Editor’s comment: In a June 25th article titled “China eases credit as US Tariffs Loom”, it was reported that China’s central government will release $77 billion to 17 large banks who are to “use the freed up funds by converting bad loans into equity in companies that default on their debt”. At the time, I was reading this book by Dinny McMahon, who spent ten years as a financial reporter in Beijing. To get attention, the publisher and author get ham handed at times but the soul of this book is solid and fascinating to me. It explains in terms I could understand that China’s centralized government, combined with the communist party’s political will to become the preeminent world power could unravel due to constant tinkering with its financial system. Unlike other authors, McMahon avoids trying to time this calamity but very good support is given to how a storm is brewing.
Favorite excerpt:“the fact that China is vast and complex] “is compounded by an opaque political system steeped in a culture of secrecy; a fast-changing economy that operates in ways radically different from our own; unreliable official data and statistics; and a unique and complex set of incentives that influence the economic decisions of individuals, companies, and the myriad branches of the state.”