nimo_cn
Senior Member
- Joined
- Aug 18, 2009
- Messages
- 4,032
- Likes
- 883
Hard to believe that lie fools so many people.
Sent from my T8830 using Tapatalk 2
Are Chinese Banks Hiding "The Mother of All Debt Bombs"?
- Thread starter LETHALFORCE
- Start date
Sent from my T8830 using Tapatalk 2
As the last lines of the article highlight the dealings executed by the Government for the Government Banks, Why should world outside of China have any trust when everything is of opaque nature? This is over one year old article but the situation had deteriorated since than an updated article will be posted once I can get hold of on relevant topic.
Chinese public debt
Coming clean
China faces up to the hidden debts of its local governments
Jun 2nd 2011 | HONG KONG | from the print edition
BANKS in Western countries dragged their economies into the great recession. Banks in China pulled the country out of it. Much of the Chinese government's stimulus effort from 2008 to 2010 was left to financial institutions, which proved better at shoving money out of the door than America's federal government.
The banks lent to thousands of investment corporations set up by local governments, which cannot borrow in their own name. With the help of some initial capital and collateral, like land, these investment vehicles directed the lending into local bridges, tunnels and real-estate ventures. But many of the loans have turned bad, threatening the balance-sheets of the banks that made them.
Now the central government has at last resolved to clean up the mess, according to unnamed officials cited by Reuters this week. China's government will consolidate thousands of investment vehicles and hive off some of their debts into separate companies open to private investors. It will force the banks to write off another slice of the bad debt, and repay a chunk of it from its own budget. Much of the stimulus lending of 2008-10 may turn out to be public spending after all.
In this section
Too big a fail count
On the wrong track
Fingers on the trigger
Dodging the bullets
Welcome, buyjin
»Coming clean
Wanted: chief firefighter
Reprints
Related topics
Reuters Group
Government and politics
Public finance
China
The government has never revealed how much debt the local-government vehicles took on. Despite this opacity, or perhaps because of it, these hidden liabilities have become one of the four big worries haunting China-watchers, along with the property bubble, inflation and lightly regulated trust companies. Victor Shih of Northwestern University has described the debts as a "big rock-candy mountain". In June 2010, he projected it might reach as high as 24 trillion yuan ($3.7 trillion) by the end of 2012, or over half of China's GDP.
But the central government itself now reckons the debts amount to 10 trillion yuan, according to an official cited by Reuters—a quarter of GDP. That is bigger than America's state and local-government debt (18%) but the same as India's (25%).
Not all of this 10 trillion yuan will go bad. Some local-government investments will prove "bankable" in the strict sense that the borrower captures a big enough return to repay the loan. An analysis by the 21st Century Business Herald, a Chinese newspaper, suggests that only 28% of the loans have failed to generate much cashflow. In other cases, the social benefits of a project might exceed the costs, even though the benefits do not accrue to the local government itself—especially if the people employed would otherwise have stood idle.
But could China afford the stimulus? The official public debt of the central government was only 19% of GDP at the end of 2010. Adding the debts of local governments, the non-performing loans of the banks and other liabilities, such as central-bank bills, the public debt amounts to about 80% of GDP according to Andrew Batson and Janet Zhang of GaveKalDragonomics, a consultancy in Beijing. That sounds high for a developing country. But like India's similar debt burden (73% of GDP), the liabilities are mostly denominated in the country's own currency and held domestically, often by docile institutions, such as state banks. "The only entities that could trigger a crisis of confidence in government debt are themselves owned by the government," they say. China's public finances may not be as sweet as they appeared, but they are not sour.
Chinese public debt
Coming clean
China faces up to the hidden debts of its local governments
Jun 2nd 2011 | HONG KONG | from the print edition
BANKS in Western countries dragged their economies into the great recession. Banks in China pulled the country out of it. Much of the Chinese government's stimulus effort from 2008 to 2010 was left to financial institutions, which proved better at shoving money out of the door than America's federal government.
