's elegant factional model provides a novel explanation for the monetary and policy fluctuations under Deng Xiaoping and Jiang Zemin...Factions and Finance in China offers an invaluable window into the workings of elite politics in a regime better known for its opacity, and will soon become a staple in the literature on China's contemporary political e onomy."
— Kellee S. Tsai, Johns Hopkins University, Perspectives on Politics