One day in October, 2015, a group of disgruntled investors gathered in Beijing to lodge a complaint: they had bought so-called wealth management products from a state-owned guarantor backed company that managed nearly $8 billion in assets, and which had collapsed later. Such defaults have been uncommon in China’s wealth management product space, but the now-gargantuan industry may pose a large risk to China’s financial system. Many risky aspects of the wealth management products industry make people worry about the possibility of a chain reaction similar to the 2008 financial crisis, when the US mortgage market buckled under similar strains.
Does China’s debt, which refuses to stop growing, threaten to take the show off the road?
CKGSB professor Brian Viard on why Chinese banks are resorting to paying bank interest through Mercedes Benz cars, iPhones and even vegetables.
Land sales contribute significantly to local government financing in China as well as provincial GDP targets. But this is both unsustainable and problematic. A look at the situation and the kind of reform that needs to kick in. Last month, China launched a national audit of the “land-transferring fees” collected by local governments in the […]
The government is putting wealth management in China under the microscope, and is slowly catching up with the inherent risk of wealth management products. Can banks continue to invent new skirting methods? Bank deposits are boring, says Jane, a new recruit at a local bank in Shanghai. In a country where the government holds deposit […]
The week that was: Alibaba’s soccer team stake and telecom plans; China wakes up to the risks in metal financing; China’s investments in food and agriculture businesses rise and KKR invests in Cofco’s meat production business. Metal Financing: the New ‘Shadow Banking’? While Beijing keeps a close eye on China’s shadow banking system, a new form […]
The week that was: China may trump the US to become the world’s largest economy soon; the Chinese P2P lending sector to get new regulations; Xiaomi shells out a cool $3.6 million for a two-word domain name. China to be the World’s Largest Economy Soon For the last decade pundits have been prophesizing that China is […]
Local government debt in China is spinning out of control. A look at the most indebted cities in China and the size of their debts. Nearly everyone agrees that China has a serious local debt problem, some would even call it a crisis, one which the State Council addressed in a highly anticipated report released last summer. […]
Carl Walter, former COO of JP Morgan in China and CEO of its China banking subsidiary, paints a gloomy picture of the Chinese banking system and outlines the possible risks involved. In the aftermath of 2008’s global financial meltdown, China’s financial system seemed to have emerged unscathed. The country’s economic configuration, often dubbed “Capitalism with Chinese characteristics” by Chinese […]
The week that was: China’s growth slows further; financial regulators wrangle over debt problems; and meat processing company Shuanghai International (now known as WH Group) prepares to list in Hong Kong. China prepares for slower growth More signs of a slowing Chinese economy this week—imports and exports fell by 11.3% and 6.6% year-on-year in March, surprising […]