By SIMON CONSTABLE
It was 2013, and the decision in China hardly raised any eyebrows in the global investment community—at least at first. Concerned about rogue financing, the government said it would crack down on so-called “shadow banking” firms, which are financial institutions that operate with little or no regulation. Too much bad lending, China’s leaders said, could mean a repeat of 2008.
Which appeared to make sense, except that over time, the move exposed a major weakness in China: its inability to attract enough investment and to switch to a US-style consumer-led economy at the same time. The crackdown would squeeze lending too much, and China’s economy slowed. But most importantly, it created new doubts about the nation’s policies—and ultimately a dramatic exodus of international investment.
All of which raises a curious question: How do you anticipate and measure investor confidence on a large scale? Read more here.
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