China, being the worlds foremost emerging market, has increasingly begin to head down the road of further financial transparency. Areas in China’s banking industry which have been conspicuously shadowy in the past have now become under increased regulation. Specifically, the PBOC, the Peoples Bank of China will begin to start publishing TSF or total social financing in hopes to bring up investor confidence and boost the economy. Yield-hungry investors demands can be further met this way to hopefully stimulate capital influxes in larger amounts. Still, skeptics say that these financial changes still do not offer complete transparency to a point where these financial statements can offer a complete gauge for proper investing. Still, the steps China is taking seem to at least be heading in the right direction to a point where investors can gain a foothold on markets and business in China. Will this make significant changes in FDI? We will have to see in the future.
http://www.reuters.com/article/2013/01/28/us-china-tsf-idUSBRE90R07E20130128
It will be interesting to see whether this emerging financial transparency will help to boost or bust the Chinese economy. On one hand, investors will feel more comfortable with the Chinese companies and could be more likely to invest. On the other hand, perhaps this transparency will expose some issues with these businesses that they were trying to hide, ultimately decreasing investment interest and damaging the economy. I feel that the former option is more likely. I am also curious as to how China has been making their financial statements “less transparent” then other nations, as I was under the impression that all nations (except the US) adhered to the IFRS (International Financial Reporting Standards).
Note that the PBC is China’s central bank (cf. the Bank of Korea, the Bank of Japan and the Federal Reserve System) but also its top bank regulator. That leaves unclear whether TSF is a macroeconometric measure, or a way to gauge the health of a single financial institution.
So please elaborate! What does TSF mean? You need to define what this is, and compare it to metrics used elsewhere!
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I found article this interesting, though a little confusing. It is always refreshing to hear of progressive economic policies in developing countries. I recently read on another blog about the increasing efforts by the Chinese government to give the public greater access to financial information and implement more accountability measures. This should boost investor confidence and ultimately illustrates a responsible step forward for the Chinese government.