FIN 396T/ECO 375: The Chinese Financial System
Course Outline and TimeTable - Spring 2014

Class Meeting Days

Topics

Readings, Projects and other Deadlines

Class 1
January 30

Introduction and Scope of Course:
Slides on Introduction to China and Chinese History
Overview of the Chinese economy
Slides on Introduction to Chinese Economy

Chapter 1 of Rongxing Guo, “How the Chinese Economy Works.” 
Chapters 1 and 2 of Wasserstrom, “China in the 21st Century: What Everyone Needs to Know.”

Listen to Martin Jacques on "Understanding the Rise of China." and write their impressions about this. Transcript available on Blackboard

Class 2
February 6

Chinese history and its relevance for understanding the modern Chinese economy
Financial Markets and Institutions; the functions of a financial system
Slides on functions of a financial system
Student Presentation by Brianna Gallowe of Country Driving: A Chinese Road Trip by Peter Hessler, Book 1, part I, pages 1-59

Quiz on Chaps 1 and 2 of Wasserstrom (question list)
Chapters 3 and 4 of Wasserstrom
Submit Write-up on Martin Jacques's Understanding the Rise of China

Class 4
February 20

What is Banking?  The Chinese Banking Sector
Slides on Introduction to Banking
Slides on the Chinese Banking System
Presentation by Brittany-Ann Marie Polini of Country Driving: A Chinese Road Trip by Peter Hessler, Book 1, part II, pages 60-122
Presentation of Country Driving: A Chinese Road Trip by Peter Hessler, Book 2, part I, pages 127-177

Quiz on Chaps 3 and 4 of Wasserstrom (question list) and on Functions of a Financial System
Quiz on "Introduction to Banking"
Gobat, Jean. “What is a Bank?” Finance & Development March 2012, pp. 38:39 (electronic reserve)
The section on The Banking Sector, Douglas Elliott and Kai Yan, "The Chinese Financial System: An Introduction and Overview," p. 12-19 (on Blackboard)

Class 5
February 27

Martha Avery, Min Zhu and Jinqing Cai (eds.) China's Emerging Financial Markets, Chapter 10 "Agricultural Financing in China."
Chapter 5 "The Rural-Urban Divide" in Barry Naughton, The Chinese Economy

Class 6
March 6

The Fiscal System and its Effects
Slides

Review for Midterm

Chapter 18 “Macroeconomic Trends and Cycles,” pp. 427-442 in Barry Naughton, The Chinese Economy.
Roger Gordon and Wei Li, “Chinese Tax Structure,” August 2013 (on Blackboard)

Class 7
March 13

Midterm
Presentation by Qibo Zhang of Country Driving: A Chinese Road Trip by Peter Hessler, Book 2, part III, pages 225-276
Presentation by Michelle Gonzalez of Country Driving: A Chinese Road Trip by Peter Hessler, Book 3, part I, pages 281-325
Discussion of Zhangke Jia's A Still Life

Write-up about Zhangke Jia's "A Still Life" due by Sunday midnight, March 16.

Online

The Party and how it relates to the Financial System

Richard McGregor, The Party:  The Secret World of Communist Rulers, Chapters 2 and 3

Class 8
March 27

Mutual Funds, Private Equity
Slides
Talk by Kevin Chen
Presentation by Anh Nguyen of Country Driving: A Chinese Road Trip by Peter Hessler, Book 3, part II, pages 326-367

Chapter 19 of Avery, Zhu and Cai (Venture Capital and Private Equity in China) available as an e-book from the Pace Library.
“Private-equity lessons from the front line,” McKinsey Quarterly article, July 2013.
China: The Sleeper Awakens, remarks by Steven Blank, April 2013

