China’s Rising Stature in Global Finance | McKinsey & Company

Interesting facts and insights:

In contrast to most advanced economies, where lending has been stagnant amid widespread deleveraging, bank loans in China have grown by $5.8 trillion since 2007, reaching 132 percent of GDP—higher than the advanced-economy average of 123 percent. About 85 percent of that Chinese lending has been to corporations; households account for the rest. This rapid growth has raised the specter of a credit bubble and a future rise in nonperforming loans, though regulators have attempted to slow the pace in overheated areas such as real estate.
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Unlike many major equity markets, China’s stock market has not rebounded since the financial crisis and global recession. Total market capitalization has fallen by 50 percent since 2007, plunging from $7.2 trillion in 2007 to $3.6 trillion in the second quarter of 2012. Investors sent valuations soaring at the market’s peak, but fears of a slowdown and a more realistic view of company valuations dampened their enthusiasm, underscoring the fact that China’s equity markets, like those of other emerging economies, remain subject to sharp swings.
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…to become a true international currency, the renminbi will have to be fully convertible—meaning that any individual or company must be able to convert it into foreign currencies for any reason and at any bank or foreign-exchange dealer. China’s central bank has acknowledged that the time has come to move in this direction and accelerate capital-account liberalization,6 and it recently outlined both short-and long-term road maps for this process.

Source: China’s rising stature in global finance | McKinsey & Company.

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