Wednesday, September 15, 2004
Several vingnettes thanks to Dean Kao at MIT
1. Dean sent me a very interesting article on rampant NPL in student loan (unfortunately, can't be pasted below because it is in Chinese). Basically, the State Council is forcing banks to lend to poor students, but NPL ratio is high for those loans. So, banks find ways to not make those loans, leaving many students unable to attend university. The whole thing is just such a mess because yet again, the central government is trying to fiscalize the banking system. There is a lot of risk associated with student loans, so the MOF should set up a fund in the Big 4 banks and sub-contract the banks to dole out the money.
2. Dean also asked me whether a rise in interest rate would affect the stock market. My response: If they don't adjust deposit interest rate, the stock market should be fine. In any event, I don't think China is to apoint where interest rates have a substantial effect on the stock market. I could be wrong, but it is probably still a "zhu" or "wen" market.
3. We had a discussion on Tian Congming (for googlers out there), the party secretary of Xinhua. Apparently, Tian served as vice secretary in Tibet when Hu was secretary there, which might suggest a close tie between them. However, while it is true that Tian and Hu worked together for a couple of years, Tian's history with another Politburo member, Liu Yunshan, goes much deeper. Both Liu and Tian come out of the Xinhua-Neimenggu xitong. Tian and Liu over-lapped in NMG for many years. Thus, one can infer that Tian is a loyal follower of Liu rather than of Hu. Of course, we know that Liu is loyal to Jiang.
1. Dean sent me a very interesting article on rampant NPL in student loan (unfortunately, can't be pasted below because it is in Chinese). Basically, the State Council is forcing banks to lend to poor students, but NPL ratio is high for those loans. So, banks find ways to not make those loans, leaving many students unable to attend university. The whole thing is just such a mess because yet again, the central government is trying to fiscalize the banking system. There is a lot of risk associated with student loans, so the MOF should set up a fund in the Big 4 banks and sub-contract the banks to dole out the money.
2. Dean also asked me whether a rise in interest rate would affect the stock market. My response: If they don't adjust deposit interest rate, the stock market should be fine. In any event, I don't think China is to apoint where interest rates have a substantial effect on the stock market. I could be wrong, but it is probably still a "zhu" or "wen" market.
3. We had a discussion on Tian Congming (for googlers out there), the party secretary of Xinhua. Apparently, Tian served as vice secretary in Tibet when Hu was secretary there, which might suggest a close tie between them. However, while it is true that Tian and Hu worked together for a couple of years, Tian's history with another Politburo member, Liu Yunshan, goes much deeper. Both Liu and Tian come out of the Xinhua-Neimenggu xitong. Tian and Liu over-lapped in NMG for many years. Thus, one can infer that Tian is a loyal follower of Liu rather than of Hu. Of course, we know that Liu is loyal to Jiang.
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