> Henry, this looks like more bad news for China...
>
> Doug
>
> ----
Its good and bad. The bad news is that global capital is getting harder to come by and eventually will cost more as well. The good news is that foreign loans are going to be more selective and be made only to good projects. China is getting very tired of the idea that any Chinese company with dierect link to the givernment, which was just about most of them, can get a foreign loan without due dilligence on the part of the lending banks. It couraged corruption and bad investment and in the end, the government had to pay for all the mistakes just to preserve its credit rating. With the final separation of company and government, loans have to be analyzed on a commercial basis. It will be good for the economy in the long run. There is, as the articles pointed out, a lot of posturing by the banks to mimimize their potential losses. In the end, foreign banks will continue to lend because that is their business, but they will have to bear their risks. The interesting thing is that there is a classic case of class struggle: Chinese banks are siding with the foreign banks to put pressure on the Chinese government to pay up on non-government loans. Typical of free marketeers, they only want free market when there is profit, as soon as there is a loss, they want the government to come in and bail them out. The good news is that the Chinese financial sector has finally taken a step toward market economy. The bad news is that the prospect for capitlaism has improved in China.
Henry