Brief Paper 2/1999: A China: Um risco para o sistema financeiro internacional?
Title: Brief Paper 2/1999: A China: Um risco para o sistema financeiro internacional?
Author(s): Quintaneiro, Luís
Publication Date: 1999
Publisher: ISEG - CEsA
Quotation: Quintaneiro, Luís. 2008. "1999". Instituto Superior de Economia e Gestão – CEsA Brief papers nº 2-1999
Abstract: The much publicized bankruptcy of G1T1C (Guangdong International Trust and Investment Corporation) in October 1998 coincided with a period of extraordinary turmoil in international financial markets. It was the first time that a financial institution in the R.P. of China, which - it was admitted - enjoyed an implicit guarantee from the Chinese authorities, was allowed to "fall". This bankruptcy caused relatively significant losses (not yet fully quantified) in Western financial institutions creditors of GITIC. On the other hand, at the same time, the pressure on the dollar and the Hong Kong stock market was taking on extreme proportions, leading the authorities of that PRC Special Administrative Region to similarly extreme responses. Due to these facts, there was no lack of those who considered that China could be the next and decisive episode in the emergence of a situation of financial crash that would eventually extend to the world scale. This perception is, however, devoid of any real foundation. The characteristics of China's economic and financial system (the result of the development process pursued, which is markedly different from any other situation) give rise to a very specific international financial insertion and exposure, which can hardly constitute a threat to stability of the same, unlike what happened in Southeast Asia, South Korea, Russia or Brazil.
Identifier: http://hdl.handle.net/10400.5/2080
Category: Working paper
Abstract:
The much publicized bankruptcy of G1T1C (Guangdong International Trust and Investment Corporation) in October 1998 coincided with a period of extraordinary turmoil in international financial markets. It was the first time that a financial institution in the R.P. of China, which – it was admitted – enjoyed an implicit guarantee from the Chinese authorities, was allowed to “fall”. This bankruptcy caused relatively significant losses (not yet fully quantified) in Western financial institutions creditors of GITIC. On the other hand, at the same time, the pressure on the dollar and the Hong Kong stock market was taking on extreme proportions, leading the authorities of that PRC Special Administrative Region to similarly extreme responses. Due to these facts, there was no lack of those who considered that China could be the next and decisive episode in the emergence of a situation of financial crash that would eventually extend to the world scale. This perception is, however, devoid of any real foundation. The characteristics of China’s economic and financial system (the result of the development process pursued, which is markedly different from any other situation) give rise to a very specific international financial insertion and exposure, which can hardly constitute a threat to stability of the same, unlike what happened in Southeast Asia, South Korea, Russia or Brazil. China: Um Risco para o Sistema Financeiro Internacional? was presented at the 1st Portugal – China Congress organised by the University of Trás-os-Montes e Alto Douro in Vila Real, 19-23 April 1999.
Quotation:
Quintaneiro, Luís. 1999. China: Um Risco para o Sistema Financeiro Internacional? Instituto Superior de Economia e Gestão – CEsA Brief papers nº 2-1999
