Two Worrying Possibilities For China's Disappearing Bank Deposits

sharkChina’s underground banking system

Photo: Wikipedia

No one knows exactly what happened to $173 billion that was withdrawn from China’s banks in July.Victor Shih draws some disturbing conclusions in an essay at beyondbrics:

Although the mystery remains unsolved for the moment, solving the mystery is important for investors who want a sense of where the economy is heading.

If large sums are indeed disappearing into the shadow banking system, then a rapidly rising share of the financial system is beyond the direct control of the government.

If large sums are indeed flowing out of China, we may have the beginning of major, sustained outflows from China.

Click here for a guide to China’s underground banking system and why it should scare you >

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