Tag: Banking and Financial Institutions

China Evergrande Must Be Liquidated, a Judge Said. What Happens Next?

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After nearly two years of false starts, last-ditch proposals and pleas for more time, China Evergrande, a massive property company, has been ordered to dismantle itself. It’s a big moment. Evergrande’s collapse in 2021 sent China’s housing market into a tailspin. The worries in real estate, where most households put their savings, helped tip the economy into a downturn. The scale of Evergrande’s empire is enormous: Its developments cover hundreds of cities. It controls dozens of business and is more than $300 billion in debt — a sum far greater…

As China’s Markets Stumble, Japan Rises Toward Record

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There’s a shift underway in Asia that’s reverberating through global financial markets. Japan’s stock market, overlooked by investors for decades, is making a furious comeback. The benchmark Nikkei 225 index is edging closer to the record it set on Dec. 29, 1989, which effectively marked the peak of Japan’s economic ascendancy before a collapse that led to decades of low growth. China, long an impossible-to-ignore market, has been spiraling downward. Stocks in China recently touched lows not seen since a rout in 2015, and Hong Kong’s Hang Seng Index was…

China’s GDP Grew in 2023, but Economic Strains Lurk

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Car production set records in China last year. Restaurants and hotels were increasingly full. Construction of new factories surged. Yet China’s economic strengths conceal weaknesses. Deep discounts helped drive car sales, particularly for electric cars. Diners and travelers chose cheaper dishes and less expensive hotels. Many factories ran at half capacity or less because of weak demand inside China, and are working to export more to make up for it. China’s economy grew 5.2 percent last year as it rebounded from nearly three years of stringent “zero Covid” pandemic control…

The Debt Problem Is Enormous, and the System for Fixing It Is Broken

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Martin Guzman was a college freshman at La Universidad Nacional de La Plata, Argentina, in 2001 when a debt crisis prompted default, riots and a devastating depression. A dazed middle class suffered ruin, as the International Monetary Fund insisted that the government make misery-inducing budget cuts in exchange for a bailout. Watching Argentina unravel inspired Mr. Guzman to switch majors and study economics. Nearly two decades later, when the government was again bankrupt, it was Mr. Guzman as finance minister who negotiated with I.M.F. officials to restructure a $44 billion…

Xi Jinping Is Asserting Tighter Control of Finance in China

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In his decade as China’s top leader, Xi Jinping has asserted greater control for himself and the Communist Party over the country’s economy. Now, Mr. Xi has moved to extend that power more forcefully than ever over China’s financial system. The Communist Party issued a detailed ideological statement on Friday in Qiushi, the party’s main official theoretical journal, that made clear that it expected banks, pension funds, insurers and other financial organizations in China to follow Marxist principles and pay obedience to Mr. Xi. The Qiushi paper, which was being…

Gold Bars and Tokyo Apartments: How Money Is Flowing Out of China.

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Affluent Chinese have moved hundreds of billions of dollars out of the country this year, seizing on the end of Covid precautions that had almost completely sealed China’s borders for nearly three years. They are using their savings to buy overseas apartments, stocks and insurance policies. Able to fly again to Tokyo, London and New York, Chinese travelers have bought apartments in Japan and poured money into accounts in the United States or Europe that pay higher interest than in China, where rates are low and falling. The outbound shift…

China Consumer Prices Fall, Renewing Fears of Deflation

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Prices are falling again in China after a two-month reprieve, with households and businesses wary of spending even as state-controlled banks pump money into the construction of more factories. The decline in prices could put China on the cusp of a pernicious economic condition called deflation, in which companies and workers find that they receive less money for their goods or their work, while their debts remain as heavy as ever. In the United States, by contrast, inflation has been brought down substantially, although consumer prices are still higher than…

China Bet It All on Real Estate. Now Its Economy Is Paying the Price.

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When China’s housing boom seemed like a one-way bet, Gary Meng’s parents bought an apartment from China Evergrande, the country’s biggest developer. Soon the company called with another pitch: to manage their wealth. It was a good deal with little risk, the family thought. Evergrande had global recognition and was a politically important company at the heart of China’s growing economy. They invested all their savings. Then the unthinkable happened. In 2021, Evergrande defaulted, representing the start of a real estate meltdown that has shaken China’s economy, felled some of…

How China’s Property Crisis Is Testing Its Too-Big-to-Fail Banks

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China’s giant banking system, the world’s largest, is heavily exposed to the real estate crisis: Nearly 40 percent of all bank loans are related to property. And pressure is building on those banks as dozens of real estate developers have defaulted or missed payments on overseas bonds, led by China Evergrande, the world’s most indebted developer. The scale of China’s property problems — enormous levels of debt, an oversupply of apartments and consumers increasingly wary of buying — means the government could be forced in the coming years to spend…

Real Estate Crisis Triggers New Alarms Over China’s Shadow Banks

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An accountant in northeast China deposited her life savings and received a letter guaranteeing her investment in a trust firm. Workers at a state-owned utility pooled money from friends and relatives believing that their investments were backed by the government. A man sank $140,000 into an account that he was told would make a 10.1 percent annual return. They are among the hundreds of thousands of Chinese investors confronting a distressing reality: Their investments with Zhongzhi Enterprise Group, a financial giant managing $140 billion in assets, and its trust banking…