Capital Flows, Securitization And China's Economic Growth

On the basis of redefinition for capital liquidity, the paper divides the capital flows into two types: indirect capital flows and direct capital flows. In contrastive analysis of two types of capital flows, the paper explains advantages and disadvantages of each type, and attempts to study the positive effect of securitization in capital flows on Chinese economic growth through capital forming, enterprise developing and state-run companies reforming, especially when the indirect capital flows has got into trouble and speed of Chinese economic growth has not reached the potential level.To begin with, the paper put forward that indirect capital flows has made the Chinese economic growth frictional. To resolve the problem, we have to take the advantage of securitization of capital flows.Secondly, the paper discusses the effect of securitization of capital flows on facilitating Chinese economic growth in three aspects.1 .Capital formation. The paper puts forward that securitization promote efficiency from savings to investment and makes the market no arbitrage opportunity, which means that controlled interest rate should turn to equilibrium interest rate, the market interest. Here the paper discuses the mechanism about controlled interest rate and capital formation deficiency, especially minus deficiency of capital formation during the present Chinese deflation.2.Enterprise development. Under the guideline of M-M theorem for capital structure theory and principal-agent theory of contract economics, the paper illustrates the effect of securitization in Chinese economic growth on deducting transaction cost and spurring the management internal motives and specially focuses on the entrepreneur spirit. The paper therefore comes into a conclusion that the Chinese economic growth lies in not only enterprise expansion but also numerous new enterprises' setting up, specially the private company. The establishment of numerous new companies originates from the one of securities features: non-personality.3.State-run company reform. The successful reform of state-owned companies is crucial for Chinese economic growth. On guiding of property right theory from New Institution Economics, the paper discuses the reason why state-owned company is often connected with low efficiency. In restudying of Marx theory about property relationship between public ownership and individual ownership, the paper points out the feasibility state-owned companies turn into joint-stock companies in which securitization undertakes the significant effect through merger & acquisition in dealing with public depositary assets.At last, the paper makes a suggestion on standardizing securities tools and securities market in process of Chinese securitilization.Through the discussion and analysis above, the paper draws a conclusion that the securitilization in capital flows plays important part in present Chinese economic growth.