A Review of China's Institutions

The spectacular economic growth in China during the past four decades has inspired a great deal of research to understand China's unconventional growth path. This review focuses on recent developments in 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 in comparison to developed markets in the West. Alternative financing channels and governance mechanisms, rather than 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 determine whether similar mechanisms are behind the growth of other economies.