Strongly Questioning Mr. Zhou Xiaochuan's Ability to Manage the People's Bank!
2006-03-09 16:02:12
Mr. Zhou is no stranger to capital market players. How the capital markets fared under his stewardship has already been consigned to the dustbin of history -- no need to discuss that further. When Mr. Zhou was appointed head of the central bank, this ID had already posted questioning this decision. This ID did not wish to see Mr. Zhou's brilliant track record in the capital markets continue to be gloriously replicated in China's most critical domain. To this day, this ID still strongly questions Mr. Zhou Xiaochuan's ability to manage the People's Bank! Of course, if it were a complex systemic issue, reasonable minds could disagree, and that would be fair enough. But when someone bearing the title of "Senior PhD," serving as the central bank governor of a nation of 1.3 billion, makes the most basic common-sense error, then strongly questioning his ability to manage the People's Bank is not at all inappropriate.
Mr. Zhou stated that the actual net assets of the four major state-owned commercial banks were all negative values -- "technically bankrupt" -- and therefore there was no question of selling them too cheaply. But the most fundamental common sense in finance is that a bank's most important asset is its network and brand, which constitute the most important component of a bank's value. I ask: did the net assets Mr. Zhou discussed include this most important component? Obviously not. Setting aside for the moment the four major asset management companies, which are currently running a "meat bun thrown at a dog" operation in how they dispose of assets -- I ask: does anyone dare request that the NPC and CPPCC organize an independent body to audit whether the four major asset management companies have engaged in improper conduct while handling non-performing assets?
How much China's four major state-owned banks' networks and brands are worth is understood by anyone in the world with even a modicum of financial knowledge. But there's one thing foreigners understand yet will never say: finance is a nation's most critical pillar, of equal or even greater strategic importance than national defense. Capturing a nation's finance produces strategic value thousands of times greater than its network and brand, let alone so-called net assets. In "Currency Wars and the RMB Strategy," which this ID wrote three years ago opposing RMB appreciation, I pointed out that "large-scale national-level investment must absolutely not be commercialized or politicized, but must be strategized." I ask: is our current financial strategy still as much of a disaster as it was when this ID questioned our strategic resource policies years ago?
In "Currency Wars and the RMB Strategy," this ID also said: "Economics is fundamentally political science. For any specific economic phenomenon, there is certainly more than one theoretical solution. But the choice of which one depends on political considerations." "Putting politics in command" is absolutely not just lip service. Politics permeates every part and every moment of life. In the context of capital globalization, there is no corner that politics doesn't penetrate. The question is whose politics and what kind of politics -- this is something a central bank governor should probably not forget.
Just as I clearly stated years ago, this ID fears that one day we'll wake up to find our capital markets and financial markets have been dissolved by the "energy-absorbing technique" of capital globalization politics. War doesn't necessarily involve gunpowder. Wars without gunpowder are often the most terrifying and most brutal -- this is something no Chinese person should ever forget.