China is now the unquestionable global manufacturing powerhouse.
It won’t stop there.
An article in The Australian today (China’s banks target Australia) talks about how Chinese banks are expanding in Australia. In the past year, about 4% of the syndicated loan market has shifted to China and Japan from European banks.
ICBC is 70 per cent owned by the Chinese government. It is China’s largest bank, with $2.5 trillion in assets, compared with $2.3 trillion in assets for the largest US bank, JP Morgan Chase. Its drive in Australia comes as the bank seeks to more than double the share of profits coming from overseas operations in the next five years, to 10 per cent, from the current 4 per cent.
Since the crisis began, the euro has been supported as European banks sold off overseas businesses to pay off losses. The buyers were mostly Asian banks and now they are using their new businesses, and well-capitalized old businesses, to compete with the remaining (crippled) western firms.
This is just the first chapter of this story, large portions of LTRO borrowing will be paid back by overseas banking sales. Chinese banks will be there to lend a helping hand.