The banks lent to thousands of investment corporations set up by local governments, which cannot borrow in their own name. With the help of some initial capital and collateral, like land, these investment vehicles directed the lending into local bridges, tunnels and real-estate ventures. But many of the loans have turned bad, threatening the balance-sheets of the banks that made them.
Now the central government has at last resolved to clean up the mess, according to unnamed officials cited by Reuters this week. China's government will consolidate thousands of investment vehicles and hive off some of their debts into separate companies open to private investors. It will force the banks to write off another slice of the bad debt, and repay a chunk of it from its own budget. Much of the stimulus lending of 2008-10 may turn out to be public spending after all.
In this section
Too big a fail count
On the wrong track
Fingers on the trigger
Dodging the bullets
Welcome, buyjin
»Coming clean
Wanted: chief firefighter
Reprints
Related topics
Reuters Group
Government and politics
Public finance
China
The government has never revealed how much debt the local-government vehicles took on. Despite this opacity, or perhaps because of it, these hidden liabilities have become one of the four big worries haunting China-watchers, along with the property bubble, inflation and lightly regulated trust companies. Victor Shih of Northwestern University has described the debts as a "big rock-candy mountain". In June 2010, he projected it might reach as high as 24 trillion yuan ($3.7 trillion) by the end of 2012, or over half of China's GDP.
But the central government itself now reckons the debts amount to 10 trillion yuan, according to an official cited by Reuters—a quarter of GDP. That is bigger than America's state and local-government debt (18%) but the same as India's (25%).
Not all of this 10 trillion yuan will go bad. Some local-government investments will prove "bankable" in the strict sense that the borrower captures a big enough return to repay the loan. An analysis by the 21st Century Business Herald, a Chinese newspaper, suggests that only 28% of the loans have failed to generate much cashflow. In other cases, the social benefits of a project might exceed the costs, even though the benefits do not accrue to the local government itself—especially if the people employed would otherwise have stood idle.
But could China afford the stimulus? The official public debt of the central government was only 19% of GDP at the end of 2010. Adding the debts of local governments, the non-performing loans of the banks and other liabilities, such as central-bank bills, the public debt amounts to about 80% of GDP according to Andrew Batson and Janet Zhang of GaveKalDragonomics, a consultancy in Beijing. That sounds high for a developing country. But like India's similar debt burden (73% of GDP), the liabilities are mostly denominated in the country's own currency and held domestically, often by docile institutions, such as state banks. "The only entities that could trigger a crisis of confidence in government debt are themselves owned by the government," they say. China's public finances may not be as sweet as they appeared, but they are not sour.
rockdog
Senior Member
- Joined
- Dec 29, 2010
- Messages
- 4,040
- Likes
- 2,936
I think this is best comment in this thread, i need to bring and translate this to some chinese forum, with the India discussion topic there...
LETHALFORCE
Mod
- Joined
- Feb 16, 2009
- Messages
- 29,876
- Likes
- 48,566
EconomicPolicyJournal.com: More Proof of Economic Madness in China: China Public Debt is 80% of GDP, Not Official 17%
More Proof of Economic Madness in China: China Public Debt is 80% of GDP, Not Official 17%
A copy of Manhattan, complete with Rockefeller and Lincoln centers and what passes for the Hudson River, is under construction an hour's train ride from Beijing. And like New York City in the 1970s, it may need a bailout.
Debt accumulated by companies financing local governments such as Tianjin, home to the New York lookalike project, is rising, a survey of Chinese-language bond prospectuses issued this year indicates. It also suggests the total owed by all such entities likely dwarfs the count by China's national auditor and figures disclosed by banks.
Bloomberg News tallied the debt disclosed by all 231 local government financing companies that sold bonds, notes or commercial paper through Dec. 10 this year. The total amounted to 3.96 trillion yuan ($622 billion), mostly in bank loans, more than the current size of the European bailout fund.
There are 6,576 of such entities across China, according to a June count by the National Audit Office, which put their total debt at 4.97 trillion yuan. That means the 231 borrowers studied by Bloomberg have alone amassed more than three-quarters of the overall debt...