Chapter 6 from Walter and Howie, Red Capitalism.
Lin, Chen; Clement Chun-Yau Shum and Sonia Man-Lai Wong, “The Emergence of Shareholder Protection in China,” in the Barth et al. volume.
Reena Aggarwal,  May Hu and Jingjing Yang, “Fraud, Market Reaction, and Role of Institutional Investors in Chinese Listed Firms,” SSRN Working Paper, July 2013
"Rats" and "black mouths" gnaw at China stocks (stock manipulation story) http://www.reuters.com/article/2011/09/29/us-china-stocks-fraud-idUSTRE78S0Z520110929
Tomasic, Roman, “Looking at Corporate Governance in China’s Large Companies: Is the Glass Half Full or Half Empty?” (December 1, 2010). The Devlopment of the Chinese Legal System: Change and Challenges, Guanghua Yu, ed., Routledge, December 2010. Available at SSRN: http://ssrn.com/abstract=1806504
Chen, Ding. “Developing a Stock Market Without Institutions: The China Puzzle,” Journal of Corporate Law Studies, Apr2013, Vol. 13 Issue 1, p151-184

Class 10
April 10

The Stock Market (continued)
Slides

Student Presentation by Kyle Pittman of Shah, Angilee; Wasserstrom, Jeffrey; and Mishra, Pankaj. 2012. Chinese Characters : Profiles of Fast-Changing Lives in a Fast-Changing Land, Berkeley: University of California Press; Chapter 8, Megan Shank, “King of the Road.”

Class 11
April 17

Payment Systems (including discussion of credit card usage and online purchases)
Slides

Student Presentation by Will Brenizer of Shah, Angilee; Wasserstrom, Jeffrey; and Mishra, Pankaj. 2012. Chinese Characters : Profiles of Fast-Changing Lives in a Fast-Changing Land, Berkeley: University of California Press; Chapter 7 “The Ever-Floating Floater.”

Student Presentation of Gong, Yufeng and Zhongfei Zhou, “Combating Financial Exclusion in China: A Banking Regulatory Perspective” in Barth, James; John Tatom; Glenn Yago (eds.) China's Emerging Financial Markets, New York: Springer Verlag, 2009.

Student Presentation by Sylvia Haxhari of Gan, Jie, "Privatization in China: Experiences and Lessons” in Barth, James; John Tatom; Glenn Yago (eds.) China's Emerging Financial Markets, New York: Springer Verlag, 2009.

“Payment, clearing and settlement systems in China,” Committee on Payment and Settlement Systems, IMF, 2012, available at
He, Ling-Ling and Razeen Sappideen, “The Payment System in China,” Journal of International Banking Law and Regulation, 2008.

Gan, Jie, "Privatization in China: Experiences and Lessons” in Barth, James; John Tatom; Glenn Yago (eds.) China's Emerging Financial Markets, New York: Springer Verlag, 2009.

Class 12
April 24

Informal Finance and Shadow Banking
Slides

Student Presentation by Genesis Ron Jaya of Country Driving: A Chinese Road Trip by Peter Hessler, Book 3, part III, pages 368-415 and part IV, pages 417-424

China Shadow Banking Primer by Nicholas Borst, Peterson Institute for Institutional Economics, November 2011 (http://blogs.piie.com/china/?p=587)
Zhang, Joe Inside China’s Shadow Banking System.
Gong, Yufeng and Zhongfei Zhou, “Combating Financial Exclusion in China: A Banking Regulatory Perspective” in the Barth et al. volume
“IPO Sheds Light on Shadow Banking,” WSJ China http://blogs.wsj.com/chinarealtime/2013/10/28/bank-of-chongqing-sheds-light-on-shadow-banking/, viewed January 15, 2014
Huang, Haizhou and Ning Zhu “The Chinese Bond Market: Historical Present Challenges, and Future Perspectives,” in the Barth et al. volume. “China’s Emerging Financial Markets.
Chaps 4 and 5 from Walter and Howie, Red Capitalism.
Mutual Fund (Asset-Management Fund) Industry

Conclusion

Allen, Franklin; Jun Qian, Meijun Qian and Mengzin Zhao, “A Review of China’s Financial System and Initiatives for the Future,” in the Barth et al. volume.
Tatom, John A. “Will China surpass the United States?” in China’s Emerging Financial Markets, Barth et al. (eds.)
Michael Pettis “Monetary policy under financial repression,” available at http://blog.mpettis.com/2013/12/monetary-policy-under-financial-repression/

Final Exam

Class Meeting Days

Topics

Class 1

Introduction and Scope of Course
Overview of the Chinese economy

Chapter 1 of Rongxing Guo, “How the Chinese Economy Works.” 
A brief history of China
Chapter 1 of Barry Naughton, “The Chinese Economy: Transitions and Growth.”

