March 17, 2009

China Bank Regulator to Allow M&A Financing

The China Banking Regulatory Commission will allow commercial banks to extend loans for mergers and acquistions in an important rule to facilitate the "reinvigoration" in major Chinese economic sectors. The policy of reinvigoration is a change to Beijing's huge $4 trillion Yuan stimulus effort and revealed in detail at the recently concluded National People's Congress.

The intent is to reduce the problem of excess production capacity in China and thus try to control supply versus demand. Infrastructure spending that could eventually accomodate greater demand will be avoided in favor of "soft" investment in social services (although high speed rail projects appear safe). One of the goals is to remake all major industrial sectors into oligarchies of big globally competitive corporations by shutting down or absorbing backward and smaller producers...

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