Sorry to keep posting without waiting for responses, but I'm just finding a wealth of information on a link that, I believe, Stitch posted on the Asia Forum board. Here's some more surprising (at least for me) information.
MikeM(From Florida)
From South China Morning Post:
>> Chinese have one of the highest savings rates in the world, squirrelling away 40 per cent of their income, much of this soaked up by ailing state firms that are unable to pay back their loans. Up to now, the system has been propped up by depositors, either unaware of the true state of the problem, or confident the government will keep the state banks afloat.
Should depositors begin to feel doubts about the security of their savings the backlash could be serious. "When households in large numbers attempt to withdraw their savings the insolvency problem of several of China's large banks will become a liquidity problem," Nicholas Lardy of the Brookings Institution wrote recently in the Asian Wall Street Journal .
The central bank will then have two alternatives, says Mr Lardy. It can supply funds to the banks to meet the demand for withdrawals, or it can limit withdrawals. The latter could well lead to a serious loss of public confidence in the banking system.
The commercial banks already are being squeezed by the slowing growth of personal savings resulting from the central bank's decision to cut interest rates three times since May 1996.
Personal bank deposits climbed 23 per cent in 1997, a respectable increase, but the lowest in the past 10 years. The banks are reported now to be resorting to illegal means to attract deposits from companies, offering gifts such as free cars, and higher interest rates...<< |
