| Abstract | While Southeast Asia struggles to cope with weak currencies and plunging stock markets, China has been left, so far, unscathed by the region's financial earthquake. But the stability seems fragile because the state-owned banks are sick. For years, Chinese banks have been plagued by bad debts, high operating costs and insufficient capital -- the legacy of a Stalinist planned economy. Despite sweeping economic changes in China, its banks continue to operate like cashiers of the state treasury, lending heavily to state enterprises many of which are unable to returns loan or are being wound up. |
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