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In Red Capitalism: The Fragile Financial Foundation of China's Extraordinary Rise, Revised Edition Carl Walter and Fraser H Show all. In Red Capitalism: The Fragile Financial Foundation of China's Extraordinary Rise, Revised Edition Carl Walter and Fraser Howie go deep inside the Chinese . The Fragile Financial Foundation of China's Extraordinary Rise, Revised Edition. All eyes are on China, but will it really surpass the U.S. as the world's premier global economy? Walter and Howie aren't so certain, and in this revised and updated edition of Red Capitalism they.


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Köp Red Capitalism av Walter Carl Walter, Howie Fraser Howie på kaz-news.info PDF-böcker lämpar sig inte för läsning på små skärmar, t ex mobiler. Editorial Reviews. kaz-news.info Review. Product Description In Red Capitalism, Carl Walter and Fraser Howie detail how the Chinese government reformed and . Red Capitalism: The Fragile Financial Foundation of China's Extraordinary Rise [ Carl Walter, Fraser Howie] on kaz-news.info *FREE* shipping on qualifying.

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Showing Rating details. Sort order. Jul 18, BlackOxford rated it really liked it Shelves: How Goldman Sachs Captured China It is difficult to overestimate the power of financial theory as a social ideology.

This book is a demonstration of that remarkable power in the most unlikely political environment: Walter and Howie unravel the apparent mystery of how a Communist, indeed a Maoist, state has transformed itself into a capitalist society in the course of a single generation.

Neither Lenin nor Mao conceived of any such evolution. So where did the Chinese programme originate and How Goldman Sachs Captured China It is difficult to overestimate the power of financial theory as a social ideology.

So where did the Chinese programme originate and what is the intellectual framework that provides such extraordinary cohesiveness during this profound social transition? Walter and Howie provide an answer which many will find surprising: What is needed is a theory, a theory which in itself is neither socialist or capitalist, a theory which purports to be an unbiased account of the way the world really is and provides coherent guidelines for coherent action.

Enter modern financial theory. Based on the need by early 20th century robber barons in the US to provide a rational for their machinations to control transport and commodities, financial theory makes an ingenious play.

Unlike liberal economic theory and with complete disregard for the niceties of accounting, financial theory employs a specific and irrefutable criterion of value.

This criterion is neither the market nor the result of any disciplined analysis of what the results of commercial transactions have been. Rather, for finance, value is a matter of expectations about the future, what I or you, or a CEO or a Politburo member thinks could happen over some indefinitely long period in the future. You and I may not have the power to impose our view of the future on others but CEO's and Politburo members do. And in the name of financial rationality they do this as a matter of course in the modern world.

It is finance which provides the mechanism for transforming political power into economic power. The case of the China Mobile flotation, at the time the largest stock market entry ever undertaken is demonstrative: It is precisely the corporate tactic of Enron, orchestrated by precisely the same bankers and lawyers.

Even the accounting is similar: And just as with Enron, the bubble can continue to expand without limit When it does be quite sure that Goldman Sachs has already shorted the entire Chinese economy.

View all 10 comments. Dec 03, Anna rated it really liked it Shelves: I am endlessly fascinated by the paradox of China: As macroeconomists have sheepishly admitted since , it turns out that banking is actually crucial to national economies and should be included in their models. My overall conclusion from this book was that, like Russia, China is essentially a kleptocratic oligarchy. The Chinese Communist Party have managed an incredibly clever trick, really. This book greatly increased my understanding of how this occurs.

Rather than re-state the key points, here are some quotes. For context, the government of China sets interest rates on loans, bond prices, and exchange rates. Chinese banks, despite their Fortune rankings, are not even close to being internationally competitive. They simply do not operate like banks as understood in the developed world. Thirdly, the banks are fully exposed to both interest rate-related and credit-induced write-downs in the value of their fixed-income securities portfolios.

