It could be said that any financial system that appears to be robust will, in time, reveal some underlying rot. In the late 1990s, for instance, the Asian financial crisis appeared to confirm the virtues of London and New York-then the global financial crisis happened. Anyone who is overly impressed with the apparent resilience of China today would do well to read a new book by two bankers who have worked there for many years, Carl Walter and Fraser Howie. "Red Capitalism" avoids the standard approach to Chinese analysis, which uses mounds of macroeconomic data that even Chinese regulators acknowledge are replete with flaws.
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