by YaTingPom » Wed Mar 21, 2018 6:01 pm
If anything the investment will increase because China has appointed a new governor to People’s Bank of China, the deputy of the previous governor (the one who changed its exchange rate in 2015 causing worldwide panic and causing cash outflows from China).
His appointment should have got more press time than the Federal Reserve’s new chairman as China is a far bigger player than the Fed. It’s policies effect the whole world.
Previously PBC had to prop up unprofitable state-owned loans and debt, often to stimulate the economy of China, where these ghost cities originated from - lots of cheap cash and the pet projects of powerful provincial leaders. (The loans are also guaranteed by government).
Now though that’s all changing.
Whilst the above will continue the bank is now free to offer loans, at higher rates, to private firms - small businesses as well as corporates - and the public sector, something that’s never been allowed.
So China’s booming economy built on flaky cash injections for state run businesses - concrete, steel, aluminium, and unproductive factories etc will now be driven by consumer spending with the injection of funds to private companies. If they don’t China will be forced to export its access and no doubt create a glut and therefore a drop in prices and a trade war.
If anything the investment will increase because China has appointed a new governor to People’s Bank of China, the deputy of the previous governor (the one who changed its exchange rate in 2015 causing worldwide panic and causing cash outflows from China).
His appointment should have got more press time than the Federal Reserve’s new chairman as China is a far bigger player than the Fed. It’s policies effect the whole world.
Previously PBC had to prop up unprofitable state-owned loans and debt, often to stimulate the economy of China, where these ghost cities originated from - lots of cheap cash and the pet projects of powerful provincial leaders. (The loans are also guaranteed by government).
Now though that’s all changing.
Whilst the above will continue the bank is now free to offer loans, at higher rates, to private firms - small businesses as well as corporates - and the public sector, something that’s never been allowed.
So China’s booming economy built on flaky cash injections for state run businesses - concrete, steel, aluminium, and unproductive factories etc will now be driven by consumer spending with the injection of funds to private companies. If they don’t China will be forced to export its access and no doubt create a glut and therefore a drop in prices and a trade war.