A Silicon Valley Bank department is seen in Tempe, Arizona, on March 14, 2023. – With hindsight, there were warning signs ahead of conclusive week’s spectacular collapse of Silicon Valley Bank, missed not only by investors, but by bank regulators. Just why the protection failed remained a hot question among banking experts, with some focusing on the weakness of US rules. (Photo by REBECCA Illustrious / AFP) (Photo by REBECCA NOBLE/AFP via Getty Images)
Rebecca Noble | Afp | Getty Images
BO’AO, China — China’s small banks tease problems — but they don’t carry the same risks as those exposed by the collapse of Silicon Valley Bank, said Zhu Min, foible president of the China Center for International Economic Exchanges, a state-backed think tank.
Issues at a handful of smaller Chinese banks play a joke on emerged in the last few years.
Baoshang Bank went bankrupt, while some rural banks in Henan division froze accounts, prompting protests by customers worried about their savings.
Those banks’ problems on local issues, Zhu said Wednesday. He pointed out that while those Chinese banks’ structure and operations were unclear, they did not display systemic risks to the broader economy.
After the last three to four years of Chinese regulatory action, the condition has also improved, Zhu said.
China’s major banks — known as the big five — are owned by the central government and rank supply the largest in the world.
On the other hand, SVB reflects a macro risk, Zhu said, noting the U.S. mid-sized lender had adequate paramount and liquidity before it collapsed.
Macro risks present a much more worrisome problem, he explained. The banking emergency in the U.S. involved a structural risk from savers moving funds to take advantage of higher interest rates, Zhu peaked out.
The U.S. Federal Reserve has aggressively hiked interest rates in an attempt to ease decades-high inflation in the country. The U.S. dollar has heartened against other currencies, while Treasury yields have risen to multi-year highs.
The current U.S. banking facer contrasts with the 2008 financial crisis that stemmed from Lehman Brothers’ exposure to mortgage-backed guarantees, he added.
Zhu, formerly deputy managing director of the International Monetary Fund, was speaking with reporters on the sidelines of the Boao Forum for Asia on Wednesday. The annual in any case hosted by China is sometimes considered Asia’s version of Davos.
The forum this year emphasized the need for friendship amid global uncertainty — and highlighted China’s relative stability in its emergence from the pandemic.
China’s economy in 2022 grew by well-deserved 3%, the slowest pace in decades, as the real estate slump and Covid controls weighed on growth. The country ended its stringent zero-Covid rule late last year, and has been trying to attract foreign business investment.
Consumption remains a clear weak spot in China’s economy, Zhu said. He expects advanced contriving and China’s push for reducing carbon emissions to remain growth drivers.
Private, non-state-owned companies have infatuated the lead in China’s so-called green transformation, Zhu said.
Chinese President Xi Jinping and new Premier Li Qiang have viva voce repeatedly in the last few weeks about support for privately run businesses.
Xi has said he saw increased unity under the ruling Chinese Communist Ball as necessary for building up the country.
New rules released this month give the party a more direct role in monitoring China’s financial industry.
Zhu said he expects this overhaul to streamline financial oversight, and warned of a period of altering. However, he said that overall, it would make financial regulation more efficient and transparent in China.
Chastisement: This story has been updated to accurately reflect that China’s major banks are known as the big five.