International Law

China Learning from U.S. Bad Practices?

By Stan

This Shanghai Daily article is one step away from being a candidate for The Onion:

CHINA’S economy can’t overly rely on growth in the real estate industry, said a report by the Chinese Academy of Social Sciences after some of its economists visited the United States to study the subprime mortgage crisis.

"China’s economic growth has depended too much on the real estate industry. It is especially ill-advised that the earnings from selling land become a major source of income for the local government," said the report published today.

"It distorts the role of the government and reduces the overall competitiveness of the economy because the land, as an economic element, is not renewable."

The report noted that China can learn a lot of lessons from the US subprime mortgage crisis and the most urgent one is to modify the development path of its property market.

Properly evaluating the credit of a borrower and reducing bank risks when they lend to real estate developers were among the topics requiring serious consideration.

Uh, did it really take a U.S. trip to learn all that? I think those lessons were already apparent over here a decade ago, and particularly when the -ITICs went belly up and "NPL" became a term of common usage. (That was also when Gordon Chang first decided that China was doomed. Seems so long ago . . .)

I hope the CASS guys enjoyed their boondoggle.

Full post as published by China Hearsay on September 26, 2008 (boomark / email).