Chapter VI of bad debts, such as the tiger

 Chapter VI of bad debts, such as the tiger (or financial capital robbery)
2005  1 19, the laid-off workers from Sichuan, China Zhang Xiaolin set himself on fire in front of China Securities Regulatory Commission. Four years ago, Zhang Xiaolin 20 million investment loan stocks, but Zhang self-immolation before the rest of his account only 1 million.
as the macro background of this personal tragedy, China's emerging stock market falling for four years. counting from the highest point, the index was almost cut down the middle. In China, tens of millions of investors lose money, but Zhang is a member of the ordinary. Its unique only in that he interpreted in a tragic way to have a devastating financial crisis. For only only 20 years of market history, has been enjoying pleasant for China's economic growth, the financial crisis has occurred in the distant land far away events. but the above is highly sensitive because the disclosure of which has not been a formal event implies, the financial crisis could has crept into the daily life of Chinese people.
a miracle of bad debts behind Tiger
China's sustained economic growth record of 20 years of so called miracles, because it can not reach the ordinary people and, reach beyond the explanatory power of conventional wisdom. So, what unique factors which promote China's economic miracle? In our view, China's economic miracle in the promotion of all the factors, the Chinese financial system played a unique secret weapon like a key role. its importance, no matter how estimates can not be overstated. Therefore, the interpretation of China's financial system, China's economic miracle has become a critical interpretation of a ring.
essential feature of China's financial system is its high degree of bureaucratic monopoly. This characteristic, despite 26 years of reform and not a little change. For this reason, China's financial system is generally considered the most sluggish pace in the reform areas. China's financial industry characteristics of high government monopoly, regardless of ownership in the financial business, or in the financial business executive recruitment procedures, all performed very obvious. we can see, whether in banking, insurance or securities industry, financial institutions are almost entirely of government companies . The high degree of identity of ownership of any other industry can match. Many people in an obsolete paradigm of these enterprises as state-owned enterprises, but in fact, due to the reform process, the bureaucracy completely hijacked the government and countries, these enterprises have been stolen, in essence, replaced by bureaucratic enterprises. Thus, the personnel executives of these arrangements, in effect become a kind of bureaucratic fat, or points within the system of political appointment, rather than through market to find the optimal allocation of human resources. in the Chinese financial companies, if you can find the origin of the main leaders of non-bureaucratic, will be a sort of a small miracle. a light to help spread outside joke bureaucratic culture to understand the truth of the Chinese financial sector: a Office of the Governor of the Bank's can exist, is really the shame of the financial sector. appendage, into the bureaucracy to achieve its political and economic goals of a ever increasing demands of tool. its different stages of reform differ only in that it is more a tool for local government, or the central government's tool. the Chinese financial system that arises from the tragic development.
the financial system as a market economy, the most basic core structure, the importance of self-evident. in the normal market economy, financial markets function in accordance with market principles or capital funds allocated to the best one. It should have been the direction of financial reform in China. However, in the right direction of financial reform, China's bureaucratic system does not meet the appetite. In the reform period, China's bureaucratic system has a look at them more important and more urgent task. This is the economic growth and wealth redistribution. Therefore, they must follow their own will to manipulate the financial markets. the exclusive monopoly of the financial system to become a necessary requirement to achieve this goal. China's bureaucratic system, the finance is not a power to meddle in other people, not a citizen and organization the right to equal share of the market. is generally believed that China's financial reforms lag because of the sensitivity and complexity of the financial reform of the To. But the deeper reason is the financial system any meaningful reform of the bureaucratic system may lead to the erosion of an exclusive monopoly. but also because of this reason, China's financial reform, more than 20 years, although on the surface of bustling . This is not only an economic task, which is China's bureaucratic system requirements of the legitimacy of the existence of the overriding political task. In this way, high economic growth of China's bureaucratic system is actually turned into an insurmountable political hard constraints. This hard constraints on China's financial system, which is a sustained and serious pressure. This is the so-called Enterprise generous blood transfusion policy, in the mid-1990s, after the reform is mainly for the period of state-owned enterprises continue to breed out of the new financial concessions, the performance of the projects supported by all levels of government financial support, the performance of the hot spots, hot industry (such as recent real estate, cars, etc.) into the undisciplined credit. of China's bureaucratic system for providing such financial support is an important criterion is to see whether they can promote economic growth in the short term, even if This growth needs to pay a heavy price. provided that they meet this standard will have a strong driving force at all levels of government to provide them financial support. It should be noted that in the late 1990s, grew up in the new state-owned enterprises and government project company, in essence, residual claim on one of those bureaucrats who are within the corporate bureaucracy, the loss of wealth than the amazing ability is worse than the traditional state-owned enterprises. Here, the financial markets is no longer the principle of risk-based allocation of resources and benefits means, but the bureaucratic system to support its political goal of a high-growth policy tools. for economic growth is. no more direct than the financial role and can play an influential tool. China's bureaucratic system at all levels to support its financial as tool of choice of policy objectives, it is a very much in line be a mismatch. we all know, high level of investment has been to support the rapid growth of China's economy a major factor. but followed a general confusion, in the micro-economic efficiency of such a downturn, this high level of investment rate is how to maintain it, it actually rely on to maintain the self-cycle? The answer is: the Government's financial support (the growth rate is only supported). In order to achieve such financial support, financial resources must be full monopoly. Without the bureaucratic system that is based on the spare no effort to monopolize the financial support of China's high investment rate simply can not sustain, (China's economy will not be anything drastic Unfortunately, this political and financial support is often staggering waste of financial resources as a cost. political growth rate of the request for the more demanding, less waste of financial resources is enormous.
