Friday, June 28, 2013

Dubious loan in China generate a crisis!

Last week Chinese stock market came back to its 2008 level!

China went through a terrible crisis.
But where does it come from?
Two words: corruption, scheming:
In China you don't pay taxes but a local mais un responsable local official
In China to open a shop on the street you don't pay a rent but a local police officer
In China you can buy an appartment without garanties
In China you  can get a one year business visa asking a visa agency. You are considered as a businessman in the figures!

Before 2008 crisis, China engine was export.
Since 2008, companies find it more and more difficult to sell abroad.
Corruption and scheming increased.

Dubious loans fuel the economy and created the crisis!
Companies lend money to companies and individuals
This generated the crisis! And this is only the beginning as the entire system is sick with dubious loans: companies and individuals can not pay.

For instance: you create a company you need to invest 500 000rmb or 2 000 000rmb or mire... If you don't have that much money you can ask another company to lend you the money! How many companies were created this way? thousand? million? This trend increase since the 2008 crisis. 

Another example: you want to buy an appartment but don't have the minimum capital. You ask a company to garantee. But this company doesn't have any capital...

Or again: you are a local officer, you want to start a huge construction project that will help boost your carreer. But you don't have the money to do this. No problem, the bank will lend if not some private company... It doesn't come for free...

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