People

Over the past millennium, China has relied on the Confucian clan to achieve interpersonal cooperation, focusing on kinship and neglecting the development of impersonal institutions needed for external finance. In this paper, we test the hypothesis that the Confucian clan and financial markets are competing substitutes. Using the large cross-regional variation in the adoption of modern banks, we find that regions with historically stronger Confucian clans established significantly fewer modern banks in the four decades following the founding of China's first modern bank in 1897. Our evidence also shows that the clan continues to limit China's financial development today.

China’s desire to escape the shadow of the U.S. dollar and build an alternative infrastructure for global finance is being stymied by one major factor: Its reluctance to loosen the shackles around its own currency. By creating the Cross-Border Interbank Payment System, or CIPS, back in 2015, the Chinese financial authorities had hoped to provide a way for companies and individuals to keep money flowing internationally — even if China were ever to come under the same kind of economic pressure Western countries are currently meting out to Russia, following its invasion of Ukraine. The problem is that CIPS has neither the scope nor the technical capability to match its Western counterpart — the Society for Worldwide Interbank Financial Telecommunication (SWIFT), often described as the Gmail of the global banking system.

The risk of additional sanctions deters Chinese lenders, while a fledgling payment network relies on the Swift global system

China’s smaller banks could come under greater scrutiny over financing to Russia as the nation’s biggest lenders are already showing signs of complying with U.S. and European sanctions in a bid to protect their large international footprints.

It’s been a record year for China’s internet moguls, but not in the way most would have hoped. The country’s 10 richest tech tycoons lost $80 billion in combined net worth in 2021, according to the Bloomberg Billionaires Index, amid widescale crackdowns by Chinese regulators. The drop represents almost a quarter of their total wealth and is the largest one-year decline since 2012, when the index started tracking the world’s richest people.

Every once in a while, a company grows so big and messy that governments fear what would happen to the broader economy if it were to fail. In China, Evergrande, a sprawling real estate developer, is that company.

Billionaire owners of Chinese developers have dipped into their own pockets for at least US$3.8 billion to save their troubled companies from default, as a cash crunch engulfs the industry. From sales of luxury assets to stakes in sought-after listed companies, the personal balance sheets of China's property tycoons have become key for investors to determine whether developers will meet their debt obligations.

China Evergrande, the struggling real estate giant, said on Wednesday it had ended its effort to sell a stake in its property services company to another developer, its latest setback following weeks of missed interest payments. The now-scrapped sale of a 50 percent stake in Evergrande Property Services would have raised about $2.6 billion. The termination comes as Evergrande is scrounging for assets to sell to help pay angry home buyers, contractors, employees and creditors. Evergrande is just days away from defaulting on an $83 million interest payment that it skipped in September.

Shares of China Evergrande, the troubled real estate giant whose fate has contributed to jitters in global markets, fell again on Tuesday amid a new prediction that it would soon default.