Since 2016, China’s financial authorities have been quietly pushing the banks to dispose of their bad loans more aggressively. The process has been incremental, but cumulatively meaningful. The measured pace at which Beijing is pursuing its debt cleanup could easily be misconstrued as timidity, a sign that China’s political leaders remain either uncommitted to dealing with the risk or unconvinced… READ MORE
In 2016, a spate of fraud involving bankers’ acceptance drafts (BADs) and commercial acceptances drafts (CADs)—which are collectively called commercial paper or corporate bills—led to a major contraction in both their issuance and the volume of bills that are discounted. While that has seemingly helped erase the worst abuses, the fallout is still being felt in the real economy. Commercial… READ MORE
China’s financial system is a little like the Island of Misfit Toys. From a distance everything looks familiar, but up close it becomes apparent that things aren’t built the way you might expect. Take the country’s money-market funds: they aren’t managed by institutional investors like Vanguard and Fidelity but by internet giants Alibaba and Tencent. Meanwhile, trusts don’t help preserve… READ MORE
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