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Book review red capitalism the fragile financial

It will not cost you any additional money and you will help The Confucian Libertarian to keep growing. Walter and Fraser J. And what they have to say will tear up all your old mis conceptions about Chinese economy.

Written in 2010, Red Capitalism does not offer any groundbreaking prophecies for the future but, rather, what it offers is a delightful description of the way the Chinese Communist Party manages and controls its ill-fated economy. The June 2015 crisis, however, is absolutely coherent with the picture offered by these authors. There are two important methodological issues that make this book worth reading. Xi Jinping in Mexico before he became Mr.

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President of China —. Rather than being the result of Chinese exceptionalism, as state-sponsored nationalism claims every now and then, Chinese healthy economy in the dark days of Western capitalism is the result of it being walled up from international capital markets, having little, if not zero, exposure to the dangers and benefits of free market.

This includes non-convertible currency, minimal foreign participation or few overseas assets. This is, according to the authors, the real reason behind the apparent health of the Chinese banking system, but it is also its greater weakness —as the recent collapse of the Chinese stock markets and the devaluation of its currency show.

Red Capitalism: The Fragile Financial Foundation of China’s Extraordinary Rise

Right now China is a three-layered social system: Some of them are rich, and not only by Chinese standards, but their life style is closer to a Western pimp from a very bad Hollywood movie —bragging about the money they have but not being able to use it to improve their situation, they may have an expensive, luxurious car and a cheap, broken house.

This middle class survives because it does not challenge the government. And why should they? After all, they may have no access to Facebook or Youtube but they are far better than the third layer: During my last week in China I bump into one of the brightest minds I have ever met in China: Forget about university teachers, brilliant students, financial analysts or any other guru.

He did not only complain about human rights, lack of freedom, censorship, the Sentaku Islands and every president from Mao to Xi Jinping, but he went as far as to say that even in North Korea the government provides you with free housing instead of demolishing it.

  • After all, they may have no access to Facebook or Youtube but they are far better than the third layer;
  • Walter and Fraser J;
  • The authors are westerners who have worked in finance in China for years, and they presented their evidence in a logical manner without avoiding or sugarcoating the issues;
  • If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

And he has a point. At the end his taxi broke down in the middle of the highway and I left joking about it being the result of his criticism of the CCP.

Red Capitalism: The Fragile Financial Foundation of China’s Extraordinary Rise

The big problem China will have to solve in the coming years —one of many— is the stagnation of this giant Keynesian machine of byzantine and Orwellian machinations. The Chinese economy is like a giant with feet of clay standing on the top of a house of marked cards and, for the most part, the giant is playing against himself to avoid money flowing out into foreign hands.

  1. The specter of a powerful China is haunting the U. When requesting a correction, please mention this item's handle.
  2. It does not face the same crises as Mexico, Argentina, Greece and Spain.
  3. The Fragile Financial Foundation of China's Extraordinary Rise, Revised Edition Carl Walter and Fraser Howie go deep inside the Chinese financial machine to illuminate the social and political consequences of the unique business model that propelled China to economic powerhouse status, and question whether this rapid ascension really lives up to its reputation. This gives the impression of value creation on their portfolios, but these movements are, in fact, due more to speculation on market movements driven by any number of factors including, for example, overall Chinese economic performance.
  4. In assessing the quality of your investment idea, I will be looking at how it fits with the investment philosophy I espouse on this site and the strength of the supporting arguments which can include excel models as well as the identification of potential pitfalls.
  5. But, digging deeper, the authors contend that these liberalizations have been allowed only where they strengthen the state.

It is not a threat to the world, but to itself and, especially, to the Chinese people who will suffer its consequences.