Yale University School of Management Finance professor 陈志武 Chen Zhiwu’s book 非理性亢奋 [Irrational Exuberance] 2nd ed published December 2010 discusses Chinese finance and its problems. He concludes that the lack of an independent judiciary and rule of law are serious shortcomings. Professor Chen has a web page on the Yale School of Management websitehttp://mba.yale.edu/faculty/profiles/chen.shtml and a Chinese language blog at sina.com http://blog.sina.com.cn/chenzhiwu , a blog outside the firewall at http://www.bullogger.com/blogs/chenzhiwu/ and a micro blog which has 2.4 million “fans” following it at http://t.sina.com.cn/chenzhiwu
The topics Chen addresses are familiar to undergraduate economists; the application of these ideas to analyzing the Chinese economy makes the book especially interesting. Chen is clearly not one of those who believes in a special Chinese model that creates its own new economics as it goes along. Chen has written several other popular books on the Chinese economy including Why are Chinese Hard-working but Not Rich? http://product.dangdang.com/product.aspx?product_id=20986528
A hint of the contents can be seen from the chapters titles which include:
- Is the Chinese stock market getting worse?
- Irrational Exuberance — the world telecoms bust
- The danger of a stock market bubble — explaining the US stock market crisis
- Why does China’s economic future depend on press freedom?
- A free media is an indispensable part of a market economy
- A case study of the media and the market’s effectiveness in oversight of a company
- From libel suits can be seen the legal difficulties of media speech
- Class action suits are an effective way of protecting the rights of stockholders
- How does the US handle the problem of insider trading?
Systematic economic critiques of the PRC system like Prof. Chen’s are apparently OK with the Party but not political critiques of the Charter o8 variety that fit in nicely with Prof. Chen’s points. Prof. Chen, for example, says that the fact that Chinese cannot buy and sell land is a serious obstacle to individual Chinese building their wealth. If China followed Prof. Chen’s suggestions and adopted media freedom, free buying of selling of land, independent judiciary and rule of law implementing Liu Xiao*bo’s and Charter o8’s ideas would be far off. Yet Liu Xiao*bo is in jail and Prof. Chen is welcome in China, gives lectures in China, and his books are published here. Ran Yun*fei told me last year that the difference between someone who is considered a dangerous dissident and someone considered fairly acceptable is not just their views, but their relationships with the powerful and influential in society. Perhaps there is something like that going on here? Or could it be there is some version of Senator Barry Goldwater’s old slogan “In your heart, you know he’s right?”. It didn’t work for Liu though.
Perhaps Chen’s critiques are seen as merely academic (although the book is well-written and organized and seems to attract many readers — students are passing around PDF copies online; Currency Wars did well despite is 5th rate sources such a jewwatch.com just because there is a great demand for well written books on economics and finance. ) and not subversive. SASS scholar Yu Jianrong 于建嵘 is another example of a person who makes sharp criticisms of the system but still seems to be seen as not an enemy of the people by the Party, and at most a source of contradictions among the people. That is, in the political system of the people’s democratic dictatorship.
Many websites carry the 2008 edition of Chen Zhiwu’s book; the 2010 edition that I bought in a Chongqing bookstore I also found on dangdang.com
Prof. Chen traces the effects of lack of transparency due to an ineffective regulatory system, unwillingness of the courts to take up lawsuits on financial cases (he notes courts will generally only take a civil suit if a company has already lost a criminal case), orders by the propaganda department to media not to report a certain matter or to report it in a certain way. This means that investors have little reliable information and make it hard to choose between good companies and bad companies, and increase the temptation of companies to cheat their investors. He mentions Economics Nobelist George Akerlof’s work on adverse selection here.http://en.wikipedia.org/wiki/The_Market_for_Lemons
[This discussion of little investor information to choose between good and bad companies on the securities market because of media control and poor regulators and ineffective courts reminds me of the problem China has suppressing crazy rumors that spread quickly and find many believers. A bit of a stretch, but perhaps there is a similar process going on in society with high media control and low trust — an adverse selection process going on against accurate information since the authorities have low credibility and have a history of discouraging people from speaking out, especially if the “accurate information” conflicts with officially certified accurate information.]
