Investors Do Not Trust Chinese Government Bailout Efforts

October 17 00:00 2011

New York, October 17 ( – The Chinese government may have become the latest entrant to what can be called a global investors mistrust club. Reports have been increasingly spreading the news that Chinese government is adept at manipulating numbers causing investors to be wary to believe what government reports say. Besides, investors are not greeting the news that China is backing its banks with great enthusiasm. The global markets were almost indifferent as these events unfolded.

This response by the investors is not without reason. Many of them have believed in and invested in the China growth story. However, of late the Chinese government has been doing a horrible job with regards to its policy making. Most of the state owned banks are lending money to state owned corporations many of which are inefficient and making losses. On the other hand, the small local businessmen are increasingly turning to loan sharks whose outrageous interest rates are eating up the profits. Although the effect of slowdown on the economy has been minimal, the small businessmen have been hard it.

All this along with the fact that America has launched a bill to counter what they call “currency manipulation” by the Chinese has led to investors rethinking whether China will perform as much as they had earlier expected it to.