A day with banking professionals from China: Dan Korman
Today we got to talk with some banking professionals from China. It was very educational to learn how they operate and perform business in the banks within China. One thing I noticed is that they all seemed to look up to the way in which the US operates its financial system. They all seemed to have great confidence in the US financial system. I also learned that they are not as heavily involved in the derivatives markets as the US banks are, which implies they takes less risk in their financing activities. I personally do not see our government’s intervention in the financial system to be very beneficial. In fact I am very worried with the extent to which they have become involved with the banks.
I personally believe the Chinese have a better foundation in their financial system in regards to the amount of leverage that their banks possess. In America we seen the financial collapse happen in part due to the great amount of debt that the banks carried. This reckless risk taking has had very adverse effects on the US economy. In China they seem to be more conservative in their financing and investing activities. The Chinese seem to be less risky in terms of their financial practices versus the US. They may look up to the US now, but I feel that soon the rest of world will look at the Chinese’s ability to save more and spend less as a more practical way of operating business, and economic practices. Of course it is very early to tell which method will be successful, but with great risk comes great responsibility. The US financial system I fear will never be the same as it once was. I soon see China becoming the top power in the global economy, a power that the US has been for so many years. In spite of global economic recession, the Chinese GDP is still predicted to grow at 6-7% for the next year. This may be quite slower than recent years; however it is still substantial growth. All economies will face tough times in the next couple years, but I feel China is better prepared for the tough economic times versus the US. However, considering the US’s great influence on exchange rates and other economies my prediction may prove to be wrong.