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Paul, your article has a pretty good explanation, so why ask? Lack of transparency is an issue, but I think it is blown out of proportion: It does hides corruption, which is true, but I will remind you that time and time again in even an open environment like the US, fraud can be hidden. Cases like Enron, Waste Management, Worldcom, etc come to mind. So, even in an open environment, fraud can occur big time.The 10 Worst Accounting Scandals of All TimeHaving said that, some comments: US corporations complain about IP theft. In a JV, how can you run a company together without sharing information? In IP theft, it is obviously more prevalent in developing countries than developed countries. But, issues like Samsung vs Apple, remind one that it is not only with China, the problem exists. Though there is a side that says IP monopolies like patents slow innovation. I think some of it has to do with history. When China had no patent or IP security, secrecy was important, just like the Coca Cola formula and its history. There is no patent for Coke’s formula, it is just a guarded secret, opacity to keep others from knowing and competing. I think the same applies to China.China is trying to open up with less opacity, but it doesn’t change overnight. Keep in mind the Deng Xiaoping’s road to capitalism is only 40 years old, less than a generation. I would remark that in less than a generation, China has opened up quite a bit and is still opening up. As China transitions to a western economics, IP will become more and more important, transparency in finance will become more open, and, in general, society will become more importantI will remind you that China began an open source platform for development of things digital. It is the epitome of openness with no patents or copyrights to deter the progress in developing new digital applications and products. My opinion is that this form of transparency, in a technical sense, will move China much quicker and develop new techniques, devices, and applications than the west can do in their existing environment. That’s one reason, those westerners that know, have moved to places like Shenzhen, to take advantage of these open source platforms.Shenzhen: China’s Ecosystem for Open-Source InnovationIn fintech, you see a similar thing happening. The QR code has opened a new dimension in processing financial transactions, it gives everyone the power of a digital wallet on their cell phone. In it’s ultimate incantation, it can bypass banks and credit cards. It can even bypass SWIFT transactions. (America, are you listening? Russia is one of the countries adopting QR codes). I had a big discussion with a cryptocurrency advocate and he kept telling me that QR codes weren’t currency. Technically it is true, but QR codes can transcend currency because what is important for most people, is not the currency, but the ease of transactions. In the 10 years since the advent of Bitcoin, it still mainly talk and very little usage. In the same time, QR code, especially in the last 3 years has show a fantastic growth in China and is now making inroads internationally. It won’t matter what currency you use, it is the transaction apps that will be central to ecommerce and financial transactions in the future. It used to be said that the strength of cryptocurrency was security, but history has show this to be a false flag. QR codes have security issues also, but as the usage increases, like cryptocurrency, software, the internet and all things digital, more and more security will come to past. My point is that QR codes is an open platform in the arena of finance that has no patents or IP protection to slow its growth.Pay Attention to These 7 Bitcoin Scams in 2018QR Codes Used in Payment ServicesI think you will see more and more openness as time passes. Also, I will make a point that western companies basically want lack of openness as pretty evident by their complaints about IP theft, copyright infringement, and the plethora of items that say: I want my own company in China to do what I want to do, and I don’t want anyone to copy me. the ultimate in capitalism. I think China has just turned the corner on this issue as evidenced by BMW, Tesla, and Boeing setting up new factories in China. China feels it is strong enough to compete with western ‘developed’ companies. Car production is no longer a research project, it has become a commodity.Opacity may linger in government in China, but in commerce and finance, it is rapidly becoming more open.

