The Red Dream

The Red Dream

by Carl E. Walter
Released August 2022
Publisher(s): Wiley
ISBN: 9781119896159

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Book description

An eye-opening deep dive into the sources and consequences of how China has financed it’s rise to global economic prominence

In The Red Dream: The Chinese Communist Party and the Financial Deterioration of China, veteran finance executive Carl Walter uses his unique experience in Chinese finance to deepen his exploration of how the Chinese Communist Party finances its obsession with GDP growth and social control. Overwhelmingly debt-fueled, the party’s financial strategy has driven an unsustainable growth in banking and state enterprise assets. Inevitably the party’s own financial health is being severely weakened and China’s future over the next decades put in doubt. You’ll also find:

  • A discussion of the financial power of local governments and the Ponzi scheme created by their sale of land use rights
  • How China’s entry into the World Trade Organization gave rise to today’s China
  • How the party and China’s regulators enable banks to present outstanding performance metrics
  • An exploration of the party’s financial assets and liabilities since 1979
  • Examples of financial crisis management and related costs incurred by China and the US
  • A look at Japan’s experience as a potential guide for China future development

An essential read for anyone interested in international economics, geopolitics, and finance, The Read Dream will also earn a place in the hands of finance professionals, bankers, policymakers, corporate strategists, and investors.

Table of contents

  1. Cover
  2. Title Page
  3. Copyright
  4. Dedication
  5. Preface
  6. List of Abbreviations
  7. Chapter 1: From Turning Point to Turning Point
    1. An Abrupt About-Face
    2. The Golden Age: A Short Story
    3. Underlying Conditions
    4. The Yin and the Yang of the China Dream
    5. Convergence
    6. Notes
  8. Chapter 2: The Shadow Fiscal System
    1. China's “Centralized” State and Localized Financing
    2. Aspirational Central Finances, Fiscal Collapse and the 1994 Budget Law
    3. The Continual Local Scramble for Funds
    4. Then There Was the Land but It Is Not Free, 1999–2007
    5. Paving the Country Over
    6. The Vulnerability of Local Governments, Banks, and Enterprises
    7. Implications
    8. Notes
  9. Chapter 3: China's Banks and the Deposit Bonanza
    1. China's State Banks and the “Tree” Model of Banking
    2. Command Lending and Funding
    3. Fintech and Other Challenges to Bank Deposits
    4. Bank Capitalization
    5. Implications
    6. Notes
  10. Chapter 4: Trees Can Grow to Heaven!
    1. Evolution of Chinese Balance Sheet Management Techniques
    2. Outcomes in Financial Engineering Chinese-Style
    3. Channels to Support State Bank Performance Metrics
    4. Implications
    5. Notes
  11. Chapter 5: Beautifying Bank Balance Sheets
    1. Parking Assets—the Interbank Market and “Repos”
    2. Flexible Loan Agreements
    3. Local Government Bonds
    4. Government “Guidance” Funds
    5. Off-Balance-Sheet Items
    6. Comments
    7. Notes
  12. Chapter 6: After 30 Years, Was Deng Xiaoping Right?
    1. A Summary State Balance Sheet
    2. Inefficient Investment Equals Extrabudgetary Funding
    3. The Promise of the Stock Markets
    4. Massive Growth in Deposits
    5. “Opening” the Door to Foreign Investment
    6. Excessive Reliance on Debt
    7. Deterioration of State Finances
    8. Summing Up
    9. So Was Deng Right, Can Capital Markets Be Used in a Socialist Economy?
    10. Notes
  13. Chapter 7: China versus the United States: Comparing the Costs of Financial Crises
    1. Summary Financial Crises, China and the United States
    2. Comparisons of Crises
    3. Macro Comparisons and the Role of Central Banks
    4. Comparisons of State Net Worth
    5. Comments
    6. Notes
  14. Chapter 8: Japanese Bubbles
    1. Bubbles and Japan's Banking Crisis of the 1990s
    2. Why Did Resolving Japan's Banking Crisis Take So Long?
    3. More Points of Comparison, China versus Japan
    4. Comparative Cashflow Chains
    5. How Might the Party Change Its Spots?
    6. The Value of Chinese State Industrial Enterprise Assets
    7. Comments
    8. Notes
  15. Chapter 9: Chinese Balloons
    1. The Party's Ruling Paradigm
    2. Chinese Balloons
    3. Convergence Revisited
  16. Appendices
    1. Appendix 1: Estimated China Government–Only Debt Obligations, 2009, 2015–2019
    2. Appendix 2: The State Sector Balance Sheet
  17. Selected Bibliography
    1. Websites
    2. Publications
  18. Index
  19. End User License Agreement

Product information

  • Title: The Red Dream
  • Author(s): Carl E. Walter
  • Release date: August 2022
  • Publisher(s): Wiley
  • ISBN: 9781119896159