Fraser Howie, the Singapore-based managing director of CLSA Asia-Pacific Markets who has written two books on China's financial system.
"You should be more worried than you think," he said of Bloomberg's findings. "Certainly more worried than the banks will tell you.
"You know how this story ends -- badly," he said.
The centrally planned manipulation of the Chinese economy, including massive amounts of money printing, could result in the greatest economic crash of all time.
More Proof of Economic Madness in China: China Public Debt is 80% of GDP, Not Official 17%
A copy of Manhattan, complete with Rockefeller and Lincoln centers and what passes for the Hudson River, is under construction an hour's train ride from Beijing. And like New York City in the 1970s, it may need a bailout.
Debt accumulated by companies financing local governments such as Tianjin, home to the New York lookalike project, is rising, a survey of Chinese-language bond prospectuses issued this year indicates. It also suggests the total owed by all such entities likely dwarfs the count by China's national auditor and figures disclosed by banks.
Bloomberg News tallied the debt disclosed by all 231 local government financing companies that sold bonds, notes or commercial paper through Dec. 10 this year. The total amounted to 3.96 trillion yuan ($622 billion), mostly in bank loans, more than the current size of the European bailout fund.
There are 6,576 of such entities across China, according to a June count by the National Audit Office, which put their total debt at 4.97 trillion yuan. That means the 231 borrowers studied by Bloomberg have alone amassed more than three-quarters of the overall debt...
Fraser Howie, the Singapore-based managing director of CLSA Asia-Pacific Markets who has written two books on China's financial system.
"You should be more worried than you think," he said of Bloomberg's findings. "Certainly more worried than the banks will tell you.
"You know how this story ends -- badly," he said.
The centrally planned manipulation of the Chinese economy, including massive amounts of money printing, could result in the greatest economic crash of all time.
- Joined
- May 20, 2009
- Messages
- 5,133
- Likes
- 746
No matter how many LOLs are posted, it appears that the situation is grim.
That the local Govts have squandered money on scheme that are not remunerative is no secret.
In fact, on Chinese economy, there was an article that I read sometimes back, when the Chinese economy was really soaring, a Chinese (Red Chinese) economist had criticised the local Govts for much of the fiscal problems that were niggling at that time.
ON the 'mindset of Indian Friends' it maybe worth noting that this article, Are Chinese Banks Hiding "The Mother of All Debt Bombs"? is not the view of 'Indian friends' or their mindset, but the mindset of a Chinese friend who responds to the name of Minxin Pei.
It is claimed that he is an expert on governance in the People's Republic of China,
Permit me an LOL. It is very contagious!
well, always there were/are lots of "Chinese (red Chinese) economists" blah "chinese economy to callapse" in China,such as Lang Xianping....etc...
and Chinese people are used to their words like "CHinese to callapse" already
Indian guys here like you pay so attention to such words,just because they don't understand China.
rockdog
Senior Member
- Joined
- Dec 29, 2010
- Messages
- 4,040
- Likes
- 2,936
In fact if we look the things from the other side, such kind of "China collapse" point of view would be good for China. I believe that the "sense of survive" can make a nation stronger, no matter those warnings and shittings from ur friend or opponent, internal or external. They at least make u always be clear for what u r doing and keep the brain cautious.
Along with those "China collapse" noise, China' GDP increased from two times into six times comparig India's from 2006 to 2012.
Badguy2000 We all experiened from 2006 on the old IDF, how some of our Indian friends loved this kind of saying, even US and EU had some true economic disaster...
On contrast, those India 2.0, India Shinning, Incredible India from the media have been loudly spreading for ten year and make some of Indian friends feel good and high. But look at those pathetic data: one third of the population can't read, 40% of their children hardly get enough food, half of them don't even have toilet. Yes, nobody talk about "India coklpase", but do we really need to?
Last edited:
i agree with you.
