John,
I am not suggesting that I am some type of China expert, just like to offer you a little different perspective.
When you look at China, be it banking or trade or whatever, you need to have a little understanding of modern Chinese history.
The 4th of July 1776 for China was Sept 16 (?), 1976, the day that Mao died. At that time, China had nothing. People were starving to death. Infrastructure was totally destroyed by ten years of cultural revolution. The educated class were either killed or out of touch with advances in their respective fields. There were no laws other than "Mao is right". China was not even at ground zero at that time. China, as a country, was 6 ft under, dead.
..... and, in pertinence to the discussion here, there were no trace of any banking system.
Fast forward to almost 30 years. How China has turned out is truly jaw dropping. I am not saying they are good or bad, just saying that considering all the problems that they faced, what they have accomplished is amazing. China could have turned out like N Korea.
Back to the banking system, don't forget China was and still technically is a communist country with a central government. Under communism, everyone has a job, health care, housing etc. Since the government owns everything, the banks and the government are one is the same. Since the government owns everything, all enterprises are SOEs.
As you can see, under that system, the banks are NOT what you would call a bank here. They are probably equivalent of all kinds of governmental offices here. e.g. it functions as a form of welfare or unemployment office, by providing loans to enterprises who will then hire everyone. Are these bad loans? If all the banks in the US are government owned and we funnel the national debt and deficits through these banks, would you call them insolvent?
In reality, China is just a communism in name. Marx and Engels would roll over in their graves if they see how their ideologies are butchered by these modern capitalists. China is moving forward. They have proven that to the world and more importantly, proven that to their own people. Transition, unfortunately, cannot be completed overnight. Russia tried it and ended up setting them back. Are there problems? Definitely, massive problems. Are they dealing with it? Yes. You see news like this one all the time. today.reuters.com
Furthermore, the punishment for the guilty is often death.
So from now on, when you hear people yap about China banks being insolvent, bankrupt, corrupt, blah blah, you would know these are ignorant people with little or no understanding of the subject matter, stay away from them. <gggggg>
On the other hand, if you hear people discuss how China is handling the transition of their banking system, how they may or may not be able to deal with the loans to the SOEs, how they may privatize the banks, how they will adopt international standards, how long do you think it will take them to do the conversions, then you know you are talking to someone who has given the subject a little bit of thought instead just mouthing what they heard on cnbc or the lou dobbs show. <gggggggggggg> |