Let me share from the area of consumer finance business.There is a lot of analysis going on in banks and financial companies. Unless the company is a start-up or under extreme time pressure, all significant management decisions are supported by lot of analysis. The analysts thus belong to the key staff, because they can see the business through numbers. (In case their analytic skill is accompanied by fair communication skill, they have a promising career perspective.)Some of the most advanced analysis is done in the department of risk management. Companies that issue loans need a sophisticated approval process, which is managed by the underwriting team. The analysts in this team develop regression models that estimate the probability that the customer will default on his loan. They would use statistic software such as SAS or SPSS to find correlation between the payment morale of historic customers and data available about them at the time of approval decision, such as demographic information from the loan application form, credit bureau services and results of various telephonic or online verification. The popular technique used for this is the Logistic regression.This area is also where big data can potentially be beneficial - there are tons of data publicly available about people on social networks. Mining this data for useful application requires lot of computational power and advanced techniques and there is a new market of 3rd party companies that provide this analytic service to financial companies. However, my experience so far was that these techniques are still in development and there is more talk than practical usage of the big data at the moment.The risk analysts also cooperate with the department of finance to continuously evaluate the performance of the customer portfolio in order to estimate the risk costs (aka impairment losses), both for the management and regulatory purposes (e.g. Basel Accords compliance). The risk cost model may be based on roll rates or (more accurately) on Stochastic matrix (aka Markov model).The risk department may also have a fraud prevention team whose analysts look for suspicious patterns in the data in order to detect individual or organized fraud attacks on the company. The fraudsters always come up with new creative ideas how to cheat the approval system so there is always something to improve in the fraud prevention and there is also opportunity to employ various software and technology (fingerprints, face recognition, ..).There is a need for a lot of analysis of efficiency of business processes in the company, especially when there are big groups of employees in question. This is the case of call centers - the customer care and telesales teams, that are typically part of the operations department, and especially the debt collection team, which belongs somewhere between the risk and operations. The analysts in these teams solve the problems of optimal staffing, optimal configuration of the campaigns (who to call, on which phone, how often), measure various performance statistics of the operators etc..Another "analytic brain" of the company is usually located in the customer relationship management department. The experts in this team develop equally complicated models as their risk team counterparts, in this case, trying to predict who of the old customers will most likely be interested about some of the new products available. No company wants to waste money spamming the people in vain. Again, the potential to use big data approach is there. (How about predicting a persons interest about some product based on what topics he/she follows on Quora?)Specific area is financial analysis in department of finance, that puts together the budget, allocates the costs and models profitability on various levels of the business.There is a need for analysts in order to monitor performance in sales team, aggregated on various level (salesman, office, team, city, region).In established companies, all process innovations are tested and carefully evaluated before implementation using the champion / challenger approach. In other words, the process flow is separated into two qualitatively equal branches that form the test group and control group (e.g. select randomly 10% of new customers for new approval rules) and the two approaches are analytically compared after enough data is collected.Finally, the advancement level of analytics in a company is critically dependent on the ability of the company to collect reliable and clean data and provide them to the analysts in proper form. Training and discipline of the front end staff in essential for that. Also, IT support and appropriate hardware is crucial to provide analysts with data warehouse, where the necessary data can be found and effectively processed. In ideal company, the analysts are provided with comprehensive data marts, OLAP cubes, management reports in OBI, etc., that shield them from technical details while providing all they need. In real practice, however, the IT development can't keep the pace with all the new business initiatives. Therefore, the analysts need to do "some of the IT work" in order to detect where to find the necessary data and use SQL to pull the data from various stages of the database (or worse - several databases) that the company uses, then clean it up and put it into a structure that can be used to make the analysis and deliver the right message to the management.

The critics blow China’s problems out of the water.There are a couple of points that are often raised when talking about China’s economy. I’ll show you a more in-depth analysis to show you why these problems are overblown, not entirely incorrect but definitely unlikely to cause a financial crisis.1.) Disproportionate share of investment as a component of GDPChina’s GDP is often stated by bears as being too investment heavy and lacking consumption, often times this can then lead to arguments that China’s economy is simply being propped up by forceful government spending and investment (I disagree with this assessment) and is unsustainable.GDP is comprised of 4 different parts, Y (Real Output) = C (consumption) + I (Investment) + G (Government Spending) + NX (Net Exports, or Exports - Imports).China’s C component is really low by normal standards, below 50% to be exact and China’s I component is really high by normal standards:A normal healthy economy in theory should have consumption be the majority because it is common sense, a countries production of goods and services should come from their own internal consumption. To a beginner it may seem that China’s economy is simply being propped up (read up on Ghost cities) by excess building and overcapacity but a far more in-depth look will be needed.Consumption in China has almost tripled, beating out