Shadow Banking and the Rise of Capitalism in China
This book is about the growth of shadow banking in China and the rise of China’s free markets. Shadow Banking refers to capital that is distributed outside the formal banking system, including everything from Mom and Pop lending shops to online credit to
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Shadow Banking and the Rise of Capitalism in China
Andrew Collier
Shadow Banking and the Rise of Capitalism in China
Andrew Collier Orient Capital Research Hong Kong
ISBN 978-981-10-2995-0 ISBN 978-981-10-2996-7 (eBook) DOI 10.1007/978-981-10-2996-7 Library of Congress Control Number: 2017934895 © The Editor(s) (if applicable) and The Author(s) 2017 This work is subject to copyright. All rights are solely and exclusively licensed by the Publisher, whether the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and transmission or information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed. The use of general descriptive names, registered names, trademarks, service marks, etc. in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use. The publisher, the authors and the editors are safe to assume that the advice and information in this book are believed to be true and accurate at the date of publication. Neither the publisher nor the authors or the editors give a warranty, express or implied, with respect to the material contained herein or for any errors or omissions that may have been made. The publisher remains neutral with regard to jurisdictional claims in published maps and institutional affiliations. Cover illustration: © WorldFoto / Alamy Stock Photo Printed on acid-free paper This Palgrave Macmillan imprint is published by Springer Nature The registered company is Springer Nature Singapore Pte Ltd. The registered company address is: 152 Beach Road, #21-01/04 Gateway East, Singapore 189721, Singapore
“I would like to dedicate this book to my long-suffering assistant, Shiyi Zhou, a very smart and talented analyst from Shanghai. She has ably pulled together data—from official and unofficial sources—and combined this with penetrating analysis of how the Chinese economy really works. This book would be much the poorer without her excellent assistance.”
Contents
1 Introduction: The Mayor of Coal Town 1 The Mayor of Coal Town 1 2 Early Shoots of Informal Finance 11 3 China’s Great Financial Push 25 4 Federalism 35 When in Doubt….Build a Town! 50 5 The Rise of the LGFV 53 6 Don’t Trust the Trusts 73 7 The Banks Jump into Shadow Banking 87 8 The Wild West of Bank Products 105
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Contents
9 The Internet Goes Shadow 123 Fast Money—and Fraud—Online 132 The Banks Fight Back 139 The Future of Online Finance in China 141 10 The Risks of Shadow Banking 145 The Balance Sheet Argument 154 What Government? 158 Weak Local Banks 161 11 What Does the Future Hold for Shadow Banking? 171
Bibliography 193 Index 199
List
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Figures
Fig. 7.1 Asset Size of Chinese Banks Fig. 7.2 A
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