posted on Jun, 26 2013 @ 10:20 AM
As you will note, this has a lot to do with mandates coming down to maintain certain ratios between deposits and loans.
Traditionally, Chinese people have been big savers. But more recently, a huge number of Chinese have become Real Estate speculators...taking money
from savings to buy multiple housing units (and, or course, taking out mortgages to complete the purchases), hoping to capitalize on the rise in
We all know, but many people in China don't seem to realize, that this kind of thing...if left to its own devices...will inevitably lead to a bubble
burst. This would (will?) create massive problems for individuals and financial institutions in China.
In recent years, as well, Chinese banks have been very eager to lend to companies who are building factories in support of the Export Economy that has
fuelled China's rapid economic rise. But, already, there are many signs that this strategy is beginning to falter (as was also very
predictable)...with plant closures, anti-dumping tariffs being imposed - and new factories now springing up in places like Myanmar, Thailand and
Vietnam...because now (with their rising middle class) Chinese labour is becoming relatively expensive.
The authorities there, it would seem, are now recognizing the warning signs, and are trying to keep their ratios in line by simply imposing monthly
lending limits. A short term solution perhaps...but this will also have the impact of slowing the economy, so the proper amount of braking will have
to be applied.
Should be "interesting".