On the organisation of oligarchy: The fundamental value-generation proposition in China is the government, not its enterprises. All this demands the simple question: The collapse of Lehman Brothers in September [ The Chinese government acted as if a veil had been removed from its eyes… This American model [ But there was nothing to take its place.

The banks, suddenly without restrictions, not only went on their famous lending binge, but also sought to grab as many new financial licenses as possible.

On foreign views of China: As it looks like the West, international investors easily accept what they see: There is the feeling that all can be understood, measured, and valued.

They would not feel this way if China explicitly relied on a Soviet-inspired financial system even though, in truth, this is largely what China retains.

The political implications are left undiscussed; it's only a short book. What worries me is that the Chinese form of kleptocratic state capitalism seems to indicate the direction that developed economies are travelling. The state effectively consists of massive monopolistic companies and banks, which collude to pay themselves huge dividends but refuse to provide social security for their citizens.

Hardly a form of capitalism that is consistent with democracy. Mar 17, Hadrian rated it really liked it Shelves: Their economic rise, which seemed miraculous, is now thought of as inevitable, and one where the West and America have nothing but a diminished role to play. The continued rise, aruges the authors, is a paper tiger.

A correction to the cycle may yet come sooner than we think. It's terribly difficult to make financial terminology readable, especially with a snarled and byzantine system as the Chinese.

But there are some deeply disturbing trends laid bare here. It is very easy to become enchanted simply with the volume and increasing rate of financial transactions. But once you try and follow the money, you have no idea where the rabbit hole goes. Some brief points, as provided by the authors: However, liberalization has only been allowed where it is either controlled by, or directly benefits, the state.

Most were barely saved from collapse in due to some shrewd inter-governmental maneuvering. Instead of gradual adjustments in capital banking, they require huge drives. The genius of Deng's reforms was his pragmatism - his successors, however, have turned this into a means by which the party bosses benefit, and only reform if necessary. Only a few bold ministers dare call for reform and a truly freer market with sensible regulation.

Yet after the crisis of , the state has retreated further from any calls of reform. It remains to be seen if the unique Chinese model can withstand any future shocks which may come. Jul 27, Adrian rated it it was amazing. Red Capitalism dispels the commonly held view that China has been on a non-stop period of economic growth since the s, and it's system is insulated from the mistakes, and runaway capitalism that brought about the crash of Rather, China seems to retain the worst of both worlds, with local debt spiraling out of control from 's stimulus packages, and a banking sector that stands as a potent case against state owned banks.

Lending is increasingly politicized in China, with the government Red Capitalism dispels the commonly held view that China has been on a non-stop period of economic growth since the s, and it's system is insulated from the mistakes, and runaway capitalism that brought about the crash of Lending is increasingly politicized in China, with the government and the party pulling the strings in directing lending to State Owned Enterprises, with often dismal returns on the loans.

On the whole, a very decent book filled with immense detail and scholarly research, and strongly recommended to followers of finance and economics, though those unacquainted with the detail of finance may at times struggle with the book.

Mar 25, Alexander Wj rated it really liked it.

Red Capitalism: The Fragile Financial Foundation of China's Extraordinary Rise, Revised Edition

I think this was a good book with many interesting insights into the real forces behind China's financial veil. I say "think" because following Wiley standard, this book is written in incredibly dry language and filled with statistics and intricate details.

I read it for fun and so didn't pay too much attention to specifics. The title is definitely much more eye-catching than the content as it closer qualifies as a historical account of post-Mao Chinese economics and never explicitly says its fr I think this was a good book with many interesting insights into the real forces behind China's financial veil.

The title is definitely much more eye-catching than the content as it closer qualifies as a historical account of post-Mao Chinese economics and never explicitly says its fragile.

Rather, it ends by noting that China has been able to push its problems off into the future and may be able to continue doing so for quite some time. The way I take it, the book basically says that China's economy is a black box where money goes in and money comes out but you don't really know what's going on in the middle as most institutions are mum and the others just shift money around to make it look like they're profitable when in fact nobody really wants to audit and find out how bad things really are.

