Financial and Business Cycle in China

Abstract

This study selects Chinese GDP and bank loan data to study the relationship between China's business cycle and financial cycle. I have the following results. First, the duration of China's financial cycle is longer than the business cycle. It can also be said that China's financial cycle occurs less frequently than the business cycle. Second, there is a dynamic correlation between China's financial cycle and business cycle, and its dynamic fluctuation relationship has a long-term nature. Third, China's financial cycle often takes precedence over the business cycle. Therefore, the business cycle can be predicted through the financial cycle.