metta8 saidNext up for finance: China’s a bubble, entire countries go broke
This was a really interesting book that detailed the bizarreness of Chinese growth. James Kynge worked as a financial reporter in China for years before writing this book in the early 2000's. Therefore, his work missed the really crazy stuff in the last 4 or 5 years.
One of the practices he noted was the fact that the CCP controlled the banking and lending system, and despite "open" stock exchanges, most companies on the trading board were at least partially or wholly state owned and managed.
Banks would literally lend to any company that had pull, despite the fact that a company was producing millions more units every year than it could sell. Chinese companies cannot compete in their own home market, and thus are forced to turn to export markets for profits. "Growth" for a company is measured by production, not profit. Often, a company's solution was to expand into other markets that were already saturated. The fact that they were expanding was enough to warrant a low interest loan from the banks.
Kynge questioned how long this was tenable.
Kynge's conclusion was that facing myriad economic, social, financial and environmental pressures, the CCP's goal has evolved to create state sponsored "champions" such as Japan and Korea's (Mitsubishi, Kia etc etc): they'd created a Faustian deal that in return for power and legitimacy to govern, they would deliver the jobs to the billions who needed them.
It's a really good read, and Kynge did a good job explaining the concepts and events of modern China's growth.