Monday, March 22, 2010
Red Mist: Who matters in China's Financial System
Working out who is really in charge is nearly impossible in China's financial system. Even in attempting to solve this question, one could find themselves in hot water with the Chinese Government. However, one thing that is most certainly not in question is China's rapid growth and economic prosperity since the late 1970s. This, as the article indicates, is in large part due to China's state owned commercial banks. Despite China's rapid expansion, one must be weary of whether this is sustainable economic growth or merely a forged sense of progression.
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3 comments:
Even though the Chinese government's role in the banking sector is the most important reason for their growth. I think that China's growth is sustainable because of their dual-track system because it allows the government to take on a bigger or smaller role at a much faster pace.
I don't think it's possible in any type of economic system to continue the rapid growth that China has maintained. I think the problem with the Chinese financial system and particularly Asian financial systems in general is the level of corruption and somewhat loose regulation that results in questionable transactions. I think we'll eventually see a slowdown in the growth levels because I don't think it's possible to sustain growth levels of 7-8% annually for much longer.
With the 16 names mentioned in this article, I find it complex as well as corrupt in the way that the finacial structure is established in China. One thing is clear, the Communist Party has it's hand in every cookie jar. The growth of 7-8% annually will not last, it simply does not have the structure for long term stability.
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