China’s credit underworld

Creative financing schemes and frisky credit-risk assessments haven’t only catapulted capitalist economies to the brink. For years China’s state-run banks have relied upon a coterie of dubious experts and shady loan guarantee companies when extending credit. Now, as things fall apart, Forbes’ Gady Epstein finds he can’t get his calls returned — these phantom financial ...

587984_090309_china2.jpg
587984_090309_china2.jpg

Creative financing schemes and frisky credit-risk assessments haven’t only catapulted capitalist economies to the brink. For years China’s state-run banks have relied upon a coterie of dubious experts and shady loan guarantee companies when extending credit. Now, as things fall apart, Forbes’ Gady Epstein finds he can’t get his calls returned — these phantom financial wizards have lately taken a turn for the reclusive — but still manages to lift the veil on China’s consequential credit underground.

 

Whether or not banks elsewhere are nationalized, the real issue remains whether financial planners know what they’re doing. Tim Geithner, take note.

On the other hand, per Forbes, at least credit is still available in China:

“In America, basically, private capital has dried up, but in China you have these large pools of capital sitting around,” says Anne Stevenson-Yang, principal of Wedge MKI, an investment research and advisory firm in Beijing. “The problem is that most of the short-term capital and capital for private companies is in these gray and sometimes semicriminal networks.”

China Photos/Getty Images

Christina Larson is an award-winning foreign correspondent and science journalist based in Beijing, and a former Foreign Policy editor. She has reported from nearly a dozen countries in Asia. Her features have appeared in the New York Times, Wired, Science, Scientific American, the Atlantic, and other publications. In 2016, she won the Overseas Press Club of America’s Morton Frank Award for international magazine writing. Twitter: @larsonchristina

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