Why a Financial Crisis is NOT Brewing in China (Institutional Investor)

While western investors living far from Asia express concerns that rising debt will plunge China into a global financial crisis similar to that of 2008, local financial leaders expressed a different view during an April 13 lunch hosted by Institutional Investor at the Foreign Correspondents Club in Hong Kong. In fact, attendees believe that China is getting its financial house in order and may emerge as a capital markets powerhouse rivaling the U.S. in the coming decade.

Schulte Research International CEO Paul Schulte had this to say:

“China is never having a 2008 crisis. I don’t think it’s going to happen… When you are running current account surpluses of $550 [billion] and $600 billion annually, it means you are in control of your banking and financial system.”

Note: In the run-up to the global financial crisis, the U.S. had an account deficit of about 5% of GDP.

Joshua Crabb, the head of Asian equities for Old Mutual Global Investors, also pointed this out:

“The U.S. markets are trading at three times book value. Asian capital markets are trading at 1.6 times book value. If the markets are going to collapse, which is what many are predicting, Asia has to get more expensive first.”

To read the whole article, What the West Misses About China, go to the website of Institutional Investor. In addition, check out our China ETFs list and our China Closed-End Funds list.

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