- Joined
- Dec 17, 2009
- Messages
- 13,811
- Likes
- 6,734
Now it is 2012, the bubble burst and China's economy has come to a screeching halt = Hard Landing
rockdog
Senior Member
- Joined
- Dec 29, 2010
- Messages
- 4,040
- Likes
- 2,936
Indian media:
China's economy experiencing 'soft landing': IMF
http://www.thehindu.com/business/Economy/article3682322.ece
World wide media:
World Bank: China's economy in 'soft landing'
World Bank: China economy should stay above 8% growth - Apr. 12, 2012
China economy heading for a 'soft landing'
BBC News - China economy heading for a 'soft landing'
IMF says China's economy reached 'soft landing'
IMF says China's economy reached 'soft landing' - Yahoo! Finance
Chinese media:
China's economy in soft landing: IMF official
http://www.chinadaily.com.cn/bizchina/2012-09/11/content_15749844.htm
China's economic slowdown, a sign of soft-landing: U.S. experts
http://news.xinhuanet.com/english/china/2012-09/28/c_131877934.htm
:taunt1:
Last edited:
- Joined
- May 20, 2009
- Messages
- 5,133
- Likes
- 746
frankly speaking, During 2008-2012,it is EU and USA that have encouter bubble burst of their economy anc come to a screech halt= hard landing.
China, sitting on the sea beach safely, is watching how EU and USA struggling out of .sinking ships.
What do you expect us to do? Does your Government provide the real picture and statistics, I do not think so. Let me give you an example of a private Chinese company traded on Toronto Stock Exchange called Sino Forest Inc. If a private company can cook up fraud of this magnitude than why we should believe everything your Government says whose books are not open to the people of China leave alone accounting firms of the nation. Here is the text for your examination.
Peter Koven | May 22, 2012 12:04 PM ET | Last Updated: May 22, 2012 7:16 PM ET
More from Peter Koven
Xavier Ng/Reuters
Xavier Ng/Reuters The company logo of Sino-Forest is displayed at the entrance of its office in Hong Kong.
After an exhaustive investigation involving many of its most senior people, the Ontario Securities Commission alleges the short-sellers were right: Sino-Forest Corp. has committed a massive and complex fraud.
The landmark allegations, which took nearly a year to put together, imply a vast and wide-ranging scheme by Sino-Forest insiders to inflate the value of its assets and revenues. The commission's findings support the most serious fraud allegations that were previously made against Sino, while introducing new ones.
The OSC alleges Sino held "undisclosed control" over the network of third parties through which it conducted purchase and sale transactions. In turn, these deals were backed by fraudulent contracts that were not drafted until the quarter after they allegedly took place and revenue from them was recognized.
'I think this is a very positive development and the OSC is to be commended for acting swiftly'
The commission also lobbed new allegations against former chief executive Allen Chan, saying he secretly controlled companies that made $22-million when Sino-Forest acquired control of Greenheart Group Ltd., a Hong Kong-based firm. Five other former executives, including chief financial officer David Horsley, have been accused of fraud.
The allegations have not been proven. If proven, Sino-Forest represents one of the largest frauds in Canadian market history.
The Sino-Forest investigation was a particularly challenging one for the OSC, as it had to overcome language and cultural barriers in China while trying to unwind Sino's complex web of third-party relationships.
Related
Sino-Forest receives OSC enforcement notices
Sino-Forest founder Chan resigns in corporate shakeup
Advertisement
Sources said the commission did not do anything out of the ordinary in this investigation — it simply interviewed everyone it could and studied every document it came across.
Experts said the OSC moved quite quickly on the file, given the scope of the investigation and the difficulties involved.
"I think this is a very positive development and the OSC is to be commended for acting swiftly," said Dimitri Lascaris, a partner at Siskinds LLP, which is co-leading a class-action lawsuit against Sino-Forest. "Relatively speaking, this is fast for any Canadian regulator."
In its statement of allegations, the commission analyzed four of Sino-Forest's transactions that it claims were fraudulent. The biggest of them involves a company called Gengma Forestry.
