The Paradox of Chinese Banks
Around the world, the banks we see today are very different from their former selves of just a few months ago. The transformation has been most pronounced in the U.S. and Europe, where a combination of mergers and government involvement have reshaped the financial sector. But change is afoot elsewhere as well, and it isn’t always positive. In particular, Chinese banks are currently under enormous pressure to change their business practices in ways that represent a serious step backward.
A year ago, many of us were ready to be impressed with China’s banking system. To be sure, banks were still mainly state-owned, and the Chinese Communist Party continued to be omnipresent. However, the average bank managers were extremely risk conscious, and regulators from the China Banking Regulatory Commission (CBRC) swooped down on bank branches conducting surprise inspections every so often. Bankers were extremely hesitant to make uncollateralized loans to any firm except for the largest corporations.
This was an enormous change from just 10 years ago, when bankers doled out large sums at the slightest urging of the local governments and when banks were considered the ’second treasury’ by central policy makers. At that time, the nonperforming loan ratio was estimated to be nearly half of all loans outstanding. By January 2008, the official NPL ratio was less than 6%. This transformation wasn’t cheap or easy -- it required hundreds of billions of dollars from the government to buy bad loans off bank balance sheets and recapitalize the institutions, and also the participation of Western ’strategic partners’ brought in to lend their expertise in best practices.
However, risk-prevention institutions built up over the past decade are now under enormous pressure to forgo prudence in the interest of maintaining economic growth. There have been two triggers for this. First, the global recession caused a plunge in demand for Chinese goods -- in November, Chinese exports fell for the first time in nearly a decade. At the same time, the property market continues to shrink in many major Chinese cities.
Anticipating a declining economy, in November the central government announced a four trillion yuan ($586 billion) stimulus package to be carried out in the next two years. At the same time, the National Development and Reform Commission was ordered to approve fixed asset investment worth 100 billion yuan before the end of the year. As of mid-December, much of the money has been doled out. This forceful injection of funds into the economy will be the dominant method of generating growth in the next two years.
Banks are trapped in the middle, because they will finance much of the stimulus package. Of the four trillion yuan stimulus, only about a quarter will be financed by the government’s central budget. At a time when local governments are strapped for cash due to falling land prices (land sales are a common form of municipal cash-raising), banks are expected to finance much of the remaining three trillion yuan in the package. This isn’t a matter of choice. Most banks must follow the government’s lead because senior bankers are appointed by the Party.
It gets worse. Local governments have announced a further 20 trillion yuan in investment to ’supplement’ the central package. Assuming both Beijing and the local governments stick to these spending targets, banks will be under enormous pressure to finance trillions in state-sponsored projects in the next two years. With so much money to push out the door, risk management will almost inevitably take a back seat. Banks that had made enormous strides toward global best practices were compelled by central pressure to greatly boost credit in the last two months of this year.
Prudence is not completely out the window yet because of continuation of CBRC monitoring, but risk management is increasingly a second priority. The CBRC has sent subtle signals to banks to not worry about profit too much and to exclude more risky loans to small- and medium enterprises from their main balance sheets.
Partly as a result, banks are increasingly compromising between risk prevention and political pressure by boosting lending through bill financing instead of writing outright loans. In theory this limits risks because bill financing tends to be short-term and can be easily transferred to another bank. Of the 477 billion yuan of new loans made in November, half were in bill financing. The rise of bill financing may increase systemic risks in the future because banks tend to be less careful when they discount these bills due to their transferability. Loans, on the other hand, are stuck on banks’ balance sheets.
Meanwhile, if the economy worsens in the first quarter the government may be tempted to abandon prudent regulation altogether. Beijing could order the CBRC to disregard risk targets or even abolish the CBRC. This would plunge China back into the old days when the only risks that bankers faced were political ones.
Without a global financial crisis, the global financial community might have criticized such a giant step back toward the planned economy. The criticism might have at least triggered some debate in China. However, with the rest of the world suffering a severe credit crunch that has seen free-market governments bailing out their own financial institutions, there are few people left who can credibly criticize China’s actions.
Western central banks have conducted operations that once were monopolized by the Chinese central bank and drew scoffs and snorts from the global banking community. For example, the People’s Bank of China, the central bank, used to conduct ’relending’ operations to inject funds into distressed banks to pay creditors or to write off distressed assets. Now, the Federal Reserve is doing the same by buying or accepting as collateral questionable assets from banks.
In any event, everyone is too preoccupied with their own losses to comment on Chinese policies. Which is a problem, not least for China itself. With enormous political pressure from the central government to pump money into the economy and silence from the rest of the world, much of the work in the past decade is being undone.
