Chris Mayer — Chinese Wealth Management Products Will Cause the Next Financial Crisis

To make my case, I draw primarily on two expert witnesses.

1. The first is Yan Liang, an associate professor at Willamette University. She gave a fascinating presentation at the Post-Keynesian Conference I attended in Kansas City in September. 

The focus was on the shadow banking system. … 

2. Charlene Chu is the head of Autonomous Research Asia, started in Hong Kong in September 2014. Before that, she was a director at Fitch in Beijing, where she worked for eight years. Chinese banks were her beat at the rating agency. And before that, she worked for the Federal Reserve Bank of New York. 

“The China today is not the China of before the financial crisis,” Chu began.
If you go back to the early 2000s, China’s was a banking sector in which there were hardly any other investment alternatives. Everybody put their money in the bank, Chu said. Every bank offered the same interest rate. You had no incentive to move your money from one bank to another. And there was no property market. There was barely a stock market. Chinese banks had virtually no liabilities. 

That’s all changed today. Echoing Liang, Chu showed that China has a debt problem.…Daily Reckoning

Chinese Wealth Management Products Will Cause the Next Financial Crisis

Chris Mayer