Banks Are Roaring Back in Xi’s New China
A government push to upgrade key manufacturing will need financing that the inefficient, largely state-owned lenders are best positioned to provide—for better or worse.
Optimism was everywhere in China’s finance circles back in 2014. E-commerce giant Alibaba Group Holding Ltd. wowed the world by raising $25 billion in New York. A new cross-border trading link let Chinese investors buy Hong Kong-listed stocks and foreigners trade mainland shares. Global index providers raced to include Chinese bonds and stocks in their benchmarks.
International asset managers’ China holdings exploded, from $753 billion in 2014 to $8 trillion at their peak in 2021. The thinking was clear: With the entry of Wall Street banks and a few more policy reforms, China’s financial markets would mature and allocate capital more efficiently.