Tom Orlik
Thank you, Tom Orlik, for ‘Charting the Brouhaha Over China’s Banks.’ This is a masterful summary of the banking  business in China and its challenges. And, a primer for understanding the meaning and impact of last week’s interest rate cut as well as for understanding an increasingly contentious (ever since Premier Wen suggested that it’s time to break up the big four bank’s monopoly) issue: the future structure of China banking. And, to my delight, lots of charts.
Here’s a good one:
Good. But, it only tells a partial story without really saying so. Credit for small business is tough–the banks like to lend to the SOEs with better credit and to government entities (or used to). Both SOEs and government entities have built a lot of projects, made a lot of investment. If, on the other hand, the banks had lent instead to small businesses would investment as a share of GDP be much lower?
And it is true that lower returns on deposits encouraged speculation in residential real estate, and with it more development, more investment. But, how large is this investment compared to the recent massive infrastructure and other projects?
True, Mr. Orlik in the last chart says ‘contribute.’ But, how much of a contribution have these had in the unbalancing of China’s economy? That would have been a great follow-on chart.
Little nits. If you only read article about the China banking industry, this is the one.
