China’s Bank Bailouts Are Even Scarier Than They Look
The financially weak, state-owned rescuers would be dangerous in good times. This is the Covid-19 era.
Outside shareholders are needed. But who is an outsider?
Photographer: S3studio/Getty Images
Banks are being bailed out in China, raising alarm. How they’re being rescued is even scarier.
Acknowledging the growing balance sheet problems among small and medium lenders, China’s banking and insurance regulator says it’s working on a reform plan and will become more vigilant about shareholders. That’s all good until you see what’s happening in reality: The state is effectively replacing precarious, often private, shareholders with financially weaker state-backed ones, or giving them a larger say. That rarely instills confidence, even in good times. These are anything but.