Although this passage is not easy to interpret, it seems to indicate a change in central bank policy during calendar 2000, authorising local postal savings stations to make loans to community enterprises. In a Chinese context, the reference to ‘improving relations’ with local officials points to very strong bureaucratic hostility to the postal savings system, which is seen as draining capital from rural areas.
There is no sign in the almanac’s statistics that postal savings stations had begun making loans by the end of 2000. If implemented, however, the stated policy shift would dramatically soften the budget constraints of China’s township enterprises. Granting rural postal workers the freedom to lend money to powerful local employers is likely to undermine one of the few solvent branches of China’s financial system – and unlike the RCCs, the post office faces no competitive pressure from nervous depositors, who assume that their accounts will enjoy an implicit sovereign guarantee.
The resulting Catch-22 resembles one aspect of the situation in Japan, where fears about the solvency of shaky commercial banks – which will soon lose their official deposit insurance – have pushed trillions of yen into the even more troubled postal savings system. Postal deposits in Japan now represent some 36 per cent of total personal savings, far more than the 7 per cent seen in China at end-2000. Moreover, the system’s use as a slush fund for loans to government agencies has saddled the state with enormous off-budget liabilities. With China’s major banks already much weaker than Japan’s, this is an element of Japanese financial policy that Beijing would do well to avoid.