A Chinese Banker Explains Why There Is No Way Out

Over the past year, we have frequently warned that the biggest financial risk (if not social, which in the form of soaring worker unrest is a far greater threat to Chinese civilization) threatening China, is its runaway non-performing loans, which at anywhere between 10 and 20% of total bank assets, mean that China is one chaotic default away from collapsing into the post “Minsky Moment” singlarity where it can no longer rollover its bad debt, leading to a debt supernova and full financial collapse. And as China’s total leverage keeps rising, and according to at least one estimate is now a gargantuan 350% of GDP (incidentally the same as the US), the threat of a rollover “glitch” gets exponentially greater. Continue reading

Is China buying influence at Cambridge University?

Beijing: A charity that gave £3.7 million ($A6.6 million) to Cambridge University to endow a professorship for Chinese development studies is run by members of the family of the country’s former prime minister, Wen Jiabao, according to a well-placed source in Beijing.

The donation from the Chong Hua Foundation in January 2012 raises serious questions over whether Beijing is buying influence at one of Britain’s most important universities, with one academic accusing it of allowing the Chinese government “to appoint a professor at Cambridge”.

Cambridge University had previously denied that Chong Hua had links to the Chinese government, but information recently received by The Telegraph indicates that the foundation is controlled by Wen Ruchun, the daughter of China’s former prime minister. Continue reading

Currency crisis at Chinese banks ‘could trigger global meltdown’

The growing problems in the Chinese banking system could spill over into a wider financial crisis, one of the most respected analysts of China’s lenders has warned.

Charlene Chu, a former senior analyst at Fitch in Beijing and now the head of Asian research at Autonomous Research, said the rapid expansion of foreign-currency borrowing meant a crisis in China’s financial system was becoming a bigger risk for international banks. Continue reading

Mega Default In China Scheduled For January 31

On Friday, Chinese state media reported that China Credit Trust Co. warned investors that they may not be repaid when one of its wealth management products matures on January 31, the first day of the Year of the Horse.

The Industrial and Commercial Bank of China sold the China Credit Trust product to its customers in inland Shanxi province.  This bank, the world’s largest by assets, on Thursday suggested it will not compensate investors, stating in a phone interview with Reuters that “a situation completely does not exist in which ICBC will assume the main responsibility.” Continue reading