China’s National Characteristics, Government-Market Relationship and the Development of Its Financial System
Ma Yong and Chen Yulu
School of Finance, Renmin University of China; China Financial Policy Research Center, Beijing, China
School of Finance, Renmin University of China, Beijing, China
Abstract: This study seeks to determine an effective boundary between government and market in light of modern financial theories. According to the findings of this paper, the relationship between government and market must be conceived of as under the “continuous spectrum of change” resultingfrom economic development. In practice, an effective frontier between government and market not only transforms continuously with the process of economic development but also demonstrates significant contrasts internationally according to the different national characteristics existing in each country. Determining a frontier between government and market requires that the relationship between the two be embedded into a broader set of institutional environmental constraints that incorporate consideration of the dynamic processes and mechanisms of economic development. The key issue is that government and market act with regard to the principle of comparative advantage as they play their respective roles.
Keywords: government, market, national characteristics
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