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Business Weekly Archive: China's hidden bank loans

20/08/2010

China's hidden bank loans

BBC World Service - Business Weekly Archive, China's hidden bank loans

Is China's economy still overheating? Plus do food price controls really work?

Is China's economy still overheating? Should governments try to protect consumers against rises in food and fuel prices? Does private equity work? And are too many workers speaking from a script?

Is China's economy still overheating? Beijing has been trying to force the banks to cut back on their massive lending. But now it has emerged the banks have carried on lending by disguising risky loans, and secretly shifting them off their balance sheets. 

They did it by transforming loans into complex investments, in an echo of the sort of financial engineering which helped to cause the credit crisis, when banks created risky derivatives out of US subprime mortgages. 

Charlene Chu is from the credit ratings agency Fitch.

Should governments try to protect their consumers against steep rises in food and fuel prices? The Kenyan parliament, for example, has passed a bill which would bring in price controls on basic foodstuffs and fuel. From Nairobi, the BBC's Kevin Mwachiro reports.

In India, the government has used various regulatory tools to keep the price of sugar down. Prices have tumbled, to the point where sugar producers are losing money on every tonne they sell. Dr GSC Rao is the chief executive of the Simbhaoli Sugar Mill.

Private equity has always been controversial. It is about buying up under-performing companies to run them better, and selling them for a hefty profit. Now the question is whether the industry has exaggerated the financial return its made for investors.

We talk to Peter Morris of the Centre for the Study of Financial Innovation, and Jon Moulton, who's worked at some of the biggest UK based private equity firms and is the chairman of Better Capital.

Plus, the British author and management consultant Peter York on why more workers have to use a pre-written script, as part of their job when dealing with customers.

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