The Unstable Financial System in China

“Mr. Walter — an investment banker who has been working in China for about 20 years — says great progress was made in China during the 1990s, when the country’s leaders began pushing a series of sweeping changes meant to restructure the state-run economy, reform its banking system and lay the foundation for a capital market system.

But the authors say that despite the veneer of a market economy, the state has been reluctant to surrender power. They contend that China is largely controlled by powerful state-owned oligopolies, and that those companies and the Communist Party use the banks and capital markets as cash machines or utilities to drive growth while also hiding debt and distorting the value of assets.”

http://economix.blogs.nytimes.com/2011/01/17/a-conversation-with-carl-walter/

Mr. Walter’s assessment is dead on accurate and peels back some of the unique issues in working with the Chinese government.

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