China

Why Chinese Banks Are Especially Vulnerable To Higher Funding Costs

Those of us who think it’s important to track developments in China’s economy and financial system had our work cut
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4 comments on “Why Chinese Banks Are Especially Vulnerable To Higher Funding Costs

  1. Curt Tyner

    H- Question? What is the end game for the Politburo?

    • As I I’m fond of saying, they’re trying to delever and relever at the same time. They need to keep just enough of the industrial SOEs in business to keep the smokestack, export-driven economy afloat until the services/consumption-led model can kick in, but they also need to get rid of the excess capacity those SOEs create so they’re not fueling the global deflationary impulse. With the currency, they need it weaker to keep the economy afloat (again, until they can ease out of the mercantilist religion) and ultimately they’ll probably float it, but in the meantime, they don’t want to accidentally trigger some kind of global catastrophe by sparking a massive capital exodus. Perhaps most importantly, they need to somehow achieve the unachievable without sparking social upheaval and/or some kind of massive backlash against the Party.

  2. Curt Tyner

    Quite the knife’s edge. SOE’s viable+Yuan (not to low/not to high)+no capital melt down+1.3 billion people under control=SUCCESS We are living in the Twilight Zone…

  3. adam waszkowski

    looks like they are evolving towards LTROs and more debt for equity swaps…and the PBOC will eat all the losses to keep ‘prices’ high?

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