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Jun 28, Ian Colby rated it it was ok. Read this review instead, and you'll get in one article what was so damn hard to read in pages: I don't know who this was written for, but it sure as hell wasn't me. The book was so chock full of acronyms, abbreviations, and institutions that it was hard to believe it was still English. The authors both take on a parochial "China would be nowhere without Wall Street" tone that I found both boring and distasteful.

An example of a tedious passag Update: Maybe I could have enjoyed it more if I was reading it in college when I was much more familiar with floating securities and H-Shares. As is, though, it seems like this book was only written for the authors themselves. Perhaps it would have been better if written as a series of papers? Oct 27, Jimmy rated it it was amazing.

It is worth reading to get an understanding and insight on the history and legacy of China's path to its red capitalism status as of , prior to catching up what China's capital market is nowadays. The book first reveals how reforms have happened in the banking, which started out in after the Cultural Revolution bas "Red Capitalism" 2nd edition in covers up to the various financial institutions and Communist Party reforms and development that have transformed China economically.

The book first reveals how reforms have happened in the banking, which started out in after the Cultural Revolution based on Soviet inspired model This system was abandoned in with Zhu Rongji who led a reform in favor of the capitalist inspired model based on the American experience. In , Zhu proceeded to adopt international methods of corporate governance and risk management, including the spinning out the problem assets from the Big 4 banks' balance sheets to 4 "bad banks" named as AMCs asset management companies during to so as to ready the banks for IPOs.

Subsequently, the state banks were able to raise new capital from international strategic investors and IPOs on international markets during the period through Interestingly the authors explained how the banks raised capital via IPOs to pay dividends to the state who owns significant portion of the banks , that turn around put the money back to the banks. The western model based reform since was ended in after the financial crisis induced by Lehman Brothers collapse, which led to the reform framework's lost of credibility and banks without fall back to replace it went on lending binge The authors concluded that China's banks operate within a comfortable cocoon woven by the Party and produce vast, artificially induced profits that redound handsomely to the same Party.

After talking about bank reform, the book proceed to cover China's bond market. Over the course of the s, successful agricultural reforms and growth of small enterprises rapidly enriched the general population, which by nearly two-third of all bonds were sold directly to retail investors.

Then the Party realized that getting banks to download bonds lower the MOF's interest expense as Party controls the interest rate compare with retail investors requiring higher returns. So bond market switch to having banks and non-bank financial institutions as prime instead of retail investors In China, diversity means nothing as all institutional investors bank or non-bank are controlled by the state The final parts of the book covers China's stock market.

As a result of Shenzhen Development Bank's IPO and Vanke's IPO in which led to generous cash dividend in , share fever and wild street market trading was spread over in China causing social unrest Beijing decided in to establish Shanghai and Shenzhen stock exchanges, which were opened in and respectively. Apart from closing the street markets, the Party's agenda was to use the stock exchanges to reform SOEs through incorporation and put an end to free private capital markets.

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Two subsequent events in also contributed to China's future development. First being Deng Xiaoping affirmed the value of stock markets, which gave rise to huge equity boom and truly national capital market. Second event was Zhu Rongji permitted Chinese companies to list their shares on overseas markets and agreed to open international markets and their capital to China's SOEs, which let in ideas and financial technologies that created its great National Champions. National Champion idea came from Goldman Sachs Ministries thus learned from Goldman Sachs and Morgan Stanley how to use international law and complex transfers of equity shares to build the National Champions.

The outcome being huge amount of cash raised internationally for powerful companies with national markets. Jan 02, Jesse Field rated it really liked it. This short, intense book is too jam-packed with the special terms and concepts related to national banks, global securities, debt and futures markets for me to grasp all its details, even after picking my way through Crashed by Adam Tooze.