view of the above in the Chinese financial system to cope with various accusations, the Chinese officials are very happy to blame the problem posed by the financial support of vigilance. because it is likely to cover up China's finance in the transition period is another important function, that is, services are also subject to powerful need for redistribution of wealth function. China's power elite, how to use their power for the Chinese bureaucratic system of wealth grab the biggest share of the distribution, is another in the history of the reform period with the overwhelming task. This is not just the stock of the redistribution of wealth redistribution of wealth, too, including the incremental redistribution of wealth. and the sounding of the economy growth compared to the target, although a redistribution of wealth, the question can not be disclosed, but is also one of China's reform era of important historical themes, is the dominant behavior of the Chinese bureaucratic system reform, a key consideration of the nature of hard constraints. it is even more than financial support is more important historical theme. For convenience, the financial redistribution of wealth may be the fastest growing channel because it is the direct management reform period, the financial bureaucracy will become the most desirable means of redistribution of wealth. China's financial sector, cases of corruption after another proof of this. In this regard, the Bank of China Kaiping branch of the culmination of corruption cases can be described. In 1993 and 2001 years, this bank before and after the three-term governor of Yu embezzled 483 million total, equivalent to 40 billion yuan. Of course, Yu Zhendong, who was never a lack of successors. The latest event was the end of 2004 Bank of China branch in Harbin Branch Creek Pine Street, two officials of corruption, fled after the 10 billion yuan of public funds overseas. Corruption is not the bank's patent, other Chinese financial enterprises in this regard are not much better. Chenzhou, Hunan Province, a charge of housing Fund officials of the rank of very low Li Shubiao, corruption 120 million yuan for gambling in Macau, and in a very short amount of time lost public funds. such corruption in China's financial system, common, large, like Wang Xuebing, Liu Campbell as the senior official (in the process of writing this chapter, there are reports that China Construction Bank chairman Zhang Enzhao is facing investigation for corruption scandal, which is the most senior bank officials involved in corruption scandals, the latest example. It is ironic, Zhang is As a result of corruption, Wang Xuebing to step down as the successor to the president of China Construction Bank. on the to as Li Shubiao, Yu Zhendong, the flow of low-level staff, almost no level of bank officials not involved in corruption scandals. the scandal as much, with one-liners to describe that China has formed a Zhendong, Li Shubiao the like bold and reckless corporate kinds of legitimate financial fraud in China's financial system is not only long, and even has become a corporate and financial insiders to get rich quick, a standard way. The consequence of this is in the balance sheet of China's financial system, but can not find those responsible mountain financial bad debt. one from within China's financial system has Dabao anonymous insider said: unspoken rules: Who can borrow, who can immediately be rich. This is called a loan to get rich. In fact, many wealthy Chinese are a little bit of black humor by the unspoken rules and direct means to get rich. For them the so-called project or business is just a cover only. Bank of China Xie Ping, the Secretary chaired a study found that China's financial corruption index reached 5.42. because of the financial corruption index seems to be the exclusive invention of Chinese scholars, the index no for national comparison, but generally means that China has a very high degree of financial corruption. It is clearly in people's daily experience. However, China's financial system is essentially a bureaucratic system, the so-called financial corruption, bureaucratic power is really only corruption. financial corruption and the corruption of power is entirely the same issue. power corruption and financial corruption, although only one word, but its meaning and the associations are very different. In this sense, financial corruption index is misleading. But anyway, China's financial system suffers from systemic corruption is a fairly established fact. systemic financial corruption during the transition period in China, the process of redistribution of wealth is extremely important as a tool to allow all the energy of its money-laundering Other tools are lagging far behind. Though the way can not be measured quantitatively, but look at the frequent outbreaks of the rich in China and financial corruption scandal of collusion between, and we will know it. Marx once said, Finance is the internal plunder. This conclusion is not always correct, but in a corrupt bunch of countries, this conclusion is surely correct, but for China, during the transition period, this conclusion can be regarded as wisdom.
