Empirical Understanding of Chinese Markets Financialization

Abstract

This research study delves into the impact of financialization on China's economy, focusing on three potential crowding-off effects resulting from the country's growing financial sector. Firstly, the study examines the "Financial Resource Diversion" effect, investigating whether the financial sector's expansion has overshadowed China's real economy. Secondly, the research explores the impact on households. It is based on the theory that the financialization of the market could have external effects on household real wages. The emergence of China's middle class may lead workers to rely more on transferring their labor to financial assets. Employing empirical analysis, the article examines the relationship between household financialization and labor income to analyze the potential trade-offs between financialization and real labor income. The study then discusses the potential impact of capital accumulation resulting from over-financialization in China. It investigates the relationship between the financial sector and the overall economic trends in the country. The primary objective of this study is to highlight the problematic nature of financialization.