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Will China eventually be able to eliminate its socialist animal spirits? Highlighting the importance of China´s investment booms and busts for both the Chinese and the world economy, Animal Spirits with Chinese Characteristics describes the origins and evolution of the investment cycle during the command economy period.

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Contents Preface Acknowledgements PART I: INTRODUCTION AND CHAPTER OUTLINE Chinese Investment Cycles And The World Economy Models Of China Truth From Facts Chapter Outline PART II: INVESTMENT WITH CHINESE CHARACTERISTICS Investment In The Chinese Economy: A Long Look Back At Theory And Practice The Meaning Of Public Ownership State-Owned Inputs: Land, Credit, And Public Goods The State As Investor Controlling The Commanding Heights Wither The Private Sector? Freewheeling Socialism PART III: SOCIALIST BOOMS AND BUSTS Models Of The Cycle Obstacles To Central Planning Booms And Busts Under Socialism Investment Fluctuations In Pre-Reform China Small-Scale Industry And Decentralized Planning Self-Sufficiency As Mercantilism Reestablishing Central Control Socialist Animal Spirits PART IV: A HISTORY OF THE CYCLE Leaping Outward And Pulling Back (1978-1983) Clambering Out Of The Plan (1984-1992) From Southern Tour To Long Landing (1993-2002) Overheating And Magic Weapons (2003-2008) Growth At Any Cost (2009) Investment As An Engine Of Growth PART V: WARPED INCENTIVES AND ´SECOND-BEST´ EFFICIENCY Tax-Revenue Maximization And ´Track-Record´ Building Redundant Capacity And Inefficient Investment Competing For Investment Investment As A Vehicle For Corruption A ´Second-Best´ Case For Intervention PART VI: BANKING AND FINANCE RUN AMOK Policy-Driven Lending The Failure Of Governance Reform Lax Due Diligence And Speculative Investment Collusion, Risk Management, And Prudential Supervision Money As A Creature Of The State PART VII: TAKING AWAY THE LADLE Interest Rate Dilemmas Sterilizing Hot Money Differential Liquidity Management Controlling Credit By Fiat The Future Of Chinese Monetary Policy PART VIII: SUPPRESSING ´BLIND´ INVESTMENT Industrial Policy: Beijing´s Paper Tiger Real Estate: Treating The Symptoms Political Competition: A Substitute For Market Forces The Limits Of Direct Intervention PART IX: SCIENTIFIC DEVELOPMENT: MASTER PLAN OR MYTH? Indigenous Innovation And Intensive Growth Getting The Incentives Wrong Income Inequality And Consumption Chinese And Soviet Precedents: A History Of Failure ´Fifth-Generation´ Computers: A Japanese Precedent Theories Of Intensive Growth Unscientific Socialism PART X: CONCLUSION Politics In Command Development Without Freedom Bibliography

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MARK A. DEWEAVER PhD, manages Quantrarian Asia Hedge, an emerging markets fund he cofounded in 1999. He lived and worked in China from 1985-1994, first as a student at Sun Yatsen University in Guangzhou, later as a research analyst for Peregrine Brokerage (now part of BNP Paribas). He has written for Project Syndicate, Asia Times Online, the Asia Sentinel, and Iraq Business News.

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