26-01-2014, 11:34 AM
Hi guys,
I have came across three articles about China's shadow debt and its trust products which caused some worry.
Will the Govt be able to effectively deleverage the debt-ridden economy successfully? But one thing for sure, the good economical growth won't be substantial in the long-term since credit is tightening up. I hope the China doesn't bail out them, it's better to take short-term pains and send a clear message to everyone not to engage in risky investments.
Any thoughts?
Here are the links:
http://www.ibtimes.com/china-shadow-bank...sk-1542659
http://www.bloomberg.com/news/2014-01-06...redit.html
http://www.bloomberg.com/news/2014-01-23...risis.html
I have came across three articles about China's shadow debt and its trust products which caused some worry.
Will the Govt be able to effectively deleverage the debt-ridden economy successfully? But one thing for sure, the good economical growth won't be substantial in the long-term since credit is tightening up. I hope the China doesn't bail out them, it's better to take short-term pains and send a clear message to everyone not to engage in risky investments.
Any thoughts?
Here are the links:
http://www.ibtimes.com/china-shadow-bank...sk-1542659
Quote:Following an investigation, China Credit Trust Company told investors that Zhenfu Energy had taken out high-interest underground loans totaling 2.9 billion yuan, bringing its total liabilities to 5.9 billion yuan. Meanwhile, total assets have been valued at less than 500 million yuan.
http://www.bloomberg.com/news/2014-01-06...redit.html
Quote:“As banks tightened their purse strings, local governments had no choice but to resort to shadow banking and incur more expensive borrowing costs,” said Tang Jianwei, a Shanghai-based economist at Bank of Communications Co., the nation’s fifth-largest lender. “That will further constrain their repayment ability and eventually overwhelm some lower-level entities which have borrowed way beyond their means. I won’t rule out some defaults in 2014.”
http://www.bloomberg.com/news/2014-01-23...risis.html
Quote:Chang Feng, 33, a finance-industry worker from Shanghai, who teamed up with his uncle to invest a combined 3 million yuan in Credit Equals Gold in 2011, said he was offered “implicit guarantees” of repayment by a product manager at ICBC.
“Originally, I didn’t plan to invest in a trust-related product,” said Chang, a spokesman for the protest group. “But ICBC’s product manager told us the project will be guaranteed by the bank. There’s no way to prove it now. We didn’t record it. We trusted ICBC.”