In the event of corruption in the dark, the Chinese bureaucracy to the policy of imposing name, at different times by different interest groups to give financial support, but also created a significant redistribution of wealth effect. Through the availability of funds and funding control of monopoly prices, the Chinese bureaucratic system can almost be at any time for any reason, will jointly create a national financial resources to special interest groups in exchange for their short-term compliance, cooperation or loyalty. For example, a large bureaucratic enterprises in China can use their political influence and long-term access to cheap or free loans of funds (now, many of the official close of the so-called private enterprises have gradually squeezed into this camp), and those who have long been excluded from the political right to vote outside of the various types of enterprises ( including many now in the political state-owned enterprises has been insignificant) was completely unable to equal sharing of financial resources, or to obtain funds only by high prices. This mandatory financial support and financial discrimination, in fact, the mandatory distribution of wealth . No doubt, the Chinese bureaucracy can often be hit by this means they are short-term political or economic objectives, but equally no doubt that this short-term political opportunism is the long-term financial success but for the price mismatch. < br> In the transition period, China's bureaucratic system of financial support given to political finance and political redistribution of wealth, the special features of China's financial causing serious injury. in the range can be calculated, most of the cost of reform in China are precipitated in the financial system, financial strange is that, it can be such a cost to the future goes on, so as to minimize the pain felt by present and oscillation. As a consequence, China's financial system in supporting China's rapid economic growth It also created the world only to see the financial history of the default rate. from any point of view, deposits in the Chinese financial system of bad debts are like a fierce tiger. tiger dormant in the shadow of China's economic miracle, may be pretentious at any time the miracle of this issue of the fatal blow.
In fact, this continued fight already has begun. its crackdown from the Chinese central government has to pay for the cost of glimpse.
Asian financial crisis brought about by the shock and awe, inspired the Chinese central government on China's potential financial crisis, the sense of urgency. to save the tottering financial system in China, the Chinese central government launched a rare financial rescue operation scale. This continued rescue operations is based on four major state-owned banks of China Ministry of Finance to issue special treasury bonds as the symbol In 1998, China's remarkable speed of the Ministry of Finance and Commercial Bank, Agricultural Bank of China, Construction Bank issued 270 billion yuan treasury bonds to ease the Four banks with capital deficit of urgency. Then, in 1999, the central government and from the four major banks stripped 1.5 trillion yuan of bad debt. This shows how many political leaders of China's drive to reform the financial system, however, Chinese leaders vigor seems to fall far short of China's financial bad cooling enthusiasm for the production line. saw was in 2006 near the eve of opening up the financial system in 2004, the Chinese government had once again launched a large-scale financial aid. opened in 2004, the Chinese government announced, with 45 billion U.S. dollars foreign exchange reserves (about 400 billion yuan) to China Construction Bank, Bank of China and the supplementary capital and in the same year in June, again from the Bank of China, Construction Bank of stripping 278.7 billion yuan of bad debt. and Meanwhile, the Chinese government to prepare for the same listed Bank of Communications, China's fifth largest bank divestiture 60 billion yuan of bad debt. However, the intense 2004, the financial rescue the financial system does not include the two chronic Bank of China Industrial and Commercial Bank of China and asset quality Agricultural Bank of China is more inferior. Similarly the government bank, to obtain relief other three banks, ICBC and Agricultural Bank of China that will surely get similar treatment. However, if the capital adequacy ratio to meet the most basic, light Industrial and Commercial Bank, a need to add 4000 billion yuan, and in accordance with the Standard & Poor's estimates, the Agricultural Bank of the worst quality of assets to achieve the same standards need to add at least 150 billion U.S. dollars, or about 1.2 trillion yuan. In so doing, the Chinese government initiated a new round in 2004 Bank rescue exercise, also need to spend a minimum 2.3 trillion yuan. plus 1998 to 1999 that a 1.8 trillion yuan, the Chinese government will rescue four banks to spend nearly 4.1 trillion yuan. that engulfed the Chinese astronomical over 40% of GDP. for an image that is to say, in 2004, all the Chinese people in China's banking system work for free for longer than 5 months or more. China's banking system is really hard act to destroy wealth. need to be mentioned , we roughly above the central bank statistics did not include various forms of local commercial banks, trust companies, credit unions and other small financial institutions, rescue operations, such rescue since the 1990s been quietly conducted in the the total cost of about several hundred billion dollars.
