Will it be an orderly unwinding of the command economy banking system, not a crashlanding?
If you think of Korea in the first half of the 1990s, it was trying to liberalise its banking system, move towards a commercial banking system, and also liberalise its capital controls. It was proceeding along those lines, when suddenly one afternoon, the banking system disappeared. The reason I raise that for China is that of course they want a smooth transition, of course they want to do it gradually, but history tells us that there are high risks you can’t do it smoothly. China could prove me wrong and do it smoothly. But my advice to investors is: beware, because there’s not a great history of it being done smoothly. Will the recent avalanche of measures aimed at deflating a property bubble do the trick? Do they address the root causes of the demand driving property market? What China desperately needs is something else for Chinese people to speculate in. When you have an economy that’s growing very rapidly, asset prices are going to go up. In China now, it’s heavily focussed on pr