But still, the basic implications are clear enough: Despite a wave of privatization, professionalization, and free market reforms in the s led by scrappy, pragmatic Shanghai bureaucrats like Zhu Rongji, since Beijing has worked to shield itself from global markets, their price fluctuations, and their crises.

As subsequent chapters show, they also hope to hide and recirculate a growing mound of bad debt, by basically both backing and demanding loans from their largest banks, in what looks something like a giant Ponzi scheme. I quote here an excerpt from the end of chapter three for is clear summary of this situation: The question is often raised: China, after all, has the wealth to absorb losses of this scale, if it is determined to do so. The internationalization of the renminbi has made headlines as China seeks to challenge the dominance of the dollar as the international currency for trade and, perhaps someday, the international reserve currency.

When in the Western banking sector was in full disarray and the world was applauding the Chinese for their stimulus package, Merrill Lynch and Morgan Stanley were going for a song. A small deal in South Africa and a community bank in California were all there was to show for these proud financial giants.

More recently, the head of one of the Big 4 banks dismissed the growth opportunities of developed markets such as the US: For China, the whole shopping basket would have been cheap. Opportunities forgone in a period such as the world has just passed through may never present themselves again. Put another way: If, as some predict, China seeks to replace the US at the center of the global economy at some time in the near future, one would expect it to export not just capital, but also intellectual property.

It is nowhere to be seen, nor is it expected. These banks are undeniably big, as they always were, but they are neither creative nor innovative. More recently, he helped build one of the most successful and profitable domestic security and currency trading operations for a major global investment bank. He currently lives in New York where he acts as an independent consultant. Fraser J. For nearly twenty years he has been trading, analyzing, and writingabout Asian stock markets.

Currently, he is a Managing Director at a leading Asia Pacific Brokerage firm in Singaporehelping international investors invest in both the Indian and Chinese markets. Please check your email for instructions on resetting your password.

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Red Capitalism: Walter Fraser J. First published: Print ISBN: Walter and Fraser J. Howie You have been writing together about the Chinese financial system for over a decade, what are the biggest changes you have seen? The obvious one is just the shear size of the markets and the economy.

Now they are twenty times bigger. The number of listed companies has more than doubled, the daily trade volumes in Shanghai have increased ten-fold and only a handful of government bonds had been issued. Now there are thousands of different debt products.

All the growth comes without the expected development: Chinese markets remain primitive in spite of their size. How do the markets remain primitive? Surely the growth brought development? China has done a fantastic job at building the market infrastructure. Trading and settlement systems and all that goes along with what we would call a modern market is there, but in nearly every case, the market has been warped or restricted by the government.

Take the bond market, the government sets interest rates and even the rates at which bonds can be issued. No bond investor considers the possibility of default of the issuer because the assumption is that the government will step in to cover the risk.

What then does a bond market do if credit risk and interest rate risk have been removed? In the stock market, the state still remains the largest holder of shares and has majority ownership of all the major companies. Has the entry of foreign investors, banks and brokers made a difference to the markets?Readers Also Enjoyed. All eyes are on China, but will it really surpass the U. Something to think about. The latest decade is little different. Red Capitalism dispels the commonly held view that China has been on a non-stop period of economic growth since the s, and it's system is insulated from the mistakes, and runaway capitalism that brought about the crash of Indulging in neither cynical nay-saying nor worship at the altar of China Inc, authors Carl Walter and Fraser Howie first deconstruct the legitimate successes achieved by 'the Party', then weigh the hidden costs and long-term consequences.

Authors Carl E. Obstructive institutions and ministries were crushed or reconfigured; crooked party members jailed. The state effectively consists of massive monopolistic companies and banks, which collude to pay themselves huge dividends but refuse to provide social security for their citizens.

Walter and Howie aren't so certain, and in this revised and updated edition of Red Capitalism they examine whether or not the 21st century really will belong to China.