- China’s state media says the banking crisis happened due to poor financial regulation and US domestic politics.
- It cited former President Trump’s rollback of certain provisions of the Dodd-Frank Act as a contributor.
- But banks in China also have their own issues amid the country’s property woes.
As the world’s coming to grips with the unfurling banking crisis, China’s state media says that Silicon Valley Bank, Silvergate Bank, and Signature Bank, New York imploded due to poor financial regulation and US domestic politics.
“While the managements of the banks should bear the most direct responsibility for mismanagement of the companies, the absence or mistakes of the United States on financial supervision and macro policies are what should be reflected upon,” Chinese state news agency Xinhua said Thursday.
The media outlet said bank collapses “fully exposed” the issues from domestic political disputes in the US that have led to changes in financial supervision.
It also pointed to former US President Donald Trump’s rollback of some consumer protections in the Dodd-Frank Act in 2018 as a contributor to the current crisis. The Dodd-Frank Act was signed into law by then-President Barack Obama in July 2010.
China’s heavy-handed criticism comes at a bleak time for its own banks
But this harsh criticism comes at a bleak time for China’s own banks.
They have had their own issues, such as property market woes — which prompted tens of thousands of people to refuse to pay their mortgages on stalled projects — and an economic slowdown after three years of on-off zero-COVID lockdowns.
The draconian lockdown measures impacted banks as property sales and mortgage take-ups tanked.
To attract mortgage-seekers, some banks are even extending the upper age limit for homeowners servicing mortgages to 80 years old.
Silicon Valley Bank’s implosion even had Chinese start-ups scrambling for cover, as the troubled bank was their go-to lender too, Reuters reported Monday. Since its collapse, some of these start-ups have been looking for alternatives — such as bigger US banks or other Chinese lenders, Reuters reported.
Despite these troubles, China touts its governance system as being superior to “Western democracy” and uses state media to push its messaging.
This is an escalation of the war of words between China and the US
Xinhua’s analysis also comes at a time of heightened tensions between the US and China across a range of issues — including the Biden administration’s threat of a ban on TikTok over national security concerns.
The Committee on Foreign Investment in the US demanded TikTok’s Chinese owners sell their stakes in the company, The Wall Street Journal reported Wednesday, citing people familiar with the matter.
Wang Wenbin, China’s foreign ministry spokesperson, said on Thursday the US has not proven that TikTok threatens national security and called on the US to “stop suppressing relevant companies.”
This war of words goes back to even October 2022, when the US imposed export controls on shipping equipment to Chinese-owned factories making advanced logic chips.
Mao Ning, another Chinese foreign ministry spokesperson, said at the time that the US has been “abusing export control measures to wantonly block and hobble Chinese enterprises.”