This is TBSI in the world. I'm John Batch. They're welcoming Gordon Chang at

Gordon G. Chang, my colleague in co-host. And we're off to the other side of the

world, to Hong Kong, to Andrew Collier of Oriental Strategy, to help us

understand the Chinese economy in distress. And what part is the problem and what

part is the solution in shadow banking? And a very good day to you. Thank you very

much. You provide me a picture of shadow banking in China since 2010, since the

recovery efforts from the Great Recession. And what I know is that the chart shows

that after 2012, it took off. It was like a long March 5 booster straight up and

it topped apparently in 16 and 17. It's now extremely high. What is shadow banking

in China? And how is it? How was it part of the problem that has led to this

distress? Good day to you, Andy. Good day, John. Well, shadow banking in the

United States during the financial crisis was basically very liquid products

traded on Wall Street. So somebody would borrow money for a mortgage and then the

bank would sell that as a product and people investment funds would purchase it.

Very, very fast moving stuff. The Chinese shadow banking is really more like a

bank that is badly regulated or an institution, I should say, that functions as a

bank, but has light regulation and may have very dodgy ways of raising and lending

money. Gordon, you have a question for Andy. Andy, what are the authorities in

China now doing about shadow banking? Panicking is probably the best word. They did

do a pretty good job back in 216 of getting rid of some of the most liquid, most dangerous

products that could blow up in their faces. But the demand for credit is so strong, particularly

in the property market, that they couldn't stop the loss of shadow banking coming through

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