Dear Chinese Banks’ Shareholders

The Elite Chinese Politics and Political Economy Blog has posted a very intelligent spoof, in the form of a letter from Listed Chinese Banks to their shareholders, to explain how China’s stimulus packages will affect their investment. Victor Shih has obviously been inspired by a 12/1/2009 Bloomberg article titled “China to Tolerate Increase in Bad Loans, Relax Lending Rules”.  For some strange reasons, the Bloomberg article’s author Philip Lagerkranser replaced this article the following day with an update in which he quoted a statement from China’s banking regulator about China’s intention to strictly control the banking sector’s bad loan ratio.  Lagerkranser has obviously been put under pressure at some points in time.  Fortunately, Victor Shih has saved a copy of Lagerkranser’s original article.  Even more significantly, Shenzhen Daily quoted the article in full on 13/1/2009 (without citing the original source).  The Shenzhen Daily‘s version is still accessible.  Just in case if this version disappeared in the near future without warning, there is still one more citation at The Age on 12/1/2009.

I am quoting Victor Shih’s preface in full below for those who need more background information in order to fully comprehend the satire.  For the quick-witted population among us, please move directly to Victor Shih’s Blog for the meaty treat.

Without even a nice note to public share holders, Chinese banks are in the process of reversing years of progress and are reverting back to state banks in a planned economy. Granted, socialism is the economic system of our time. However, unlike elsewhere, the Chinese government, which is the majority shareholder of most of China’s banks, is directly ordering banks to finance a large part of the economic stimulus. The interest of minority shareholders, who care about profit, is increasingly taking a backseat. Shareholders at the very least deserve some clarification on how the promises from a few years ago that Chinese banks will commercialize are being systematically undermined. A note should look something like this…

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