Programme de recherche HKU-AXA sur la réforme du marché chinois

In the midst of a stock market crash, Chinese authorities recently intervened in an attempt to stabilize the country’s markets. The measures taken may have saved the day this time, but the goal for any developing economy is to, one day, stand on its own two feet, resisting most fluctuations that come its way. China faces specific challenges in this regard, stemming from factors like the restricted flow of information in the country, and unreliable institutions generating an additional component of financial risk. Professor Zhiwu Chen is leading a research project at the University of Hong Kong that aims to fill the gap in empirical studies addressing both the way finance affects society in China and the reverse. In a world where technology is accelerating change on both sides of that coin, the interaction of financial markets and cultural norms creates new dynamics of socio-economic risk.
To tackle such an ambitious program, Prof. Chen has assembled an interdisciplinary team of experts in economics, finance, marketing and sociology addressing the question on multiple levels. For one, they will establish the role of the media in this emerging market, where information does not move freely. When investors cannot distinguish between good companies and bad, they invest in both, and even high-quality businesses risk being pushed out. A free press is, thus, vital for reducing uncertainty and allowing a healthy market to develop. Understanding the impact of Chinese information restrictions may offer opportunities to mitigate the associated risks.
The failure of unreliable institutions’ to enforce contracts between borrowers and lenders is another factor at play and may affect interest rates on loans. To explore this phenomenon, Prof Chen is assembling a comprehensive database of historical records from across China, going back to the year 1700. Looking also to the future, the team is observing changes in society itself. For example, individuals today rely less on family and children as insurance against risk, turning instead to investment opportunities in retirement funds, insurance products, and more. By conducting biannual surveys over the next decade, Prof. Chen will be able to track how people across China consume, save and invest; how they handle their finances during sickness and retirement; how they feel about financial risk and the strategies they use to manage it. By providing such a wealth of information, this project will shed significant light on the complex interplay between markets and society, in a context where both are evolving at a frantic pace. The knowledge obtained about Chinese society could offer guidance to policy makers in this and other developing economies as they seek to reduce the risks inherent to the process and emerge healthy and strong.
Prof. Chen’s research program aims to better understand, assess and manage socio-economic risks in large emerging market economies such as China. This cross-disciplinary program focuses on how human societies have developed ways to deal with risks, such as natural disaster, information risks, social change and financial risks. Sharing his understanding of the social impact of modern risk markets will benefit both policy makers and society.