China is merging hundreds of small banks to fend off financial stress
China is merging hundreds of small banks to fend off financial stress
2,100 banks could be affected as China looks to curb the bad loan environment of its rural communities, Bloomberg reported.
more evergrande fallout or something else?
They're trying to authoritarian their way out of a massive speculation bubble.
I don't think it will work, unless you can will away a black hole. Debt is a kind of gravity.
that depends on who the creditors are and how they demand payment. a pound of flesh or a dove feather. evergrande went bust at the same time china became the world biggest auto exporter. i think china participation in the global economy demands new economic theories, considering the promiscuity between the public sector and the "private" sector.
Debt is a kind of gravity.
Uh... no. If you pay attention to history, debt can and is wiped away without repercussion.
Debt is more of a threat, than anything else. If China fails to pay their debts, does the world just stop doing business with China?
The reason why there's so much unpaid debt is because the ruling class has convinced workers to sell themselves out. That's all. It doesn't actually need to be paid just like college loans. The world would in fact be a better place if it wasn't paid. The only people who get screwed are investors with more money than you.
Evergrande was not a triggering event, it was an inevitable consequence. The CCP's fiscal policy has driven "growth at all costs" for over 40 years now and they are running out of free runway. Their "private" sector (a bit of a misnomer considering how government-driven basically every company is over there) acquiesced to these government demands for growth, especially in real estate, long after traditional market fundamentals were saying to slow down, and now those "private" companies are saddled with investments without any way to make money off them post-pandemic. And their markets have realized that before the party did.
The party is only just now waking up to the fact that they can't keep hitting GDP growth targets by pumping stimulus into their businesses and that their economy needs to begin maturing into a more stable form. We will not see a real "collapse" like some doomsday fans love to parrot, but there is a very large correction about to happen to their economic projections, in both GDP and demographics.
"Growth at all costs" is the fiscal policy of the US as well, what's the difference between the US and China in this regard? If it's a matter of government intervention, let's not forget the ridiculous amount of money pumped into the market thanks to actions from the fed. The interest rate has been increased after such a long time of near-zero rates, but there is already begging for rate cuts.
Yeah just make them too big to fail and they can't fail
I have feeling that's only gonna help those at the top. It'll make the sector easier to control by consolidating it, but if anything goes wrong their gonna fall hard. But I'm no expert in the field.
This is the best summary I could come up with:
Beijing is tackling high-risk financial lenders by enacting a major consolidation wave that will merge hundreds of dealers across the $6.7 trillion sector, Bloomberg reported.
It's a concern Beijing desperately needs to tackle, as mounting domestic debt has applied broad downside pressure on China's economy over the last few years.
At the end of 2022, the bad-loan ratio in the rural cooperative bank system stood at 3.48%, more than double that of China's entire financial sector.
For instance, these smaller cooperatives have been cited as putting profit ahead of their policy duties, such as by offering loans beyond their rural and agricultural areas.
In 2022, four local banks in the Henan province colluded with a stakeholder to attract billions of yuan through online platforms, freezing hundreds of people out of their savings and triggering protests.
But Beijing will have to be mindful of its approach, as its previous merger enforcement didn't necessarily lead to improved bad-loan ratios, Bloomberg noted.
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China rushes to become America while America rushes to become China
It's almost like both nations are just tools to support their ruling classes.
US bails out private corporations left and right but refuses to nationalize them.
China nationalizes industries but ensures profits are maximized for those in control. (there shouldn't even be profit in a national industry; all of it should be re-invested.)
This is why communism vs. capitalism is a stupid debate. Real solutions, to real problems. Let's focus on that.