Ah, readers. Readers, readers, readers. Has it been a week already? We’d hardly noticed the time flying for all this meddling the central government’s been doing in so many of our affairs.
First came a Sunday cut to banks’ interest rates by the People’s Bank of China, the second this year. That got us so rattled we went out for a pack of smokes, but found our favored brand’s price unusually high—the bloody State Council had raised the cigarette tax by 11%!
As if that weren’t enough, a loan application for one of our subsidiary’s subsidiaries was rejected! We’d been told that the PBOC was pressuring commercial banks to lend to small and medium-sized businesses, you see, and decided the best way to do our patriotic duty and help the economy flourish in this much-bemoaned “new normal” was to set a small business up ourselves. Yet it seems commercial banks are hung up on things like “profit” and “low-risk investments”.
Frankly, dear readers, we’ve never so much as used those two terms in the same sentence, at least until that one just now. We expect that the bank money that didn’t come our way is actually tied up in the stock market. After all, we learned not soon after our crushing rejection that the latest batch of mainland company IPOs was set to tie up RMB3 trillion next week. And to think semi-honest business concerns such as our own were having shell companies denied funding just so other, less honest fat cats can roll the dice on ever-rising share prices.
Why, it’d make our blood boil if we weren’t a magazine.
Luckily the banks got theirs soon enough. On Thursday Beijing forced a $160 billion bond-for-debt swap down their throats, since none of them would have taken the deal otherwise. Not that the fact that these and other listed banks will take a hit has put off international investors, mind: This week the fine folks at both MSCI and Dow Jones coyly hinted they might soon add A-shares to their indices.
It’s almost as if the central government organs are all coordinating toward something bigger, in some sort of… centralized plan? No, no it couldn’t be. That would make too much sense, and in any case who even knows which policies are actually meant to stick? After all, word came today that the PBOC was secretly telling commercial banks to keep their interest rates lower than the new ceiling established on Sunday. We expect the banks will hop-to, and dear readers, trust us: You don’t want to cross China’s central bank, or local government debt will be the least of your worries. ♦
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