[video] Fixing China’s property prices
Two of the chief concerns about the Chinese economy are shadow banking and rising property prices. Wang Tao, chief China economist at UBS, talks to John Authers about how the government is trying to cool prices and address fears of a credit crisis.
China is to rein in its fast-growing shadow banking system by requiring banks to provide extensive disclosures about the off-balance sheet investment products that they sell to customers, according to people briefed on the new rules.
The Chinese shadow banking system – credit flows beyond traditional bank loans – has increased fourfold in size since 2008 to about Rmb20tn ($3.2tn), or 40 per cent of gross domestic product. These flows were crucial in reviving the country’s growth last year, but banking analysts and rating agencies have warned that they pose an increasingly serious risk to Chinese economic stability. Continue reading »
Guest post: the danger in China’s shadow banks and bank-trust products
By Ben Simpfendorfer of Silk Road Associates
The Chinese coastal city of Wenzhou is notoriously clannish – especially so since the collapse of the city’s shadow banks. Once a symbol of its boisterous private sector, the number of shadow banks has fallen from a peak of 450 in 2007 to less than 50 today. Continue reading »
Hong Kong’s rising shadow bankers
Has a mainland-China-style credit crunch hit Hong Kong?
There is certainly a lot less liquidity sloshing about the place, thanks to a combination of Basel III capital requirements and more Hong Kong dollar deposits being converted into renminbi – a currency widely expected to appreciate against both the US dollar and the Hong Kong dollar, which is pegged to the greenback. Continue reading »
Guest post: China’s disappearing Rmb1,100bn bank deposits
By Victor Shih of Northwestern University
In July this year, households and companies withdrew a total of Rmb1,100bn ($172.5bn) from China’s banks, equivalent to 2.5 per cent of GDP. In August, household deposits barely clinged to positive territory at Rmb26bn, despite receiving over Rmb188bn in new loans that month.
Corporate deposits grew a bit more, but were still abnormally low. Although the September numbers are not out yet, Chinese press reports suggest that the deposits in the major state banks declined substantially in the first half of the month. Where did all the money go? Continue reading »
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