中国银行业的困惑
在全球各地，我们如今看到的银行同它们几个月前的样子大相径庭。美国和欧洲的转变最为明显，一连串的并购和政府干预已经重新塑造了金融业。但其它地区也在发生着改变，而且并不总是积极的。尤其是在中国，银行目前正面临着改变业务模式的巨大压力，而这些改变标志着严重倒退。
一年前，中国的银行体系给我们当中的许多人留下了深刻印象。固然，这些银行仍主要为国家控股，中国共产党的影响力也无处不在。不过，银行的管理层普遍具有很高的风险意识，中国银行业监督管理委员会(简称：银监会)的监管者也经常会出其不意地到各地分行进行检查。除了最大的一些企业外，银行对向任何企业发放无抵押贷款都非常犹豫。
与仅仅10年前相比，这就是一个巨大的变化。当时，银行对当地政府有求必应，随意发放大量贷款，银行被中央决策者视为第二国库。那时候，不良贷款比率预计占到了所有贷款余额的近一半。不过到了2008年1月，中国官方公布的不良贷款比率降到了6%以下。这种转变代价不菲，也不容易。政府拿出数千亿美元从银行的资产负债表中购买了不良贷款，向银行重新注资，还引进了西方“战略伙伴”，带来了最佳业务规范的专业知识。
不过，过去10年里建立起来的风险防范机制目前正面临为保增长而放弃谨慎的巨大压力。引发这种变化的因素有两个。首先，全球衰退导致对中国商品的需求下降──在11月份，中国的出口出现了近10年来的首次下滑。与此同时，中国许多主要城市的房地产市场继续萎缩。
预见到经济下滑的情况，中国中央政府11月宣布了4万亿元（5,860亿美元）的经济刺激计划，计划在未来两年实施。与此同时，中国国家发展和改革委员会也受命在年底前批准人民币1,000亿元的固定资产投资。截至12月中旬，大部分钱已经分发出去。这种向经济强制注资的做法将成为未来两年刺激经济增长的主要手段。
银行则卡在中间，因为它们要为刺激计划提供大部分资金。在4万亿元的经济刺激计划中，只有四分之一由政府的中央财政预算拨款。在地方政府因为土地价格下跌而现金吃紧之际（卖地是市政府常用的生财之道），预计刺激计划中剩下的3万亿元大部分都将由中国的银行业负责。银行没有选择余地。大多数银行都必须遵从政府的指令，因为银行业高级管理层都是由共产党任命的。
更为糟糕的是，各地政府也宣布了20万亿元的投资计划，以“补充中央的经济刺激计划”。如果北京和地方政府坚持这些支出目标的话，银行今后两年将面临巨大的压力为政府投资项目提供数万亿元资金。要提供如此庞大的资金，风险管理几乎不可避免地要往后站。今年最后两个月，此前朝着全球最佳规范做出巨大努力的中国银行业在中央的压力下被迫大举增加放贷。
由于中国银监会的持续监督，银行还没有完全抛开谨慎心理，但风险管理正越来越成为第二号考虑因素。中国银监会已经向银行微妙暗示，不要过度担忧利润，不要把向中小企业提供的风险较高的贷款纳入主要资产负债表。
一定程度上受此影响，中国银行业正日益在风险防范和政治压力之间做出妥协，通过票据融资而非直接放贷来增加放贷。理论上这能限制风险，因为票据融资一般是短期的，可以轻松转至另一家银行。今年11月中国新增的4,770亿元贷款中，有半数都是票据融资。但票据融资的增长可能会推高未来的系统性风险，原因是银行可能会因为票据融资可转让而在贴现时不够谨慎。另一方面，贷款则一直留在银行的资产负债表内。
与此同时，如果明年第一季度中国经济形势恶化，政府可能会倾向于完全放弃谨慎监管。北京或许会下令中国银监会忽视风险目标或甚至取消银监会。这可能会把中国银行业拉回到过去那个唯一风险就是政治压力的年代。
如果不是全球金融危机，全球金融界可能会批评此举是朝着计划经济大幅倒退。这类批评可能至少会在中国引发了一些争论。不过，由于全球其他地区都遭受严重的信贷紧缩，导致自由市场国家的政府纷纷出手救助各自金融机构，现在也没什么人有底气批评中国的行为。
西方国家央行已经采取了一度为中国央行所独有的举措，中国的这些举措还曾经招致了全球银行界的嘲笑与讥讽。举例来说，中国央行过去通常会通过再融资操作向陷入困境的银行注入资金，帮助它们偿付债权人或冲销不良资产。现在美国联邦储备委员会(Fed)也在做着同样的事情，从银行购买问题资产或接受为抵押品。
不管怎样，现在所有人都忙于应付自己的损失，没精力评论中国的政策。但这是个问题，而且并不只是中国自身的问题。中国银行业正承受着来自中央政府要求向经济注资的强大政治压力，而全球其他地区又无暇顾及，保持沉默，中国银行业过去十年取得的许多成就正在付之东流。