with traditional bank line of bad debts, the Chinese new financial bad line the collapse of the wave of large-scale, scope, affecting almost all the famous old securities firm, the Government had to be the central bank re-lending and other forms of saving. It is estimated that China's system of hidden bad loans of state-owned securities billion yuan in 2000. This figure the hundreds of trillions of Bank of China compared to the figures do not seem surprising, but compared to the Chinese brokerage's asset size, it is a very alarming rate. in China continue to expand the scale of the other assets of the insurance industry in the financial industry, danger are not much better, its liquidity risk and solvency in the future so that observers are very worried. In particular, need to be mentioned that the Chinese securities firms and China's emerging capital markets has been considered a product of China's reform, and is so the product of a reform, but now has become a destruction of wealth and financial corruption synonymous. This can not be said to be a great irony. This phenomenon also shows that manufacturing of bad debt may simply not so-called traditional (before the reform already existing) state-owned enterprises, but in the The real culprit of financial bad manufacturing.
Since 1998 the scale of China's financial rescue operation and frequency, China actually has a financial crisis, although this crisis is not the kind of swift and severe form of oscillation shown, but its national welfare caused substantial damage, not at all inferior to the former. However, these costly financial rescue operation for our future does not buy an insurance policy, China's financial outlook remains perilous. < br> Second, the Tigers Stopped
to blame for the bad financial state-owned enterprises and the planned economic system, economic circles in China is a very popular way of thinking. a well-known economist, and even asserted: financial reform The success or failure lies in state-owned enterprises. This is undoubtedly a habit of thinking of the wrong diagnosis. because, as a basis for financial support and financial corruption of the system is not universally condemned as early as the traditional planned economy, but was born in the reform and reform continue to be copied out of the disease. This is the most worrisome of China's financial characteristics of bad debt. In this sense, large-scale financial rescue again to no avail.
1998 years later also proved that indeed the case. to a large number of government stripping of bad debts and to continue to replenish capital of financial enterprises at the same time, China's financial risk but in order to follow almost exactly the same way before the re-accumulation. as well as state aid as a result of the final guarantor of financial companies operating on the self-indulgence, generally known as promote a new round of economic growth can be described as our best. from the central government level, mainly marked by large-scale issuing treasury bonds. issuing treasury bonds on the surface, it seems out of the stereotype of over-reliance on the banking system, but most of the so-called bond-financed projects must be matched large number of bank loans. This is actually still is a typical political During 1998 to 2004, nearly 2 trillion of debt supporting the loan, nearly 800 billion yuan of bad loans. For China's bureaucratic financial system, the amount of bad debt losses has not inspire our surprise, we were surprised that the financial support to. At this point, we can hardly hope that a miracle happens. However, we thus can see that for political legitimacy, China has been and will finance to pay the original capital.
Although a great deal of effort devoted and money, but the Chinese government expect new growth cycle, but it has long been a not move. until the end of 2002, when local government is not always a good face on Zhu Rongji, will bid farewell to politics, local government finally can safely join the chorus GDP After a new round of economic growth before the so-called final report was officially launched. this one, driven by real estate and car upgrade the so-called consumption, has played a key driving (both in consumption and investment) effect. was thus that China there is a new round of economic growth in consumption as a support, is different. But the depth of its internal, a new round of economic growth, there is nothing unique to the Department, because the essence of China's bureaucratic system is still available financial support. , but it shows the characteristics of China, so we have good reason to judge the government's financial support, is a national credit cheap transportation to the market. In China, consumer credit has been strongly advocated and encouraged the government , the rush of a scene resembling the traditional slack, lack of discipline of the degree, and goes for the past few. The results, in just a few years, the Chinese ratio of household debt in many major cities close to and over the United States. the best way to symbolize China's ; the model city of Shanghai as an example, the proportion of household debt has surpassed the United States in 2004, reaching 155%, while the ability to measure indicators of household debt repayment rate is even more debts and liabilities of up to 58.36%, far exceeding the 18 United States %. [1] (No wonder people ridicule: China's economic growth is borrowed from economic growth. in such a short time in reached such a high debt ratio, so we have reason to suspect that China's market capacity of the country's future) in China, the transformation of expected income rather unstable countries, such a high rate of the debts and liabilities may lead to great financial risk is entirely speculative. In fact, the financial risk is not just a guess. there are indications, the end of 2003 more than 1800 billion auto loan balance, nearly 100 billion can not be recovered. [2] and in the absolute share of total consumer credit real estate loans, frequent 骗贷, abnormal price earnings ratio unstable family expected income, and bank risk control bureaucratic motivation and professionalism, have aroused wide concerns about bad housing loans. The People's Bank of Shanghai in early 2005, according to a report published in 2004, Shanghai The new loans, real estate loans have accounted for about 80%. Corresponding to this, the Central Bank of China, Mr. Xie Ping also reminds us: China is now the size of loans, real estate collateral has been accounted for half. without regard to other details, alone such a high concentration of loans, they can smell one of the precarious atmosphere. real estate loans as a longer term, the risk of default is not in the short term exposure, but once the reversal of market trends, and its bad debts intensity of the outbreak than any other industry counterparts. this case, much of the Japanese real estate bubble burst more than a decade caused by the recession, the recent real estate frenzy of Hong Kong to create a large number of ;, the difference is that China's financial system much more fragile than Japan, but also whether a Hong Kong.
