The Effectiveness Of The Integration Of Industrial And Financial Capital In China

The history of international economy shows that the integration of industrial and financial capitals has been the necessity of less developed countries to promote the realization of industrialization and catching up the developed countries. In the practice of the economic development, the growth of industries and finance is related and interdependent. The efficient integration of industry and finance plays an important role in economic development. Taking the development of the Wall Street-represented US capital market as an example, the integration of financial capital and industrial capital has made US a global economic superpower. However, the negative effect of the industrial and financial capital integration is also a major cause for the financial crisis which happened in Asia 11 years ago. After 11 years, the cross-function operation formed by the industrial and financial capital integration has made the originally independent"financial market"and"banking institutions"in the financial system losing its independence, which has led the subprime mortgage crisis globally. The two rounds of the crisis has shown that in spite that the integration of industrial capital and financial capital promote the development of the global economy, the ineffectiveness or negative effects can also harm the global economy more seriously. In terms of the practice in China during the last 20 years, the integration of industrial and financial capital has formed significant impact on both industrial economy and financial economy. However, two forms of impact can be identified, that is, the positive impact and the negative effect. It not only helps building such large-scale enterprises as Haier, Everbright, CITIC, Luneng, Hongta and Xiwang, but also caused spreading crisis. It is the secret for making big and strong enterprises, while the cause for enterprise bankruptcy. The bankruptcy of Delong, the closedown of Daewoo and the breaking of Hyundai has been good cases.The world economic crisis and the practice in China has shown that there do exist the no effect and negative effect when industrial capital and financial capital integrate, that is to say, it is not absolutely sure that the integration will form positive effect. It is possible that such no effect or negative effect can cause the crisis in the financial system leading to the halt or back-turn of macro economy. Furthermore, it is more possible that enterprises may blindly seek to expansion or diversification, forming disproportionally accumulated risk, which led to the final bankruptcy of the enterprises. Hence, in the integration of industrial capital and financial capital, it is very important to study on what mechanism, routes and models should be used to create positive effect and avoid negative effect or no effect.The thesis is based on the theories of political economics, micro economics, macro economics, system economics, industrial economics, financial economics, and management science. The research method involved include combining normative analysis and practical analysis, joint study on both history and practice, comparative study, cross disciplinary research. It follows the logic of raising a question, analyzing it and solving it, focuses on the systematic and creative study on the effectiveness of the industrial and financial capital integration in our country from the three points of view, that is theory, practice and solution.In terms of theory, the thesis focuses on the inner mechanism of the effectiveness of the industrial and financial capital integration; the cause, nature, forms and conditions of integration have been studied deeply. The effective of the industrial and financial capital integration is defined, and its evaluation standard and relevant theoretical criteria has been proposed. The study shows that the monopoly profit is the direct force of the integration, the risk and transaction cost is the indirect force, the capital added value is the base for its effectiveness, the market is the joint point of its effectiveness, the financial development is important to promote the effective integration, government behavior determines the degree of its effective integration. It is further pointed out that the evaluation standard in the enterprise level is the efficiency and the efficiency criteria, the strategic standard of effective integration, and its analysis frame is new competition theory.In terms of practice, the economic effect of the integration to economy in China has been studied comprehensively. The preliminary study included the environmental elements influencing the effectiveness of integration of industrial and financial capitals, the current situation of the integration in China, and the problems. Based on it, the enterprise performance has been used as the focus to analysis. The public companies have been used to study the current situation of the effectiveness of integration of Chinese enterprises. Based on two basis hypothesis, the data on those public companies involved in industrial and financial capital integration (non financial institutions) between 1999 to October 2008 has been tested, especially whether there is an effectiveness threshold. Together with the study in the former chapters such as chapter 3, chapter 5 and chapter 7, four conclusions have been made:firstly, the direct reason causing no effect of the industrial and financial integration in China is the imperfect market mechanism and government behavior; secondly, the basic reason causing on effect of the integration is that the integration does not possess clear objective; thirdly, the important approach to promote the effective integration is to develop finance industry; fourthly, the key to the effective integration is to establish system innovation, model innovation and route innovation.In terms of the solution, the experience of developed capitalist countries, how to avoid the risk involved, how to choose the proper model, how to design the approach to effectively integrate the industrial capital and financial capital have been studied. In the avoidance of integration risk, the risk type, basic characteristic of the risk and the avoidance approaches have been analyzed. In the selection of effective model, the establishment of the objective model and content which should be innovated is studied. In the design of approach, what is mainly studied includes the risk control of the new forms of banking-enterprise combination, enterprise groups and financial control enterprises.