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The Importance of China's Restructuring Process
Felix: China is a very interesting situation, because it's not so transparent and difficult to analyze. He says the Chinese banking industry is maxed out in a way; they have an equity capital of 2%. The official non-performing loan situation is reported as about 2%, slightly below 2%. And therefore, that means that the industry is not making any money, but it's actually losing money. If you lose money with a 2% equity capital in a situation where the real estate cycle is turning down, that's a very difficult and challenging situation for the government.