Following the Baoshang Bank seizure on May 24, Beijing’s dilemma between financial reform and financial stability is clearly in view. Only administrative pressure on large banks to maintain short-term lending to risky institutions is currently preventing a larger credit crunch. The interbank market tension is weakening Beijing’s overall control over China’s macroeconomy, and despite assurances … Continue reading Beijing’s Credibility and the Baoshang Bank Dilemma