China’s Banks Must Compete to Survive
The explosion of debt and shadow banking may threaten the stability of China’s banking system, if it stays as is.
Yukon Huang and Canyon Bosler
The news leading up to China’s Third Plenum next month seems to suggest that the country is heading toward a financial cliff. The common perception is that China’s mismanaged banks are saddled with unprecedented credit driven by irresponsible local borrowing and incomprehensible shadow banking products. Over-capacity in manufacturing suggests that high investment rates cannot produce the returns needed to service these new debts. Leer más
Consumer-Based Growth: Reorienting Investment and Enhancing Efficiency
IMF experts review
China should increase the efficiency of its investments, with a less direct and less transient link with corporate and household income. Thus, investment may generate a more permanent and higher income. Consumption could become more self-sufficient. Therefore, the investment should not be indiscriminately directed towards urbanization and industrialization of western regions, but focused on areas with greater and more lasting side effects on income and household consumption Leer más
The new Chinese model
Winners and losers
Analysis by Michael Pettis, an theoretical economist and financial strategist, who lives in Beijing and is a professor at the University of Guanghu. Pettis has been called a “brilliant economic thinker” by the Wall Street Journal.
China is changing its economic growth model, or trying to at least. The leaders of Asian Giant are seeking to change the locomotive of economic growth from massive investment to domestic consumption .In order to achieve this purpose; they must increase the purchasing power of families. This change is likely to slow down the pace of GDP growth. Leer más
China’s Financial Risks
Viewpoints of Zhang Monan, a member of China Information Center, a member of the China Foundation for International Studies, and a researcher at China’s Platform for Macroeconomic Research.
The recent upheavals in the financial system of China, and the subsequent liquidity crisis caused global shivers. The Central Bank of China precipitated a liquidity crisis among banks that forced them to raise their short-term interest rates sharply higher. These drastic measures seek to stop the banks involved in complex transactions that involve hiding and securitizing risky loans, so that the regulators may not notice them. Leer más