Friday, 03 September 2010 07:56
Why do Chinese banks, swimming in savings, invest in U.S. Treasury bills when rates of return are far higher at home? The answer may lie in disparity among Chinese firms in productivity and access to credit
By Douglas Clement, Editor, The Region
In recent decades, few phenomena have been as globally significant as China’s astonishing economic transformation. Over a matter of years, it has transitioned from a poor nation dominated by small farmers and enormous, plodding state-owned enterprises into a dynamic economy where private companies shape international markets and annual GDP growth surges past expectations. As this is written, economists predict that China will soon eclipse Japan as the world’s second-largest economy, and it is arguably only a matter of time before the United States, too, places second.
