"In November, Bank of China became the first Chinese lender to participate in the sale of U.S. commercial-mortgage-backed securities, known as CMBS. ... Investors are moving into riskier investments that offer higher yields, as the Federal Reserve's near-zero interest rates hold down returns on the safest debt, including Treasurys."
"The latest securitization foray by Bank of China involved teaming up with Goldman Sachs Group Inc. GS -0.56% and Deutsche BankDBK.XE -3.20% on a $900 million loan on a 1.7 million-square-foot office and retail property in Manhattan's Times Square." ("China Bank Securitizing U.S. Loans", Wall Street Journal)
So the Bank of China is in bed with "The Vampire Squid"?
Indeed, and it's worse than it looks. Wealthy elites rule the country like their personal fiefdom while touting the same neoliberal nostrums as their mentors in Washington and downtown Manhattan. The "free market" is the new god, while austerity, "reforms," and privatization are the corollaries of the new state religion. Here's an excerpt from an article titled "China's new premier to enforce 'painful' market restructuring":
"China's newly installed premier, Li Keqiang, emphasized in his first press conference on Sunday that the government is preparing sweeping 'free market' economic restructuring measures, including privatization of state assets and deregulation of the banking and finance sector.
"... During the press conference, broadcast live on Chinese state television, the new premier mentioned 'reform' two dozen times to emphasize the forceful character of his policy. 'The reform is about curbing government power; it is a self-imposed revolution,' he declared. 'It will require real sacrifice and this will be painful and even feel like cutting one's wrist.'
"Li added: 'We need to leave to the market and society what they can do well... All wealth creators, either state-owned or private, should be duly rewarded for having honestly competed on a level playing field.' The premier admitted that the government was heading into 'unchartered waters,' warning: 'We may also have to confront some protracted problems. This is because we will have to shake up vested interests... Sometimes stirring vested interests can be more difficult than stirring the soul. No matter how deep the water is, we'll wade into it because we have no alternative.'" ("China's new premier to enforce 'painful' market restructuring," World Socialist Web Site)
It's all there in one speech, praise for the glorious free market, support for harsh austerity measures and privatization, even Margaret Thatcher's infamous TINA ("There Is No Alternative" to slash and burn capitalism) The astonishing rise of Li Keqiang suggests that China is eager to be "integrated" into the US-dominated global system, a system that lavishly rewards its managers at the top while working people face reduced social services, belt-tightening and ever-increasing financial crises.
While upbeat economic data has eased jitters about a hard landing in China, the underlying problems remain the same. Eventually China's property bubble will burst, investors in sketchy wealth management products will face heavy losses, defaults and bankruptcies will soar, and the economy will slip into recession. China's financial crisis is coming; it's just a matter of when?
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