China's Superbank: Debt, Oil and Influence - How China Development Bank is Rewriting the Rules of Finance

The topic is interesting, the writers have a way with words, read it in one sitting! Having said that, I wish for books like this -- that deal with current events -- the authors would create some kind of online supplement to follow new developments. For example after the book was published the China Development Bank's agenda was scaled back in line with the new attempted reforms...

I found the book very enlightening in the works of the largest bank in the world. What the book does not address, it is not the purpose of the book, who long the Chinese will accept the low interest in their deposits and the government will continue to underwrite the losses CDB incurs from the loans to government owned companies.

There are few better observers of the political economy of Beijing then Michael Forsythe and Henry Sanderson; their Bloomberg series last year was unbelievably insightful, and "China's Superbank" is a great followup to that series as it sets the lay of the land of Chen Yuan and the increasing protean CDB.The book examine the CDB role both domestically and internationally from the Chinese solar sector to structure of the loans extended to Caracas. If your trying to understand the rebalancing/non-rebalancing process or Beijing's foreign policy it's a terrific read. I particularly enjoyed the authors focus on the funding advantage the CDB enjoys given it's ability to issue debt and the potential downstream effects of that capital structure. But across the board I learned a lot - highly recommended!

Update 27/22/2013Definitely recommend getting this book. I have a much better understanding of what is happening in China & especially with all of the changes that are going on, this book has been a go to resource for keeping up. Strong recommend.It was a shame that the kindle version was put out in such a shoddy fashion (fixed now), but the content is just too good to allow that to continue to mar the review.UPDATE:3/20/13 One of the authors contacted me (and I assume other Kindle customers) and said the kindle version had been fixed. I downloaded the new version and the "insert sentence" placeholders are indeed gone. I am going to reread the book and update the review afterwards. Moving the stars to 3 from 1 right now.PBAs others have noted the Kindle version is in draft form. The draft however is very good, but I can't give a full review until this gets fixed. I tweeted one of the authors 7 days ago, but haven't heard back. I contacted Amazon tech support, and they directed me to Wiley (the publisher) Tech Support. My chat transcript with them is included at the end.Bottom line is right now this book is not ready for purchase. I will update this review once I hear back from Wiley.Here are the relevant aspects of the chat I just had with the tech:Discussion Thread Chat Transcript 03/11/2013 11:05 AM[10:52:19 AM] Hi, my name is Wiley Tech Support. May I please get the name of the school you are attending or the name of the company that you work for, and a description of the issue that you are currently having.[10:54:26 AM] PB: k. the book in the kindle version is a draft. It has lots of "insert sentence" markings in it leading to incomplete paras[10:54:46 AM] PB: The book is[10:54:56 AM] PB: China's Superbank: Debt, Oil and Influence - How China Development Bank is Rewriting the Rules of Finance[10:55:05 AM] PB: The amazon kindle version can be found here: China's Superbank: Debt, Oil and Influence - How China Development Bank is Rewriting the Rules of Finance (Bloomberg) [10:55:53 AM] Wiley Tech Support: Ok, thank you for the information and I am sorry for the issues with this eBook.[10:55:54 AM] PB: and reviewers of the book have noticed the same thing in the kindle version so I know that it is not just a problem with my download[10:56:30 AM] Wiley Tech Support: What I will need to do is escalate this information to our editorial team so that they can get a corrected copy of the eBook to Amazon.[10:56:36 AM] PB: Great![10:56:55 AM] PB: do you have an eta on when this will be resolved?[10:57:21 AM] PB: and will I be notified?[10:58:16 AM] Wiley Tech Support: At this time I do not I am sorry to say. Unfortunately it will depend on what all is required to produce the corrected eBook. We will notify you via email at pb@XXX once this issue has been resolved.[11:04:39 AM] Wiley Tech Support: I will get this escalated right away so we can get this resolved as quickly as possible for you.

