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The 10.7 trillion renminbi in local debt revealed by the National Audit Office earlier this year has led to all matters regarding local government finances to be carefully scrutinized. Slowing economic growth and reduced revenues from the property market mean that Chinese local governments need to borrow more money to continue their high levels of [...]
The importance of the property market to China’s investors, savers and banks is well known, but its impact on local governments is less well understood. The ability of Chinese local governments to service the debt they have built up over the past several years, 10.7 trillion RMB at the end of 2010, relies heavily upon [...]
Central Huijin’s move to purchase shares in the four large state-owned commercial banks yesterday has attracted a lot of attention from investors concerned about the stability of China’s financial system. The value of bank stocks are down by a third over the year, which much of the decline occurring over the past several months. Huijin purchased [...]
In one door and out the other is a good way to describe the flow of Chinese bank profits. The state-owned commercial banks are as profitable as they’ve ever been, but their profits are being passed along to shareholders at a rate that is reducing their capital base to unsound levels. While most large state-owned enterprises [...]