One effect he notes is that on average in any given week the number of stocks that move together with a general market trend of up or down is about 90% on the Chinese market and about 60% on the U.S. financial markets which are much more transparent (pp. 35 – 39), not just as a result of more effective financial markets regulation, but of being embedded in a rule by law system in which information flows freely.
Chen said that state-owned monopolies can use their monopoly power to boost their incomes at the expense of average citizens, but unlike in western countries, the monopoly problem is not somewhat ameliorated by a flow of income from publicly-held monopolies back to average citizens. This meliorating effect occurs in many western countries where stocks are widely held but not in China. This and other problems of asymmetric information and power aggravates the skewing of the income distribution in China. The lack of widespread participation in financial markets and the problem of land not being private (“dead capital”) in China are severe obstacles to the financial opportunities of the average Chinese. Diversifying wealth means that savings rates can decline and people will feel wealthier; this will help increase consumption and help bring capital alive. (pp. 3 – 22)
Chen said the quality of the Chinese stock market is declining. There was much enthusiasm after the Securities Law was passed in 1999 and in 2001 some financial magazines exposed wrongdoings of some listed companies. In 2001, however, the first securities holder to bring a case to court was told by the court that it would not accept the case. In 2003 there were two important cases, but the penalties imposed were relatively small, and in other cases the courts refused to hear a civil suit unless the accused company had already lost a criminal case. During 2000 – 2005 the number of cases brought and the median penalty imposed fell steadily. (pp. 39 – 41)
Chen devotes a long chapter (pp. 101 – 189) to explaining why media freedom is essential to the future of the Chinese economy. 中国经济前情为何离不开新闻自由
Chen begins the chapter “Although the problem of official corruption and the lack of trust in Chinese society is becoming more and more serious, and is a problem felt keenly by all sectors of society, reports on this problems are always restricted and the media is censored. The propaganda departments that manage the media are constantly sending out documents or making a phone call in order to orally “get in touch” to order that the media not report on certain topics that are “sensitive” or “not beneficial to social stability”. What effect does the strengthening of censorship have on the Chinese economy? In other words, what economic benefits do we get from the media freedom? Is media freedom worth something? Naturally we are all happy about the rapid growth of the Chinese economy, and so might find it hard to understand why someone would say “media freedom is very important for the Chinese economy”. Indeed, for centuries media freedom has been for centuries thought of as a completely political institution and useful for oversight of the activities of those who govern society and as a check on government power.
However, media freedom is essential for the deepening of the Chinese economy, for reducing economic corruption, and for promoting market trading. More media freedom will also be needed to increase employment in China. [to summarize where he goes from there, the service sector is poorly developed in China, China’s economic growth is tied to manufacturing and construction, areas in which the quality of institutions and information symmetry are much less important than in the service sector, where the greatest opportunity for creating new jobs lies. China’s economic model has benefited much from exporting but by becoming the “workshop of the world”, terrible pressures have been placed on China’s environment and resources…. Justice Brandeis (p. 128) said “sunlight is the best disinfectant” and so information freedom helps fight corruption and boosts information symmetry in financial markets.
Chen also wrote a chapter on “The Law and Wealth” in which he points out that passing many laws does not equal the rule of law and that although the Standing Committee of the National People’s Congress does have legislative power and the government executive departments do not, in practice laws passed by the NPC do not constrain the executive departments of government. (p. 199). He discusses the PRC Law on Investment in Securities http://e.3edu.net/flyy/E_5227.html and issues such as under what circumstances are laws regulating a particular sector needed and the Investment law (pp. 194 – 198) and what should be the respective roles of the securities regulators, the courts and the National People’s Congress in regulating the securities sector, the discussing the experiences of the UK, the USA, and China in regulating the securities sector.
- 证监会，法院与人大– 如何分管证卷市场
出 版 社：中信出版社
I S B N ：9787508623443
所属分类： 经管 > 经济
标 签：财经管理 经 济 经济学理论