Eyes on Chinese banking stability

<p>Kia ora,</p><p>Welcome to Monday's Economy Watch where we follow the economic events and trends that affect New Zealand.</p><p>I'm David Chaston and this is the International edition from Interest.co.nz.</p><p>Today we lead with news inflation risks aren't the only worry - Chinese banking stability might be too.</p><p>In China, there have been official <a href="https://asia.nikkei.com/Business/Markets/China-debt-crunch/China-warns-regional-banks-to-brace-for-tidal-wave-of-bad-debt" target="_blank"><strong>warnings</strong></a> to many regional banks of a coming tidal wave of bad debt. Now Beijing is dealing with the issue by bundling many of these vulnerable lenders up in a <a href="https://asia.nikkei.com/Business/Finance/China-merges-ailing-small-lenders-to-head-off-a-big-crisis" target="_blank"><strong>mass consolidation</strong></a>. Unfortunately for them, this comes at a time when many of the already large national banks are <a href="https://asia.nikkei.com/Business/Finance/China-banks-profit-revival-falters" target="_blank"><strong>struggling with profitability</strong></a>. And some of these large institutions are being roped in to help shore up the regional risks. Beijing is risking its banking system foundations in trying to avoid regional bank bankruptcies, the result of the excesses they engaged in.</p><p>In Hong Kong, they finally have some good GDP data to <a href="https://www.hkeconomy.gov.hk/en/pdf/er_21q1.pdf" target="_blank"><strong>report</strong></a>. Their Q1-21 economic growth was +5.4% better than the ugly Q4-2020 data, and +7.9% higher than the pandemic-affected Q1-2020.</p><p>In South Korea, their booming export export sector seems to be quite able to sustain that growth with fast-rising prices. <a href="http://file:/C:/Users/User/Downloads/2.%20%5bPress%20release%5d%20Export%20Import%20Price%20Indexes(202104)_f.pdf" target="_blank"><strong>Export prices</strong></a> were up +2.2% again in April from March, capping a +11% rise just in the first four months of 2021.</p><p>In Ireland, th