{"id":8879,"date":"2011-04-18T10:35:46","date_gmt":"2011-04-18T14:35:46","guid":{"rendered":"http:\/\/quotulatiousness.ca\/blog\/?p=8879"},"modified":"2011-04-18T10:35:46","modified_gmt":"2011-04-18T14:35:46","slug":"the-real-secret-weapon-of-the-china-economic-miracle","status":"publish","type":"post","link":"https:\/\/quotulatiousness.ca\/blog\/2011\/04\/18\/the-real-secret-weapon-of-the-china-economic-miracle\/","title":{"rendered":"The real secret weapon of the &#8220;China economic miracle&#8221;"},"content":{"rendered":"<p><a href=\"http:\/\/biggovernment.com\/cstreet\/2011\/04\/18\/china-is-about-to-suffer-a-banking-crisis\/\" target=\"_blank\">Chriss W. Street<\/a> thinks the Chinese banks are about to suffer a crisis moment:<\/p>\n<blockquote>\n<p>It is ironic that China is demanding greater control of the World Bank and International Monetary Fund, just as the nation\u2019s banking system is about to be devastated by the white hot flames of inflation.<br \/>\nFrom a distance, China\u2019s economy seems to be the poster child of sustainable growth. Recent government reports show the economy expanding by 9.7%, retail sales up a blistering 17.4%, foreign reserves at $3 trillion, and inflation only 5.4%. But these statistics mask a dark side; Chinese communist authorities have been artificially holding down fierce inflationary pressures by subsidizing consumer prices.<\/p>\n<p>[. . .]<\/p>\n<p>The less known and far more important secret-weapon of the \u201cChina Economic Miracle\u201d is the absolute control of the banking industry by China\u2019s four largest state-owned banks (\u201cSOB\u201d); Industrial and Commercial Bank, Agricultural Bank, People\u2019s Bank of China and Construction. Since the government does not provide adequate social welfare programs and restricts its citizen\u2019s investment options to bank accounts, about 40% of Chinese household income is deposited in SOBs each month. The SOBs then leverage the deposits by ten times and loan 75% of this massive amount of cash at extremely low interest rates to state-owned-enterprises (\u201cSOE\u201d). The other 25% of lending is allocated to real estate development.<\/p>\n<p>China is no stranger to bankers making risky loans to communist party officials and their crony real estate developers. During the Asian Financial Crisis of the mid-1990s, it is estimated that 40% of all SOB loans were non-performing and most were written off. The Chinese paid for the SOB losses with a 76% devaluation of their currency that crushed the people\u2019s buying-power by 76%. From 1997 to 2004 Chinese frivolous lending was somewhat restrained, but since 2003 the bureaucrats have mandated a massive expansion of lending. In comparison to the U.S. and Europe where bank lending is flat, SOBs have been expanding loans by 25% annually.<\/p>\n<\/blockquote>\n<p>H\/T to Jon for the link.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Chriss W. Street thinks the Chinese banks are about to suffer a crisis moment: It is ironic that China is demanding greater control of the World Bank and International Monetary Fund, just as the nation\u2019s banking system is about to be devastated by the white hot flames of inflation. From a distance, China\u2019s economy seems [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[22,25,84],"tags":[436,712,363,71,165],"class_list":["post-8879","post","type-post","status-publish","format-standard","hentry","category-china","category-economics","category-government","tag-banking","tag-centralplanning","tag-corruption","tag-debt","tag-inflation"],"jetpack_featured_media_url":"","jetpack_shortlink":"https:\/\/wp.me\/p2hpV6-2jd","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/posts\/8879","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/comments?post=8879"}],"version-history":[{"count":1,"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/posts\/8879\/revisions"}],"predecessor-version":[{"id":8880,"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/posts\/8879\/revisions\/8880"}],"wp:attachment":[{"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/media?parent=8879"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/categories?post=8879"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/tags?post=8879"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}