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China's banks are an accident ...

Discussion in 'Finance & Banking' started by Tropo, 29th Jun, 2009.

  1. Tropo

    Tropo Well-Known Member

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    China's banks are an accident waiting to happen to every one of us

    China's banks are veering out of control. The half-reformed economy of the People's Republic cannot absorb the $1,000bn (£600bn) blitz of new lending issued since December.
    Money is leaking instead into Shanghai's stock casino, or being used to keep bankrupt builders on life support. It is doing very little to help lift the world economy out of slump.
    more...China's banks are an accident waiting to happen to every one of us - Telegraph
     
  2. davo6253

    davo6253 Well-Known Member

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    Very interesting tropo, i always wondered about the accuracy of china's economic data given their political situation. If it turns out china isn't able to help us out of this mess, 'the great recession' could get a whole lot greater.

    Cheers,
    David
     
  3. Chris C

    Chris C Well-Known Member

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    LOL the West has no right to question whether the Chinese financial system is sound. Theirs is the one that dragged the world into this financial crisis.

    China is far from being highly leveraged like the majority of western banks which have been exposed to excessive risk to pander to CEO salaries and shareholder expectations.

    China's system is one of the few countries that still has a reserved reserve ratio in place to limit the excesses of its financial system along with a guiding hand when it comes to credit allocation, and if you look at the guidance they offered over the last 2 years its almost as if they saw this whole thing coming...
     
  4. davo6253

    davo6253 Well-Known Member

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    Chris,

    This article is saying that the banks have only taken bigger risks after the crash so as to try to mantain the 8% growth that China have forecasted. I don't see why this is so unrealistic, the West has shown you can grow by increasing debt while it may not be genuine growth it will give them the numbers they need. It may be hypocritical for the West to say China's banks are risky but it doesn't mean its not true?

    Cheers,
    David