Chinese Banks Play Role in Global Money Lending

Chinese Banks Play Role in Global Money Lending

Photo from Picasa

Photo from Picasa

Balance of Financial Power Shift

US Banks have been facing dire times over the past couple of years, and have curtailed lending to people looking for personal loans. This curtailment of lending also applied to the country’s vast overseas projects. At the same time, Chinese banks have stepped in to pick up the slack left by US banks, and have gained in strength by lending to major projects across the world. Though this will not be any consolation to the US banks, but it would be worth knowing that Chinese banks are lending money to the cash strapped Southwest Airlines, which would have been unthinkable in the past.

Why the Shift? Why Now?

China, along with a few other Asian countries, is one of the countries who have not been affected by the current recession. The World Bank and the International Monetary Fund places China among the top nations that will show growth in the year 2010. Years of conservative practices had left Chinese banks so flush with cash that they were looking to invest, and with the recession hitting other parts of the world, the Chinese seized these opportunities without much thought. Investments poured into other parts of the world from Chinese banks in the form of short term and long term loans and are now being known as the main engine for global recovery. The Chinese have spared no industry in making their presence felt, starting from financing for copper mines and minerals to aircraft purchases and shoring up retail stores. The only area that they are not into is in personal loan lending to individuals. However, this too should be taken with a pinch of salt as Chinese money lenders may have a presence among the Chinese population in the United States.

Economists Warn the Chinese

Even as the Chinese have been expanding in financial operations across the world, many US economists are warning them about the dangers that exist. What happened with the US Banks prior to the start of the recession could very well happen to the Chinese. The banks looked to expand in every way possible and invested money into projects that soon became non-existent. These projects made the global economy turn on its head, leaving people running around frantically looking for personal loans. The same fate could happen to the Chinese banks, but they are not heeding these warnings. They are more inclined to create an impression that leaves them as the top financiers of the world.

Conservative Money Could Have Helped the US

One wonders whether having a conservative policy to start with would have helped the United States to stay out of their financial woes. The policy the banks applied was conservative to US nationals who were really in need of the finances, but were proved wrong in following their policies and neglecting the population at large. Perhaps they will now change their thinking and start looking at the people in the country. They would do well to start lending personal loans to the American people rather than companies that are depending upon assistance.

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