Conclusion
Conclusion
This book concludes by providing an update on the reform of China's rural credit cooperatives (RCCs) in the late 2000s, with particular emphasis on the costs of soft-budget constraints and bailouts by the central government. It compares the political–economic dynamics of the rural credit sector with the rise in local-government borrowing and debt as a result of the 2008–2009 fiscal stimulus program. The book situates its findings in the broader theoretical contexts of local development-oriented and predatory states, balance of power in central-local relations, and market-preserving federalism. It argues that the bailouts took place because the RCCs were “too big to fail,” thus creating “moral hazards.” Finally, it draws normative implications for China's development policies and its growth model.
Keywords: rural credit cooperatives, soft-budget constraints, bailouts, rural credit, local-government borrowing, fiscal stimulus program, predatory states, central–local relations, market-preserving federalism, moral hazards
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