In that case, Sino bought standing timber and land use rights from Gengma Forestry for about $14-million in 2007. The OSC states that the transaction was never recorded, and that Sino purported to buy the same assets from Yuda Wood (an alleged undisclosed subsidiary) for $83-million.
In 2010, the standing timber was purportedly sold for $231-million, the OSC said. However, the same assets were offered as collateral on a Sino-Forest bank loan in 2011, suggesting the sale could not have taken place a year earlier and been reported as revenue.
The OSC raised other troubling questions about the legitimacy of Sino's purchase and sales contracts. For example, the commission stated that forestry bureau employees, who provided confirmations of Sino's tree ownership, obtained gifts and cash payments from Sino's suppliers.
At its peak, Sino-Forest was worth more than $6-billion. Its epic collapse began in June of last year, when short seller Muddy Waters LLC accused the company of fraud. Sino was unable to file its 2011 financial results because of uncertainty around its third-party relationships, which forced the company into creditor protection last March. By that point, Sino's business in China was effectively destroyed by the fraud allegations.
The OSC allegations did not come as a surprise to investors. Last month, Sino-Forest said it received enforcement notices from the commission. Those are typically issued near the end of investigations, giving the targets a final opportunity to respond before formal allegations are launched.
HELP US UNDERSTAND CHINA THAN I WILL NOT BOTHER YOU. What we have been asking is that there should be transparency in your country so that people can examine the books if they wish to. Is that too much to ask for, I do not think so.
Can you please go back to the page one of the thread and read the post before posting a response? Thank you.
no smoking
Senior Member
- Joined
- Aug 14, 2009
- Messages
- 5,010
- Likes
- 2,308
huaxia rox
Senior Member
- Joined
- Apr 4, 2011
- Messages
- 1,401
- Likes
- 103
1 there are some chinese companies that are not presenting real figures to the public or have their other problems.....tell me which country doesnt have that kind of companies??like this one??
2 no one needs to take the responsibility of letting you understand china...its your own choice to do so if you like....and if you dont like no one cares at all......
- Joined
- May 20, 2009
- Messages
- 5,133
- Likes
- 746
well,what took place around me tells me the real figure....
ten years ago,no ordinary chinese around could afford cars ...but now....
almost everyone around complain that they can not find enough parking lots.
hehe
linking_park
Regular Member
- Joined
- May 16, 2012
- Messages
- 60
- Likes
- 1
China's ICBC first_half profit up 29% to $17.13 billion.
AFP: China's ICBC first-half profit up 29%
AFP: China's ICBC first-half profit up 29%
linking_park
Regular Member
- Joined
- May 16, 2012
- Messages
- 60
- Likes
- 1
China Industrial Bank's H1 profit up 39.81% to RMB 17.1 billion.
China Business News: Industrial Bank's H1 profit up 39.81%
China Business News: Industrial Bank's H1 profit up 39.81%
linking_park
Regular Member
- Joined
- May 16, 2012
- Messages
- 60
- Likes
- 1
China Construction Bank 1st-half profit up 15% to $16.8 billion
China Construction Bank 1st-half profit up 15% - MarketWatch
China Construction Bank 1st-half profit up 15% - MarketWatch
linking_park
Regular Member
- Joined
- May 16, 2012
- Messages
- 60
- Likes
- 1
SPD Bank: 12H1 Net Profit Up 33.49% YoY to CNY 17.19 Bn
SPD Bank: 12H1 Net Profit Up 33.49% YoY to CNY 17.19 Bn | ChinaScope Financial
SPD Bank: 12H1 Net Profit Up 33.49% YoY to CNY 17.19 Bn | ChinaScope Financial
| Thread starter | Similar threads | Forum | Replies | Date |
|---|---|---|---|---|
|
Systemic Flaw to Strike Chinese Banks in 5 Years: Expert? | China | 5 | |
|
Chinese bank ditches Iran gas project | Pakistan | 7 | |
|
Chinese banks shun small business | China | 0 | |
|
Attacks on Chinese in Pakistan | Pakistan | 8 |
