Word: banking
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...stock market has soared is that Chinese companies have received so much cheap financing that they have dumped proceeds into the equity market for lack of better alternatives. Andrew Barber, Asia strategist at Research Edge, a New Haven, Conn., investment-research firm, estimates that up to 30% of new bank lending this year has wound its way into equities. Why isn't the money going into new businesses? The evidence suggests that in key parts of the economy growth remains anemic, particularly the important export-manufacturing sector, which continues to suffer from the reduction in global demand. According...
...believe this will happen anywhere near that fast). This willingness to make its positions known publicly and push other governments to see things China's way "is very different from 10 years ago, when Beijing was much quieter and more low-profile," says Jun Ma, an economist at Deutsche Bank in Hong Kong. (See China covers...
...China's overall economic vigor may continue to impress, but there are questions surrounding the quality of its performance. The People's Bank of China, the central bank, is giving great gobs of money to state-owned banks that, with Beijing's forceful encouragement, are lending to state-owned companies participating in infrastructure construction. Skeptics are frightened by the amount of cash being shoveled out the doors. The central bank recently announced that new loans in June totaled $224 billion. That was more than double the previous month's amount and brought new bank lending in the first six months...
...crisis period] with eyes wide open," says Barber, recognizing that loans being granted in a relatively weak economic climate could start to go bad in droves. The country's once shaky financial sector was cleaned up several years ago - in 2007, nonperforming loans amounted to just 3% of total bank assets - and vehicles set up to deal with China's last banking crisis still exist. In other words, Beijing thinks its financial system is strong enough to handle the risks of its very loose monetary policy...
...people simply looking for a place to live, though, deals abound. The house that the Robertses finally bought - with three bedrooms, granite countertops and textured walls - had been listed at $315,000 before its owners fell into foreclosure and the bank took over. The Robertses paid $169,000. "We never thought we'd be able to have such a nice house," says Jillian happily...