Class 2

Chinese history and its relevance for understanding the modern Chinese economy
Financial Markets and Institutions; the functions of a financial system

“The Chinese economy before 1949,” Chapter 2 of Barry Naughton: The Chinese economy before 1949
A brief but good description of the Chinese economy before the revolution.
“The Socialist Era,” Chapter 3 of Barry Naughton, “The Chinese Economy”
A great overview of the pre-reform era, good to read to understand the backdrop to the reform period.
Chapters 4 of Naughton, “Market Transition: Strategy and Process.”

Class 3

What is Banking?  The Chinese Banking Sector

Li, Tong “China’s Nonperforming Loans: A $540 Billion Problem Unsolved” in the Barth et al. volume
Chapters 2, 3 and 4 from Carl Walter and Fraser Howie, “Red Capitalism.”
A detailed, but tendentious, look at the banking crisis and the NPL problem.
China’s Banking System: Issues for Congress, Michael F. Martin, February 2012
Chapter 1 “Banking System: Features and History” and Chapter 12 “Non-performing Loans,” in Cousin, “Banking in China.”
Tian, Lihui. “Bank Lending, Corporate Governance, and Government Ownership in China,” Working Paper, Peking University
Kate Mackenzie, “Moral Hazard the Chinese Way,” FT Alphaville, August 19, 2013.

Class 4

Chapter 12 “Rural Industrialization: Township and Village Enterprises in Barry Naughton “The Chinese Economy.”
Looks at the phenomenon of Town and Village Enterprises in rural China.
John Knight and Lina Song, "The Rural-Urban Divide: Economic Disparities and Interactions in China," Oxford Scholarship Online: October 2011
Cindy Marks, "Rural Banking in China," May 2010, Asia Focus, Country Analysis Unit, Federal Reserve Bank of San Francisco

Class 5

The Party and how it relates to the Financial System

Chapters 2, 3, 4 and 5 from Cousin “Banking in China.”

Class 6

Midterm

Class 7

Rule of Law and the Financial System
Center-Local Political Relations
Macroeconomic Trends, Corruption etc.
Slides

Rule of Law and the Financial System
Center-Local Political Relations
Macroeconomic Trends, Corruption etc.
Chunli Shen, Jing Jin and Heng-fu Zou, “Fiscal Decentralization in China: History, Impact, Challenges and Next Steps.”
Tomasic, Roman, “The Conceptual Structure of China’s New Corporate Bankruptcy Law” (February 2, 2010). China’s New Enterprise Bankruptcy Law,” in R. Parry, Y. Xu, H. Zhang, eds., Ashgate Publishing, 2010. Available at SSRN: http://ssrn.com/abstract=1546556
Thomas, Kristie.  “China’s Legal Response to the Global Financial Crisis: Increasing Certainty in Contractual Disputes to Boost market Confidence,” Journal of Corporate Law Studies, October 2010, pp. 485-500.
Hempton, John. “The Macroeconomics of Chinese Kleptocracy,”
http://brontecapital.blogspot.com/2012/06/macroeconomics-of-chinese-kleptocracy.html)
Ryan Ong, "Tackling Intellectual Property Infringement in China," China Business Review, March 2009.
Nicholas Schmidle, "Inside the Knockoff-Tennis-Shoe Factory, August 19, 2010

Class 8

Mutual Funds, Private Equity

Chapter 3 of Kwek Ping Yong (Private Equity in China) and Chapter 6 (Challenges and the Future of Private Equity in China)

Tsai, Kellee. Back-Alley Banking: Private Entrepreneurs in China.

Class 10

Payment Systems

Class 11

The Stock Market

Bai, Chong-En, Qiao Liu and Frank Song, “Bad News is Good News: Propping and Tunnelling Evidence from China,” Working Paper, University of Hong Kong.

Class 12

The Bond Market

Conclusion

Final Exam