Notes

Financial trouble in Big China. Last week, four of China’s biggest banks said they’d raise about US$72 billion in capital through the sales of new shares. Just a ho-hum stock issuance by some financial institutions? Maybe a pre-emptive move to bolster balance sheets before any possible damage is done by the new round of U.S. tariffs this week?

No. First, $72 billion is an enormous amount of money—roughly the annual GDP of Slovenia or oil-rich Azerbaijan. China has the world’s second-largest defense budget, and that’s only about $245 billion each year. And this is clearly a move directed by Beijing: All four are state-owned banks, and they said the Finance Ministry would be a major investor in the new shares. In China, it’s rare for the central government to orchestrate a maneuver like this.

So what’s going on?

—Michael Bluhm