economic growth in the dark to launch a new round of financial support, the Chinese bureaucracy, the financial resources necessary to develop not only limited to traditional banks, they even playing the Social Security Fund's attention. It is reported that Shenzhen has been fighting for policies to take advantage of the city's accumulated investment in infrastructure, social security funds. In China, which is tantamount to a losing gambling games. In view of various types of insurance funds (especially pensions) has become an increasingly important financial tools, the ability to gather funds are very powerful, we particularly need to guard against the bureaucratic system in order to such funds to replace state-owned banks powerless as the new 7 percent. Compared with other countries, China's unusually higher than the figure twice as many people. [3], an intuitive interpretation of this data is that almost all of them are doing business without capital. When most companies are using the bank's money interpretation is more deep, after 26 years of rapid economic growth, China at the enterprise level simply did not happen efficient capital accumulation. enterprise, but a sense of the word of the loan instruments. The truth about that a wide range of private foundation inject a package of reforms as the main means and rescue measures. But unfortunately, China's financial has not been a new vibrating brush. The reason is: The Chinese bureaucratic system to give the financial system, and not the slightest change. particularly in the so-called 2002 officially launched the new round of economic growth, China's state-owned banking system immediately relapse, has created yet another record-breaking monetary expansion and investment frenzy. According to the China Banking Regulatory Commission's data, Chinese state-owned commercial Bank of the end of 2003 the proportion of non-performing loans 21%, which is obviously still a ridiculously high risk data. In view of the official data credibility problem has always existed, observers generally estimate the defect rate of the Chinese state-owned banks is much higher than that figure. the international level agency Standard & Poor ear level estimates, mainland banks non-performing loans ratio of total loans as high as 35%. But even the official data is authentic, only after taking into account the extraordinary 2002 currency the rate of expansion and economic overheating, and people can expect in the coming years, China will appear and a new peak of non-performing loans. a Chinese scholars estimate that in 2005 after three years, China's financial system bad assets of around 800 billion will be added each year. This means that in the next few years, China's financial system, the proportion of non-performing assets, will be 21% of the high base has increased significantly. familiar with the Chinese people can judge the economic situation, once China assets and the manufacturing sector expanding bubble (this will be the next few years the Chinese economy in the high probability event), China's financial system rapidly rising non-performing asset ratio will be an inevitable outcome. This means that, after years of rescue and reform China's financial system will return to the mid-1990s high-risk status. China's financial system is still a subject to explosion, equivalent high time bomb. Do not think the financial crisis will only eat the same laid-off workers like Zhang Xiaolin, In a financial crisis, the so-called new middle class in China is also doomed.
since the 1990s, China's financial system has been in a high-risk state, even under the worst of commercial standards, China's state-owned banking system should also be bankrupt numerous times. But what is puzzling is that China's financial system is not only not bankrupt, but the energy is still a strong driving China's economic growth. So, what the Chinese exclusive path to enlightenment, to create such a financial maverick wonders?
three tightrope balance
China's financial system survive the long-term stake but one of the secrets falling is because China has a high savings rate. The Chinese people seem born to save the animals. in terms of what difficult circumstances, they can, like magic to provincial money, savings for the future. This habit of compulsive creation of the world's national savings rate is second to none. a long time, China's savings rate has been maintained at 40%. But the vast majority of Chinese savers do not know what they super-thrifty savings this ability come from, like the arm of China's financial system as barely ...