China has weaponized its state banks to conquer global markets, forcing rivals Brazil and India to copy its playbook — but with a crucial twist that's reshaping how nations compete
> The precedent: Japan pioneered development banking in the 1980s, but OECD reforms blocked it from using cheap loans for commercially viable projects. China, operating outside OECD rules, scaled up where Japan was forced to stop.
Should the rules be changed? One failure scenario I can imagine with all actors doing outsized state financing at the same time is that you get too many doomed zombie projects doing the same thing, and a financial panic. So the rule seems like maybe it could be sensible, if a high enough percentage of capital was bought in. But if you're looking at a scenario where OECD nations are getting their lunch eaten by people outside of the group...
> The precedent: Japan pioneered development banking in the 1980s, but OECD reforms blocked it from using cheap loans for commercially viable projects. China, operating outside OECD rules, scaled up where Japan was forced to stop.
Should the rules be changed? One failure scenario I can imagine with all actors doing outsized state financing at the same time is that you get too many doomed zombie projects doing the same thing, and a financial panic. So the rule seems like maybe it could be sensible, if a high enough percentage of capital was bought in. But if you're looking at a scenario where OECD nations are getting their lunch eaten by people outside of the group...
Great comment! The rules definitely need to change. We still have zombie companies, especially in America, so things as is doesn’t work!
We need to address the fact that free market fundamentalism since the Reagan era has been a failure