Best of the Week
Most Popular
1.Spain Ignores Scotland Lesson as Catalan Independence Referendum Could Spark Civil War - Nadeem_Walayat
2.Used Car Buying From UK Dealer Top Tips, CarMotion.co.uk Real Customer Experience - N_Walayat
3.Spanish New Civil War Begins as Madrid Regime Storm Troopers Quell Catalan Independence Rebellion - Nadeem_Walayat
4.Virgin Media Broadband Down, Catastrophic UK Wide Failure! - Nadeem_Walayat
5.Are the US Markets setting up for an Early October Surprise? - Chris_Vermeulen
6.The Pension Storm Is Coming To Europe—It May Be The End Of Europe As We Know It -John_Mauldin
7.Stock Market Crash 2018; Will it Prove to be Another Buying Opportunity - Sol_Palha
8.The Profoundly Personal Impact Of The National Debt On Our Retirements - Dan_Amerman
9.Stock Market as Good as it Gets; Like 2000 With a Twist -Gary_Tanashian
10.1987 Stock Market Crash 30th Anniversary Greatest Investing Lesson Learned - Nadeem_Walayat
Last 7 days
Stock Investors Ignore What May Be The Biggest Policy Error In History - 20th Oct 17
Gold Up 74% Since Last Stock Market Peak 10 Years Ago - 20th Oct 17
Labour Sheffield City Council Employs Army of Spy's to Track Down Tree Campaigners / Felling's Watchers - 20th Oct 17
Stock Market Calm Before The Storm - 20th Oct 17
GOLD Price Creates Bullish Higher Low - 20th Oct 17
Here’s the US’s Biggest Vulnerability in NAFTA Negotiations - 20th Oct 17
The Greatest Investing Lesson Learned from the 1987 Stock Market Crash - 20th Oct 17
Stock Market Time to Go All-in. Short, That Is - 19th Oct 17
How Gold Bullion Protects From Conflict And War - 19th Oct 17
Stock Market Super Cycle Wave C May Have Started - 19th Oct 17
Negative Expectations, Will the Stock Market Correct? - 19th Oct 17
Knowing the Factors Affect your Car Insurance Premium - 19th Oct 17
Getting Your Feet Wet In Crypto Currencies - 19th Oct 17
10 Years Ago Today a Stocks Bear Market Started - 19th Oct 17
1987 Stock Market Crash 30th Anniversary Greatest Investing Lesson Learned - 19th Oct 17
Virgin Media Broadband Down, Catastrophic UK Wide Failure! - 19th Oct 17
The Passive Investing Bubble May Trigger A Massive Exodus from Stocks - 18th Oct 17
Gold Is In A Dangerous Spot - 18th Oct 17
History Says Global Debt Levels Will Lead to Another Crisis - 18th Oct 17
Deflation Basics Series: The Quantity Theory of Money - 18th Oct 17
Attractive European Countries for Foreign Investors - 18th Oct 17
Financial Transcription Services – What investors should know about them - 18th Oct 17
Brexit UK Vulnerable As Gold Bar Exports Distort UK Trade Figures - 18th Oct 17
Surge in UK Race Hate Crimes, Micro-Racism, Sheffield, Millhouses Park, Black on Asian - 18th Oct 17
Comfortably Numb: Surviving the Assault on Silver - 17th Oct 17
Are Amey Street Tree Felling's Devaluing Sheffield House Prices? - 17th Oct 17
12 Real-Life Techniques That Will Make You a Better Trader Now - 17th Oct 17
Warren Buffett Predicting Dow One Million - Being Bold Or Overly Cautious? - 17th Oct 17
Globalization is Poverty - 17th Oct 17
Boomers Are Not Saving Enough for Retirement, Neither Is the Government - 16th Oct 17
Stock Market Trading Dow Theory - 16th Oct 17
Stocks Slightly Higher as They Set New Record Highs - 16th Oct 17
Why is Big Data is so Important for Casino Player Acquisition and Retention - 16th Oct 17
How Investors Can Play The Bitcoin Boom - 16th Oct 17
Who Will Be the Next Fed Chief - And Why It Matters  - 16th Oct 17
Stock Market Only Minor Top Ahead - 16th Oct 17
Precious Metals Sector is on Major Buy Signal - 16th Oct 17
Really Bad Ideas - The Fed Should Have And Defend An Inflation Target - 16th Oct 17
The Bullish Chartology for Gold - 15th Oct 17
Wikileaks Mocking US Government Over Bitcoin Shows Why There Is No Stopping Bitcoin - 15th Oct 17
How to Wipe Out Puerto Rico's Debt Without Hurting Bondholders - 15th Oct 17
Gold And Silver – Think Prices Are Manipulated? Look In The Mirror! - 15th Oct 17

Market Oracle FREE Newsletter

3 Videos + 8 Charts = Opportunities You Need to See - Free

Chinese Banks Quasi Government Institutions

Politics / Banksters Sep 04, 2013 - 12:33 PM GMT

By: BATR

Politics

When is a bank an appendage of state? In China, the incorporation of commercial banking under the auspice of governmental policy is virtually indistinguishable. Philosophically, any government should have control of their currency and structure the precepts of banking and lending system. Capitalist banking would command a greater pragmatic function if competition among banks was based upon free enterprise. However, under the central banking scheme governments regulate banks, but are creatures of fractional reserve debt money issued by central bank parentage. The Chinese way has included a touch of mystery when analyzed within the context of western international banking.


