Banks

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.

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?

One highlight of the recent report from China’s Two Sessions is the proposed reforms to the financial regulatory system. Among the changes is to place regulators under the civil service system, which would mean salary cuts of 50% or more, along with stricter regulations on staff resignations. Will China's reforms for common prosperity work?

The RMB is now one of the most actively traded currencies in the world and is set to gain further traction globally this year, as the People’s Bank of China implements the government’s strategy to boost the currency’s use overseas, challenging the dominance of the US dollar in the long term.

China's central bank is scrambling to increase demand for borrowing by using nearly every instrument in its toolbox. But the impact has so far been limited, as Chinese companies and households are trapped in a crisis of confidence in the economy amid slowing growth and the impact of strict anti-Covid measures. What more can China do to save the economy?

Comic artist Bai Yi's artwork gives a glimpse into a dystopian world where individual lives are considered insignificant before the all-powerful and all-important state machine, and where herculean efforts are needed to uphold the dignity of human lives.

Li Cheng, director of the John L. Thornton China Center of the Brookings Institution, notes that China’s emergence as an economic powerhouse has been accompanied by the rise to prominence of seasoned financial technocrats or self-taught experts. While these "new kids on the block" will most likely enter the new CCP Central Committee this fall for the first time, time will tell how they will respond to the many daunting economic and financial challenges at both the provincial and national levels.

Taiwanese commentator Chen Kuohsiang believes that China’s economy is under threat, with the unravelling of intertwining issues in the financial industry, property sector and government finances that cannot be easily resolved. How will China boost its investment-led economy, push down unemployment rates, and regain consumer and investor confidence?

Calls for de-dollarisation have increased since the financial sanctions of the Ukraine war and the very real threat of the US dollar being weaponised. In this context, academic Pei Sai Fan explains why conditions are ripe for China and Asia to offer innovative alternatives, such as developing regional digital currency cooperation in the payment and settlement of regional trade and investment, and expediting the development of new cross-border digital payment infrastructure in Asia known as multi-CBDC platform projects.