The Influence Of Chinese Credit Expansion On Economic Fluctuations Since 2008

Since the break out of the financial crisis in 2008 in the world, the Chinese government has introduced a investment plan of four trillion to stimulate growth of economy, at the same time,the People’s Bank of China lower the benchmark interest rate, and increase credit expansion. At the stimulation of low interest rate, the recovery of Chinese economy is faster than other countries, and Chinese emerge the prosperity of economy. However, this situation can not continue, with the People’s Bank of China slowing down growth of credit expansion, Chinese economy entered a downward phase. According to the theory of counter-cyclical regulatory policy of Keynesian, when the decline of private demand, The government has increased investment and lowered interest rates to stimulate growth of economy for many years. Considering the results, this policy not only did not solve the problems fundamentally, but also made the problems of structural become more prominent. So, analysising that why this situation can not continue, and which relationship between the credit expansion and downturn of economy, overcapacity are very important, This paper attempt to analyze influence of Chinese credit expansion on economic fluctuations in the theory of Austrian School.The analysis of Austrian School is starting from the theory of monetary, which Includes the theory of interest rate, the theory of capital and the theory of relative price, and considers that the credit expansion of government distort price signals and convey the wrong message, which deepen the roundabout of the production structure. With inflation become more and more serious, the People’s Bank of China begin to tighten up the expansion of the credit, the Chinese economy enter the stage of downstream. The theory of Austrian School contributes to analyze the influence of Chinese credit expansion on economy fluctuations since 2008,So, this paper use the framework of the theory of the Austrian school of business analysis, First, this paper introduce the main contents and the mechanism of the Austrian School of business cycle theory, then analyze influence of Chinese credit expansion on economy fluctuations combining with current macroeconomic situation of Chinese economy, finally, reveal the fluctuations of economic origins the credit expansion through establishing the model of multi-variable differential, with basing on the empirical data.The prosperity of economy which rely on the credit expansion of the government is not really prosperity and is not sustainable, the prosperous of market economy need the market play a leading role, after all.