all competing developing economies, not only that but retail sales in China has actually overtaken that of the US. Albeit with a population 4x as large but it's a sign of what's to come.Now if you actually take a look at a graph of per capita consumption growth in China:A staggeringly high rate of increase, the nearest competitor is nearly 70% behind China.One great thing to note is China’s sales figures have actually overtaken that of the US:The Chinese are now buying as much stuff as Americans, and that’s a game-changer for the world economyConsidering China is still a middle-income country, the consumption % of GDP in my opinion are not something that is necessarily bad, rather that the consumption as a % of GDP decreased because China’s fixed asset investment was growing at 15% while China’s consumption was growing at a 8%. China’s consumption was not growing slowly or was it stagnant, it was simply growing far slower than investment, why?Because the Chinese government can redirect resources wherever it need be without any sort of major political hiccups aside from a few entrenched interests, as a result a huge amount of investment in the form of several government driven projects and stimulus (sometimes wasteful investment or over-capacity).2.) China has a ton of income inequalityWhile China’s income inequality is in fact high, it is not something that is going to destroy China, even if China’s income inequality was much worse than it currently is:China’s GINI coefficient is not something out of the ballpark, not only that but it is on a general downtrend since 2008.3.) China has a ton of overcapacityThis is true, but only to a certain extent.China’s industrial sector is indeed over-capacitied, but one of the main things that at least personally made an impression was the speediness at which the capacity cuts had on industrial profits.“Shutdowns to reduce capacity meanwhile resulted in bigger price rebounds than those seen in the four previous cyclical recoveries over the past 17 years. China’s producer price index grew 6.3 per cent last year after reversing a four-year contraction in September 2016.”“Gao’s recent study comparing 11 industries subject to the supply-side reform with other sectors found that the two groups had a highly similar growth trend from 2006 to 2015 – but that changed at the start of 2016. That year, the growth rate of those subject to reform plunged from 6.3 per cent in 2015 to about 1 per cent. The other industries saw their growth rate speed up, from 6 per cent to 8.8 per cent.”“Without the policies to suspend production, we might have seen China’s GDP growth accelerating to 7.5 per cent from the 6.7 per cent in 2016,” Gao Shanwen, chief economist of Essence Securities, wrote in a recent research note. “From steel mills to shipbuilders, how ‘Xiconomics’ is playing outChina’s overcapacity is a problem, but it’s not something that will entirely destroy China’s economy as many analysts in Europe and America assume.4.) China has a huge debt crisisWhile it is true that China has a lot of debt, China’s debt levels aren’t completely out of the ballpark:Usually the line of reasoning goes:Japan had a lot of debtJapan was also growing fastChina is heading towards a crashI disagree with this statement.If you look at most of the economic factors, China is still around Japan’s level in the 1970’s:The implications?A couple:China still has around 1–2 decades of catchup growth left. There are still tons of areas in China where you can generate growth easily by pouring concrete.China is not likely to have reached the same unserviceable debt levels that Japan reached because there is still a lot of catchup growth leftChina is already looking to solve the issues far earlier than Japan thought to in the current stage of development. -> China Is Taking On the ‘Original Sin’ of Its Mountain of DebtSo far there has been some success, but there is a LONG way to go:Subscribe to readChina’s credit to GDP gap has been above the alarm threshold for some time now, but recently it has declined a huge amount:None of this means China is not experiencing a debt problem, it is, the main thing is that like almost all things about China “collapse!” it’s overblown way too much.China has a big debt problem but they seem to have put a decent amount of work into trying to get it fixed and the initial measures show its working, although they are not out of the clear yet.China also has a number of factors working in its favor:China has an extremely high savings rate, this can be, with the right policies tapped into to increase consumption.China runs a current account surplusLarge reserves and assets that could be tapped into if needed.China’s Asset/GDP vs. Debt/GDP ratio has improved from 50:100 in 2005 to 130:100 in 2015.China’s debt is mostly domestic and in Yuan.Still there are a lot of problems, particularly how fast debt built up. China’s debt buildup was only eclipsed by Ireland, this sort of debt-buildup is unsustainable and China’s GDP growth rate should be lower to target 6% instead of 6.5% as 6.5% will likely make it harder to continue the deleveraging process. Although, it may be that the CCP has decided 6.5% is achievable because China’s credit intensity has improved:5.) China’s growth is artificial and is driven by SOE’s and private companies are failing, little innovation and a lot of copying.Actually I’m a big contrarian on private debt, why? Because China’s private sector is far less credit intensive than SOE’s:In China, it used to be that private firms had to rely on more risky funding options. Now with the financial reforms ->China Steers Credit to Small Business With Targeted Reserve Cut it appears to be that a lot of the new debt is targeted towards productive private firm businesses.It appears the government is aware that China’s growth must now be private-sector led and is steering the economy in the direction needed for that to happen.China’s innovation stats are actually very good:China to become top patent filer within three years: UNChina is now the world's 2nd largest patent applicantChina takes 2nd place for WIPO patent filingsThis is in a country where the GDP Per Capita is still below 10,000 (Nominal) and 20,000 (PPP). So this number will get even better as time goes along and more development occurs.6.) EndingChina has problems with excess debt, overcapacity, relying too much on stimulus and wasteful investment, but these issues are not things to be blown out of proportion like they are in Financial news systems. The truth is, the problems are manageable and China can make it through all of these, will they do it? Who knows? but when analysts overblow these problems out of wack, they produce a lot of theories based off of these problems and then predict over and over again the coming China collapse.