China Holds US Banks Hostage

Beijing could allow international investors to take bigger stakes in domestic banks in China if Chinese lenders were given licences to operate in the US, according to the country’s top banking regulator.

In an interview with the Financial Times, Liu Mingkang, chairman of the China Banking Regulatory Commission, tied greater access for foreign investors in China to US banking licence applications from two banks in particular – the Industrial and Commercial Bank of China and China Merchants Bank.

Here's the problem: Chinese banks are insolvent. They have virtually no internal controls and are by and larged used to prop up state-owned industries. They have no business operating in a free market society. Their non-performing loan list looks like our tax code.

I can't tell if the Chinese government truly believes the US is using this as an excuse to keep them out of the market or whether they are using it as an excuse to keep us out of theirs.