China is a country dealing with an unfortunate and excessive debt situation. The complexities of China’s economic troubles have many causes. The 2008 financial crisis hit China harder than other countries as China has not made a desirable rebound. China also suffered additional currency related problems further exacerbated the fiscal conditions in China. Now, solutions are emerging from the investment banking world: sell bonds and stocks in greater abundance.
The United States has been addressing its debt situation, in part, by selling bonds. China may be best served by doing the same. Experts in the investment banking world do seem to agree the sale of bonds and stocks would bring in a decent amount of investment capital to China. The capital would then offset a portion of the debt and, hopefully, reign it in.
Bonds are, in essence, loans. The Chinese government sells bonds for cash with an agreement to pay interest on the bonds. Granted, some may be worried about putting funds into Chinese bonds since the economy is in such weak shape. Still, China has a very large economy and is involved with significant multi-national trading. This would indicate the Chinese market is a safe haven for those hoping to buy international stocks and bonds. Of course, risk is going to be present with any type of investment made. No one should run into any type of investment without consulting with a knowledgeable professional.
Martin Lustgarten of Ponte Vedra Beach, FL is an experienced professional many turn to for investment banking advice and assistance. Lustgarten has also lived in – and performed financial duties – in Austria and Venezuela. This has allowed Lustgarten to gain a solid perspective on the investment banking and financial world.