Boring But Important
My knowledge of economics is rudimentary, but I know that the flotation of the Bank of China is pretty important.
No doubt investors are falling over themselves to snap up shares in China's second-biggest bank. The even bigger ICBC is going to float later this year too, completing what is certainly a significant move in the PRC's progress towards liberalisation.
But hold on. Anyone who's been in China for any length of time knows that the consumer banking system is primitive to say the list. That says a lot about the system as a whole. There's very little communication among the banks, forex is still treated like rocket science and corruption is rampant - these banks sacked significant percentages of senior managers a while ago for embezzling funds.
Most worrying of all, it's these banks that absorb the risk. You see the amount of building and construction in Shanghai - all those cranes and shiny plazas. The money must be coming from somewhere. Not all of it can be real money: it comes from the banks.
Who holds up the banks? The government, and the people, who are famously thrifty and savings obsessed. So those glossy office blocks are basically built on Granny Wang's life savings and a whole load of big bad debt.
The whole thing is a house of cards that is going to make a massive crash and burn sooner or later. Now it looks like a whole host of foreign banks are going to be brought down with them when the bubble bursts.
Caveat Emptor.
BBC story reprinted below: see also this Economist story (bit complicated)
Bank of China starts share offer
Bank of China, the country's second largest lender, has announced the launch of a $9.8bn (£5.2bn) share flotation on the Hong Kong market.
Set to be the world's biggest initial share offering since 2000, it comes as China continues to open up its banking sector to foreign competition.
A consortium of international banks led by Royal Bank of Scotland spent $3bn on a 10% stake in Bank of China last year.
Trading of Bank of China shares is expected to start on 1 June.
China's state banks face a huge increase in competition from December, when the government will open the retail banking market to overseas lenders who will be able to open their own branches in the country.
A number of Chinese banks have been seeking foreign investment to help them prepare for the challenge.
The country's largest lender, Industrial & Commercial Bank of China, is planning a $10bn share flotation for later this year.
Bank of China has one of the most international outlooks of all China's banks, with offices around the world and a listed subsidiary in Hong Kong.
Its position as China's principal foreign exchange bank has also enhanced its profile in the eyes of would-be investors.
But some analysts have warned off investors, pointing out the bank's problems with bad loans, fraud investigations and antiquated computer systems.