China's Superbank by Henry Sanderson and Mike Forsythe is, simply put, a superb introduction to the arrival of China Development Bank on the world stage. The book traces the evolution of the CDB from funding development at home to securing oil and influence for China in Africa and Latin America. Before I continue my review of China's Superbank, I must make two disclosures. First, I work with both of the co-authors in the Beijing office of Bloomberg News, so they are friends. I like these guys. Secondly, while I had no hand in the writing or editing of this book, the authors did draw on some of my reporting for passages on Huawei and ZTE. My work is cited in two footnotes to the text. These two factors preclude me from claiming to be an entirely objective reviewer. That being said, the authors did not request that I write this review, and I paid for my own electronic Kindle copy at $30.69 through Amazon.com. Perhaps that's my first criticism, the price. For a slender volume some 203 pages in length, it would have been nice to see at least the Kindle version priced a bit more affordably. There is practically no discount from the $31.65 price on the hardcover, which is not yet available for shipment. With my initial disclosures in mind, I believe I can still fairly say that even if I didn't know the authors, and despite the price, I would still give this book a strong recommendation. China's Superbank is a highly insightful and readable account of the role of China Development Bank both in its home market and abroad. I have been following developments in China since my first trip to Beijing in 1991 and I've lived in the country three times for a combined total of about 12 years. While I know firsthand a fair bit about China and its development in the past two decades, there is plenty in this book that I did not know. I'd imagine the same is true for just about anyone who hasn't been pouring over Chinese-language bond prospectuses as Sanderson and Forsythe have. The book traces the China Development Bank from its founding, and shows how in its home market it pioneered a model whereby local governments financed development loans by the expropriation and transfer of land rights. They explain how this became the central mechanism for paying back loans to the CDB and, as a result, people must be removed from their land at below market prices, feeding into rural unrest. ``Without suppressing land compensation, local governments can't make the margins to pay back the banks,'' the authors quote U.S. scholar Victor Shih as saying. The book chronicles CDB's role in development of the country's bond market, and shows how CDB is unique among Chinese lenders in being financed almost completely by bond sales rather than deposits. The commercial banks that buy those bonds then assign them a zero-risk rating, and so set no capital against them even as CDB ramps up lending to new commercial sectors, and begins to spread its wings abroad in countries with long histories of default, including Venezuela. Thus the bank gives new meaning to ``too big to fail'' the authors say. China is now lending more to developing countries than the World Bank. In the case of Venezuela the lending is a staggering $40 billion. The authors show how the CDB's oil-for-loans programs help China secure large deliveries of oil for its growing economy, and that's not all. Since much of the proceeds of those loans are then used to buy Chinese goods and services, ``China wins twice,'' the authors say. I highly recommend this book for anyone looking for an introduction to how the CDB moved from funding development at home, to the frontlines of both China's global quest for energy and natural resources as well as the expansion of Chinese enterprise abroad. One wishes the authors had been able to drill into these subjects in even greater detail. Also, more context and comparison of CDB with other development banks globally would have been useful. While more would be better, there is plenty here to get you started on the global role of the little understood and increasingly influential China Development Bank.

It takes capital - money - for any business or country to achieve its strategic objectives, whatever they may be. Lots of money that's readily available and can be quickly directed to the areas of the company or economy to move things along. "China's Superbank" is the story of how China accomplished this - first at home to take their country from a poor impoverished nation of 1.5 billion people to the second largest economy in the world (second only to the United States) and soon to become the largest.I have seen first-hand the impact that China has had in two foreign countries and in China itself. My first two experiences were in Asia and Africa.Our West African country had been struggling for decades trying to boost its economy and to get out of the grips of the IMF and World Bank. Oil was recently discovered but the African country couldn't take advantage of the situation. They didn't have any capital to invest in their own resources. Then along came the CDB with a $3 billion line of credit with repayment terms geared to the amount of oil the African country pumped for China. This line of credit has allowed them to build a gas pipeline to produce electricity that will save them $1 million a day in imported oil - and the subsequent loss of precious foreign currency reserves. While we may not like the political philosophies of the beneficiary countries, the list of countries and projects recounted in the book goes on. It could serve as an example to Western countries as to how ineffective their traditional "foreign aid" has been.Our Asian country had discovered oil in the mid-1970's and had managed to gain control of their resource to the extent that they were processing their crude oil downstream into petro-chemicals that were being sold throughout the world. Located underneath the "soft underbelly" of China with respect to transportation, their economic focus was on how they could exploit the emerging markets in China. They had developed a strategic economic plan that was shared with business leaders, their politicians, and their people - to the extent that everywhere we went, their people were examining ways by which they could break into Chinese markets. At the same time, Western countries were looking for ways to transfer domestic production instead of looking at ways to sell domestic products into the humongous emerging Chinese population.My third example deals with China itself. In preparation for a recent 3-week trip to China, I had read this book and another - "Deng Xiaoping and the Transformation of China" by Ezra Vogel. Both books had given me insight into how China had changed over the past 30 years. However, the book couldn't really prepare me for that change when I actually saw what was happening. If you think China is a backwards country - get rid of that idea. If you think China is a land of peasants toiling away in rice paddies on the side of a mountain - get rid of that idea. Any ideas that you have about China that have been created by the Western media are 10-15 years behind the times. Everywhere we went, there were expressways galore. Everywhere we went in the cities, the young people were wearing the latest fashions. Everywhere we went there were new apartment buildings and factories going up. The national bird of China is the crane - the construction crane, that is.It's only when you read "China's Superbank" for the 3rd or 4th time (and it is an easy read) that you come to understand how China has done all of this. It's very simple. With 1.5 billion people now earning money - whether small fortunes or peasant wages - the Chinese are the most prolific savers in the world. It's with good reason that they havbe become prolific savers in a land of great economic uncertainty of their history over the last 100 years. And so they deposit their savings in their banks.But there's a problem. In a land of uncertainty, Chinese banks aren't about to invest these deposits into economic projects without some form of assurance that the risk is minimal. And this is where the China Development Bank steps in. Through the issuance of bonds, the money is transferred to the CDB. It analyses the projects, injects the money into the project, thus sending a signal that the risk is worthwhile. Roads, railways, airports, factories, businesses, apartments - you name it and CDB is there.Transfer this approach to foreign countries, particularly when China needs the natural resources of these countries - whether its oil, leather, copper, or glass - you then have the secret to China's foreign policy initiatives.It's something that Western governments should take a close look at.

Would give five stars if theoretical review and systematic accounts were also included in detail.