China goes for it!

[Mega]

http://www.bbc.co.uk/news/business-23377060
Mike

[GRG55]

Re: China goes for it!

Reading between the lines this looks like they are desperately trying to get debt servicing costs down for existing overextended borrowers can't make their payments in a slowing economy. Keeping the cap on deposit rates and the half-hearted attempts to restrict property lending (without popping the obvious bubble) just reinforces that view.

All the blather from the analysts about "floating the yuan" and reforms seems more of the pro-China media bullhorn. The government owns a huge portion of the official banking sector. They can do anything they want with it. The media make it sound as though the banking system works the same way it does in the west. It doesn't.

" Chinese authorities have given the banking industry greater freedom by allowing banks to set their own lending rates. Previously they were not allowed to lend at rates below a certain level set by the People's Bank of China (PBOC).

The People's Bank said it hoped the move would lead to lower costs for companies...

...There remains an upper limit on how much interest banks are allowed to offer depositors. That currently stands at 3% with a small amount of leeway to go higher.

That relatively poor rate of return has encouraged Chinese savers to invest in unregulated investment products in the so called shadow banking system.

Controls on mortgage lending will also remain in place, to maintain the "healthy development of the housing market", the PBOC said.

"One of the dilemmas they have is that house prices continue to rise quite fast so they probably don't want across-the-board lower interest rates," said Mr Nielsen..."

[touchring]

Re: China goes for it!

Reading between the lines this looks like they are desperately trying to get debt servicing costs down for existing overextended borrowers can't make their payments in a slowing economy. Keeping the cap on deposit rates and the half-hearted attempts to restrict property lending (without popping the obvious bubble) just reinforces that view.

All the blather from the analysts about "floating the yuan" and reforms seems more of the pro-China media bullhorn. The government owns a huge portion of the official banking sector. They can do anything they want with it. The media make it sound as though the banking system works the same way it does in the west. It doesn't.

You can say the same for North Korea. If North Korea has total control on their banks and even controls how much money each account holder can own (erasing the excess), then why is their economy still in doldrums?

[c1ue]

Re: China goes for it!

You can say the same for North Korea. If North Korea has total control on their banks and even controls how much money each account holder can own (erasing the excess), then why is their economy still in doldrums?

Well, one possibility: the economic embargo that has been placed on that nation since 1950.

[GRG55]

Re: China goes for it!

Well, one possibility: the economic embargo that has been placed on that nation since 1950.

Doesn't seem to have stopped them from developing a nuclear arsenal and continuing with extending the range in their missile program...

[touchring]

Re: China goes for it!

Well, one possibility: the economic embargo that has been placed on that nation since 1950.

Does anyone believe that economic embargo has an effect?

North Korea trades with China, I don't see that as the reason. The elites in Pyongyang still get their luxury items.

[c1ue]

Re: China goes for it!

Doesn't seem to have stopped them from developing a nuclear arsenal and continuing with extending the range in their missile program...

You don't need much volume of trade for that.

Does anyone believe that economic embargo has an effect?

North Korea trades with China, I don't see that as the reason. The elites in Pyongyang still get their luxury items.

Yes, many do including myself.

You might examine the economic trajectory of Iraq after economic sanctions were imposed. Now extend that for 60 years.

Trade with China exists, but China until recently didn't have much to trade. Certainly North Korea doesn't have much use for iPhones and iPads.

And as for the elites, again, not at all clear how a trickle of luxury goods equates to an entire economy.

Is the embargo the only reason why North Korea is economically screwed up? Certainly not. But then again, ideology isn't the only reason it is, either.

[GRG55]

Re: China goes for it!

You don't need much volume of trade for that.



Yes, many do including myself.

You might examine the economic trajectory of Iraq after economic sanctions were imposed. Now extend that for 60 years.

Trade with China exists, but China until recently didn't have much to trade. Certainly North Korea doesn't have much use for iPhones and iPads.

And as for the elites, again, not at all clear how a trickle of luxury goods equates to an entire economy.

Is the embargo the only reason why North Korea is economically screwed up? Certainly not. But then again, ideology isn't the only reason it is, either.

Yes, but you must have external income, or you must have sanctions busting help. That was my point to counter your embargo effectiveness argument.

[c1ue]

Re: China goes for it!

Yes, but you must have external income, or you must have sanctions busting help. That was my point to counter your embargo effectiveness argument

Certainly true, but China has amply shown that you don't need to sell under-ground resources in order to bring in external income.

However, it is awfully hard to do that when you're under embargo by the largest potential market for your labor, and the 2nd largest market would not dare touch a member of the 'Axis of Evil'.