Banks

Visitors throng a pedestrian shopping street in Shanghai, China, on 10 February 2024. (Nicoco Chan/Reuters)

China set for interest rate cuts to support economy

The People’s Bank of China (PBOC) left a key interest rate unchanged on 15 January, leading the country’s major lenders to keep their benchmark interest rates on hold a week later. The PBOC has been constrained in its ability to cut interest rates over concerns that such a move would drive more capital out of China in search of higher returns. Even so, analysts say the next window of opportunity for a rate cut is likely to be in March or in the next quarter.
Pedestrians walk at Shibuya Crossing in the Shibuya district of Tokyo, Japan, on 27 October 2023. (Philip Fong/AFP)

China may find cure for stagflation by studying Japan’s experience

According to a report by Morgan Stanley released in August, China is facing the triple challenge of mounting debt, an ageing workforce and deflation, raising concern that the country is heading for a fate similar to Japan’s in the 1990s. Could Japan’s experience offer lessons to Chinese policymakers about how to battle prolonged stagnation?
A worker walks past a housing complex under construction by Chinese property developer Evergrande in Wuhan, Hubei province, China, on 28 September 2023. (AFP)

Rethinking China’s property market meltdown

The market for Chinese developers’ dollar-denominated bonds has seen a meltdown over the past two years, losing 87% of its value, sparking renewed calls for a fresh approach to stimulating the property market.
A labourer piles up steel pipes at a steel and iron factory in Shenyang, Liaoning province, China, 23 April 2010. (Sheng Li/File Photo/Reuters)

Metal magnate’s fall from China’s rich list to bankruptcy

Zhongwang Group founder Liu Zhongtian was once on the Forbes list of China's richest billionaires. But he has now come under legal restraint and his company has filed for bankruptcy. What went wrong?
A labourer pushes a handcart at the Mercato open-air marketplace in Ketema, district of Addis Ababa, Ethiopia, 21 July 2022. (Tiksa Negeri/File Photo/Reuters)

China joins effort to avert sovereign debt crisis

China, India, Saudi Arabia and the Paris Club of mostly Western traditional creditor nations are collaborating on debt resolution cases in multiple countries for the first time. Lengthy negotiations on debt reduction have been underway among creditors to determine who should bear potential losses and how restructuring plans should be arranged. Whether and how China will provide debt relief is a key element of these discussions.
People walk past a branch of the Industrial and Commercial Bank of China (ICBC) in Beijing, China, 1 April 2019. (Florence Lo/Reuters)

Why Chinese youths are travelling across cities to deposit money

In China, some people — mostly young people — are choosing to deposit their money in out-of-town banks, making long journeys to take advantage of varying interest rates between cities. Is this another whim and fancy of the younger generation or a measure done out of desperation to generate more savings? Zaobao’s China Desk looks into the phenomenon.
Pedestrians along an elevated walkway as an electronic ticker displays stock figures in Pudong's Lujiazui Financial District in Shanghai, China, on 26 May 2023. (Qilai Shen/Bloomberg)

China’s consumers flush with cash, but recovery is still lagging

A swathe of negative economic data for April, which included the manufacturing sector unexpectedly contracting and retail sales missing forecasts, indicate that China's recovery remains lopsided. It’s not a question of whether there is enough money being pumped into the economy to fuel the recovery, but instead where that money is going and why people aren’t availing themselves of more credit?
A man walks on an overpass near a construction site of a subway station in Beijing, China, 18 April 2023. (Tingshu Wang/Reuters)

China’s overseas lending needs a full-fledged debt restructuring

China finds itself in a similar predicament as Japan in the 1970s, when the latter was a major lender to the Latin American countries which eventually suffered a major debt crisis in the 1980s. Now a major lender to various developing countries, especially after Covid, China’s apparent approach of kicking the can down the road means that time bombs of massive defaults are waiting to go off.
A man walks past the entrance to a construction site in Beijing, China, on 23 March 2023. (Greg Baker/AFP)

Chinese local governments facing debt crisis: Waiting for bailouts

Local governments are teetering dangerously close to bankruptcy, going by the amount of debt that they have racked up. While their financial troubles are likely to ease with the China’s post-Covid economic recovery, the central government is still expected to step in to prevent regional economies from toppling like a house of cards. But will certain forms of intervention do more harm than good?