Add to wishlist
An eye-opening deep dive into the sources and consequences of how China has financed it’s rise to global economic prominence
In The Red Dream: The Chinese Communist Party and the Financial Deterioration of China, veteran finance executive Carl Walter uses his unique experience in Chinese finance to deepen his exploration of how the Chinese Communist Party finances its obsession with GDP growth and social control. Overwhelmingly debt-fueled, the party’s financial strategy has driven an unsustainable growth in banking and state enterprise assets. Inevitably the party’s own financial health is being severely weakened and China’s future over the next decades put in doubt. You’ll also find:
An essential read for anyone interested in international economics, geopolitics, and finance, The Read Dream will also earn a place in the hands of finance professionals, bankers, policymakers, corporate strategists, and investors.
Preface
List of Abbreviations
Chapter 1 From Turning Point to Turning Point
An Abrupt About-Face
The Golden Age: A Short Story
Underlying Conditions
The Yin and the Yang of the China Dream
Convergence
Notes
Chapter 2 The Shadow Fiscal System: Local Governments, National Budgets
China’s “Centralized” State and Localized Financing
Aspirational Central Finances, Fiscal Collapse, and the 1994 Budget Law
The Continual Local Scramble for Funding
Then There Was the Land, but Land Is Not Free
Paving the Country Over
The Vulnerability of Local Governments, Banks, and Enterprises
Implications
Notes
Chapter 3 China’s Banks and the Deposit Bonanza
China’s State Banks and the “Tree” Model of Banking
Command Lending and Funding
Fintech and Other Challenges to Bank Deposits
Local Bank Consolidation
Wealth Management Products
Peer-to-Peer Lending
Tao Bao, MyBank, and Yu’e Bao
Bank Capitalization
Implications
Notes
Chapter 4 Trees Can Grow Up to Heaven!
Evolution of Balance Sheet Management Techniques
Outcomes in Financial Engineering Chinese-style
Channels to Support State Bank Performance Metrics
State Asset Management Companies
Trust Companies and Trust Plans
Asset-Backed Securities
Huida Asset Management Company and Structured Entities
Wealth Management Products
Asset Exchanges and Online Auctions
Local Asset Management Companies
Debt-to-Equity Swaps
Implications
Notes
Chapter 5 Beautifying Bank Balance Sheets
“Parking” Assets – The Interbank Market
Flexible Loan Agreements
Local Government Bonds
Government “Guidance” Funds
Off-Balance-Sheet Items
Entrusted Loans
Debt-to-Equity Swaps
Other Contingent Liabilities
Unconsolidated Structured Entities
Comments
Notes
Chapter 6 After 30 Years Was Deng Xiaoping Right?
A Summary State Balance Sheet
Inefficient Investment Equals Extra-Budgetary Funding
The Promise of the Stock Markets
Massive Growth in Deposits
“Opening” the Door to Foreign Investment
Excessive Reliance on Debt
Deterioration of State Finances
Summing Up
China Evergrande and Local Budgets
China Huarong: The Crack in the Foundation
So Was Deng Right, Can Capital Markets Be Used in a Socialist Economy??
Notes
Chapter 7 China versus the United States: Comparing the Costs of Financial Crises
Summary Financial Crises, the United States and China
Comparisons of Crises
The US Savings and Loan (and Banking) Crisis, 1980–1994
The Asian Financial Crisis and Chinese Bank Restructuring, 1997–2007
The US Mortgage Crisis, 2008–2015
China’s Deleveraging Campaign from 2016 to 2019
Macro Comparisons and the Role of Central Banks
Comparisons of State Net Worth
Comments
Notes
Chapter 8 Japanese Bubbles
Bubbles and the Japanese Banking Crisis of the 1990s
Why Did the Resolution of Japan’s Banking Crisis Take So Long?
Further Points of Comparison, China versus Japan
Comparative Cashflow Chains
How Might the Party Change Its Spots?
The Value of Chinese State Enterprise Assets
Comments
Notes
Chapter 9 Chinese Balloons
The Party’s Ruling Paradigm
Chinese Balloons
Convergence Revisited
Notes
Appendices
Appendix 1: China Government–Only Debt Obligations, 2009, 2015–2019
Appendix 2: The State Sector Balance Sheet
Selected Bibliography
Index
Description
An eye-opening deep dive into the sources and consequences of how China has financed it’s rise to global economic prominence
In The Red Dream: The Chinese Communist Party and the Financial Deterioration of China, veteran finance executive Carl Walter uses his unique experience in Chinese finance to deepen his exploration of how the Chinese Communist Party finances its obsession with GDP growth and social control. Overwhelmingly debt-fueled, the party’s financial strategy has driven an unsustainable growth in banking and state enterprise assets. Inevitably the party’s own financial health is being severely weakened and China’s future over the next decades put in doubt. You’ll also find:
An essential read for anyone interested in international economics, geopolitics, and finance, The Read Dream will also earn a place in the hands of finance professionals, bankers, policymakers, corporate strategists, and investors.