How did a communist economic model transform into a partner of the globalist banksters cabal? Setting the political questions aside, the business of building an economy requires the acquisition of money on a scale that most societies are unable to access. The difference in the Great Wall nation became the favorite police state pattern for the corporatists to move their manufacturing facilities that grew a trading surplus, which accrued huge sums. China alone has amassed official reserves of US$3.2 trillion.

Translate this occurrence into a banking advantage would have you believe that Forbes’ reporting is correct. Written earlier this year, Red Banks Rising: Will China Become The World's Banker?, has a Sino banking buy spree in full motion.

"In February China’s central bank issued a three-step plan that would tear down the barriers surrounding China’s big banks. Hopes quickly emerged that China’s banks could become international players much like China’s industrial companies, providing capital to a global economy that could use it. "Chinese banks are well positioned to follow Chinese companies abroad and provide financing; the question is whether they will also provide services to foreign companies," says Ben Simpfendorfer, a Hong Kong-based consultant. "China would benefit from exporting its cash, and the rest of the world would benefit, especially foreign buyers of Chinese goods."

For the most part the only Chinese financial firms putting serious money to work internationally are driven by Beijing’s politics. China Development Bank, a policy institution, has done some big deals in Africa and lent $10 billion to Petroleo Brasileiro, Brazil’s state-run oil company. There have been signs, however, that China’s big commercial banks are preparing to go global, too. ICBC has been opening and buying branches from New York to the Netherlands and last year paid $600 million for assets of Standard Bank in Argentina. It is now hiring scores of bankers in Brazil. "The Chinese banks will play a larger role internationally than they have in the past," says John Weinshank, the corporate finance chief at China Construction Bank’s New York branch, which built a $2 billion loan book in two years. "That’s the plan. I can assure you we will be expanding in the Americas over the next two years."

A second establishment flagship publisher, The Economist presents a viewpoint that a Giant reality-check, is on the horizon, Four of the world’s biggest lenders must face some nasty truths.

"CHINA’S banks are not real banks," says Andrew Rothman of CLSA, a broker recently acquired by China’s CITIC Securities. The country’s biggest financial institutions are so closely held by the state that they are, in effect, arms of the treasury. Cosseted by rules that protect them from competition, they deliver huge profits in good times: bank profits as a share of China’s economic output equalled nearly 3% last year, whereas the highest ratio achieved in recent decades by American banks was only 1% of GDP (in 2006). In bad times the state is there to clean up, just as it did during a surge in dud loans in 1990s.

But the bargain that has driven China’s "Big Four" banks to the top of the global league tables is breaking down. Profitable though they are now, another wave of non-performing loans will soon hit them. As the Chinese economy rebalances, the state is less willing than it was in the past to pour credit into state-owned enterprises (SOEs) at the expense of households and private firms. Mr Rothman’s epithet will not hold forever. China’s big banks are slowly becoming real institutions."

While the Chinese banks are adapting to international commerce circumstances, the fact that Chinese yuan does not have a reserve currency function has allowed the state-controlled regime to enjoy foreign exchange benefits that other countries resent. The day is coming, when fundamental rescaling of the world banking system, will alter the way that Chinese banks operate. The accounting firm of Ernest and Young presents the following view in a report, Challenges for central banks: wider powers, greater restraints.

"Emerging countries’ greater importance to the world economy has generated criticism of Western monetary policy and led to calls for some kind of international monetary reform. One of the strongest proponents of such reform is China. On the one hand, the capital restrictions and the state-controlled finance system enabled the Chinese authorities to partly shield the country from the worst effects of the financial crisis in 2008 and 2009 and to engineer a remarkable, if inflationary, stimulus. On the other hand, these same factors mean that China, in the words of Jin Liqun, Chairman of the Supervisory Board of China’s sovereign fund, China Investment Corporation, is the only one of the six biggest world economies that does not have its own international currency."

Having it their way, while everyone else is shackled to floating currency convertibility, means that China’s state protecting racket will break down if a reserve currency role is eventually implemented. Since at this stage it is impossible to separate state control from business risk lending, the future of the top ten Chinese Banks are dependent upon the way the financial community navigates within the treacherous waters of the China Sea.

If the prototype of Chinese banking, with a reciprocal relation under the wing of state direction forecasts international banking, just what will the banksters do with the loss of their preeminence. If the past is a reliable gauge, bidding against the moneychangers is a tall order.

James Hall – September 4, 2013

Source : http://www.batr.org/negotium/090413.html

Discuss or comment about this essay on the BATR Forum

http://www.batr.org

"Many seek to become a Syndicated Columnist, while the few strive to be a Vindicated Publisher"

© 2013 Copyright BATR - All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors

BATR Archive

© 2005-2017 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

Catching a Falling Financial Knife