A Study On Category Of Financial Repression In China

In a long time, China rural economic development is worse than urban economic development. China is a huge agricultural population country. In order to realize the sustainable development of national economy and improve the welfare of the whole country, it must accelerate the development of rural economy. Hence, how to promote the development of rural economy is China’s current economic problem. This paper selects financial repression as starting point and trys to explain the development of rural long-term economy developing problem from the aspect of financial system. The finding is financial repression is the reason of rural economic undevelopment.Firstly, this paper the basic theory of financial repression and depressive types are analyzed. Financial repression is divided to demand financial repression, supply financial repression and demand-supply financial repression. Then, the paper analyzes the current condition of China rural financial repression. The conclusion is the kind of demand-supply financial repression plays a central role in China. The supply financial repression is existed long time ago. The supply of finace instruments which is conducted by government cannot meet the rural financial demand whatever in quantity or quality. And the gap is becoming bigger and bigger. At the same time, rural financial needs is more and more big deviation because of the economic life habits and long-term lack of perfect the system guarantee. According to the investigation of Ensi in Hubei province, the demand-supply financial repression really exists. This paper analyzes the causes of Chinese rural financial repression from the aspects of different financial repression types which is different with traditional research so as to find some useful suggestion. The main reason of china rural financial repression is the absence of the relevant financial system, the uncompleting of rural financial market and the lack of rural residents for the financial service knowledge.Secondly, this paper directly reveals the measurement way of demand financial repression and supply finanancial repression based on the traditional reaseach of Goldsmith and Mckinnon and Shaw. The demand financial repression is measured by rural loans to rural fixed assets investment and the supply financial repression is measured by rural loans to all financial institution loans. According to the rural financial data from 1990 to 2009, this paper takes the empirical study the relationship between the two different financial oppression and economic growth. The finding is the influence of rural financial repression to rural economic development is also very significant. We also analyze the influence of the changing of rural demand and supply financial repression to rural economic development based on the data from 1985 to 2009. It shows that household saving savings rate and saving investment conversion rate is closed with rural economic development. It also show the rural financial development has a significant positive effect on rural economic development. Hence, it is an important way to improve the rural financial development for promoting the rural economy development.Thirdly, this paper analyzes the financial repression condition of develping and developed countries. From the example of the United States and Germany’s financial repression, it shows that the supply financial repression is dominant in the financial system. The government plays a central role in solving this problem. From the example of India, Bangladesh in Asian and Zambia, the demand and supply financial repression both exist. The demand financial repression must be solved first which need reform the rural financial system. The small loan in Bangladesh is a good example to handle the demand financial repression which is good for rural people having access to financial service. In this way, they will release the limit to financial demand.Overall, the rural efficient financial system should be composed of a variety of financial institutions which includes both policy-related finance, also include commercial financial private financial institutions and cooperative financial organizations. These financial institutions, especially commercial financial institutions, can be either state-owned or private. Policy-related finance and commercial finance can be a good way to solve the current demand and supply financial repression existing in rural China. The private financial institutions and cooperative financial organizations can provide China rural residents more opportunity to financial services which is good for solving China’s rural serious demand financial repression problem.