Bonds and bureaucrats: The politics of finance in China, 1953--2003

This dissertation is about the political economy of China's bond market. This study focuses on the politics of how and why the bond market developed in China from 1953-2003. Furthermore, this study reveals that China's bond market is emerging as a catalyst for greater federalism while funding major infrastructure projects that improve the lives of ordinary Chinese people. The ultimate finding of this dissertation is that China's elite continue to possess control over China's monetary system and hence its bond market.;This dissertation utilizes 21 key interviews with former and sitting officials who were (or are) directly responsible for the making of the bond market in China as well as practitioners in the field. Pseudonyms are used in most cases to protect the identities of officials. The interviews were conducted in Chinese in Beijing, Shanghai, Shenzhen, and Dalian over a 26-month period beginning in November 2002. The study examines every major institutional player in China's bond market and provides focused comparisons using case studies to highlight the decision-making processes.;There are four main types of bonds in China: (1) Treasury bonds are sovereign bonds issued exclusively by the Ministry of Finance; (2) Financial bonds fall under the authority of the People's Bank of China and serves as a monetary tool; (3) Financial Policy bonds as well as (4) Corporate bonds are the domain of the China Development Bank and National Development and Reform Commission. As ministry-level bureaucracies, these institutions fall under the direct supervision of the State Council, China's cabinet. The primary purposes for bonds in China are three-fold: (1) to fund fiscal deficits; (2) to refinance existing debt of large SOEs; and (3) to fund large infrastructure projects.;In the end, this dissertation is an examination of bureaucratic politics in the era of economic reform in China. This study demonstrates how internal bureaucratic decisions impacted the bond market development in China. Furthermore, this study reveals that a prominent feature of China's economic transformation is "financial repression"---as discussed in the economic literature---using bureaucratic tools to control national financial resources.