Michael Pettis
Michael Pettis

@michaelxpettis

4 Tweets Jan 07, 2023
1/4
Good Caixin article on Henan's rural banks. The article notes early on: "Evidence is growing that the banks were linked by a web of corruption, lawbreaking and abuse of power which thrived in China’s financial system over the past decade."
caixinglobal.com
2/4
It goes on to say: "The trouble in Henan underscores the limited success financial regulators have had in their campaign to stamp out risky lending and corruption and rein in the activities of major shareholders that were often at the root of financial scandals."
3/4
It then reports, a little contradictorily, that "a PBOC official told a press briefing Wednesday that China’s financial risks are 'generally controllable,' and that 99% of banking assets are safe."
4/4
In fact what happened in Henan is a systemic problem, and just as the four rural banks were not the first of the Chinese banks to get into trouble, they are also not the last.

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