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New Year tales-I
This New Year season was pretty
Bubbles threaten as China shakes off bank crisis
patchy for the government
departments that typically see a lot of andfirms’inventoryrebuilding. turnaroundinexports,or liquidityintotheeconomywhen buildstrongbuffersinthe relevantprojectfinancing.
‘action’. As explanation, an official in Theimpactof suchdriving ‘organic’consumerdemand.In manyothercountrieswere bankingsystemtocovercapital, Similarly,whenwefoundbank
one of these departments pointed to forceswillinevitablytaperoff in thefirst10monthsof 2009,banks sufferingfromacreditcrunch. liquidityandprovisioning.For loanswerechannelledintothe
an interesting impact of the 2010.Third,theglobalfinancial pumpedalmost9trillionyuan Clearly,banksplayeda thispurpose,wehaveadheredto propertyorstockmarketsfor
meltdown: it has shortened the marketsremainvulnerableto ($1.32trillion)intotheeconomy, crucialroleinachievingChina’s sometraditionallimitsand speculativetrading,westepped
queues in the visitors’ lobbies of variousshocksandthe markingaYoYincreaseof 34%. economicgoalsin2009.In2010, approachesforprudential intostopthat.
ministers. This trend was also subsequentlossof confidence, Withthestrongreboundin theywillcontinuetobe regulation.Theselimitsand Inthemeantime,banksare
evident in the alacrity with which asexemplifiedbytherecent realestateandstockmarkets, importantinservingthemacro- approachesmaylookbasicor encouragedtodirecttheir
some of the officials called in the LIU Dubaidebtcrisis.Finally,many structuralbubblesalsothreaten economicgoalsof stabilising simple,buttheyhaveprovento lendingtoboostconsumer
hacks in the morning, unlike governmentsareunder toemerge.Beyondourborders, growth,stimulating beeffectiveincarryingbanks spending,supportrural
most years.
MINGKANG tremendouspressuretoremain China’smainexportmarkets developmentandqualified
solventinthefaceof remainweak.Although SMEs,improvehealthcareand
New Year tales-II THEworstof thecrisisseemsto unprecedented,highlevels consumerspendinghaspicked thesocialsecuritysystem,and
Delhi’s blinding fog extracts a beover.Whenwelookbackat of publicdebt. upsomeeconomicslack,China’s facilitatepollutionreduction
higher cost than just harrying 2009,encouragingsignsof Tomany,Chinastandsout underdevelopedsocial-welfare andenergysaving.
passengers. Planes are having to wait economicrecoveryare amongthebrightestspotsinthe systemstillrestrainsdomestic Someof theseareuncharted
for a long while after landing to find a emerginginbothdevelopedand globalrecovery.TheChinese demandfrombecomingamajor waterstobanks,butmanyhave
parking slot, such is the congestion developingmarkets.Yet,when economymaywellhaveended partof China’sgrowthstory. provedsuccessfulinturning
that builds up. DGCA rules require welookahead,uncertainties 2009withmorethan8%gross Afterthe1997Asianfinancial once-ignoredmarketsinto
pilots to keep engines running until andchallengesloomlargeon domesticproductgrowth. meltdown,China’sleadership goldmineswhilekeepingrisks
they have reached their parking spot. manyfronts. Importshavegainedasdomestic decidedtooverhaulChina’s undercontrol.Theseeffortswill
At least one pilot estimated that he Signssuggestingrecovery demandremainsstrong.After bankingsystembytaking accumulateintoapotentdriving
had burnt some 26 tonnes of aviation includeapick-upinglobal pricedeclines,bothcapitaland resolutemeasurestofoster forcetoenablebalancedand
fuel while waiting. Imagine the cost, manufacturing,thegradual propertymarketsareona banks’capitalstrength, sustainableeconomicgrowth.
and the huge carbon footprint! reboundinworldtrade,aslower dynamicrebound.Asthe provisioningcapacity, Inretrospect,China’s
paceof joblossesinsome backboneof thecountry’s corporategovernanceand economyandfinancialindustry
New Year tales-III advancedeconomies,andthe financialindustry,banksare riskmanagement.These haveweatheredthestormwellin
The 300-odd delegates that have resurgenceof stronger alsooftenapplaudedforcapital effortsledtoasubstantial thepasttwoyears.Itwasn’t
come to the Capital to participate in domesticdemandinanumberof strengthandassetquality,as improvementintheresilienceof throughluck,butbylearning
the 20th Conference of Speakers and developingmarkets.Still,there wellastheirabilitytoavoida individuallendersandthe fromthepast.Criticsoftensay
Presiding Officers of Commonwealth aresomeimportantobstaclesto worldwideliquidityshock. bankingsectoratlarge. consumptionandoptimising throughturbulence. theonlythinghumanslearn
nations are being treated to five-star ameaningfulrecovery. Evenwiththisrosypicture, Whenthelatestfinancial theeconomicstructure.Evenif Asregulators,wealsofeel fromhistoryisthathumans
hospitality, never mind the First,progressisstillfairly challengesareeverpresentin crisishitChina,99%of banks’ aggressivelendingstrainsthe obligedtoscrutiniseeconomic don’tlearnfromhistory.Itis
government’s austerity drive. The unevenacrossmanyregionsand China.Economicgrowthhas assetswereheldbylenderswell banks’capital,individual developmentsandactpromptly timetomakeachange.
budget for creating a temporary industries.Second,the largelybeenfuelledby abovethemandatorycapital- lendersandtheindustryasa inresponse.Whenovercapacity
setup for the delegates to have lunch resurgenceof growthismainly governmentstimulus,inthe adequacyratio,withlittle wholearenowmorethan wasdetectedincertain Theauthorischairmanof the
has apparently run into eight digits! accountedforbygovernments’ formof surginginfrastructure exposuretooverseastoxic adequatelycapitalised. industriesorregions,weissued ChinaBankingRegulatory
‘quantitativeeasing’policies, investmentandamassive assets.Suchasolidpositionhas Onethingwehavelearned directivestoalertbankstothe Commission
unconventionalfiscalstimulus, increaseinbanklending,nota enabledChinesebankstopump fromthepastisthatweneedto potentialrisksassociatedwith Bloomberg