Hong Kong Banking System Outlook Cut by Moody’s on China Risks

The new rating is probably right. Maybe the timing looks suspicious, but the new rating would have come sooner or later.

There's a collusion of US Government and big corporations, but rating agencies have been pissing off Washington, so I don't think in this case there is collusion.

"Echoes of Mao in China cash crunch

By Simon Rabinovitch in Shanghai

©AFP

As China’s credit crunch takes a turn for the worse, the question of why the central bank has permitted market conditions to deteriorate so suddenly and so sharply looms ever larger.

[ Details on the credit crunch and possible causes. ]

But in the midst of the extreme market stress, a statement issued late Wednesday by the central bank raised the possibility that politics are also playing an important role.

[...] the People’s Bank of China ordered a thorough implementation of the new “mass line education” campaign launched this week by President Xi Jinping – a campaign that in its propaganda-style and potential scope carries echoes of the Mao era.

The Communist party cadres that run the central bank were told to attack the "four winds" of “formalism, bureaucracy, hedonism and extravagance”, as demanded by Mr Xi...."

It appears the purge of Bo Xilai and company did not signal this sort of thing would stay in the past.

ADDED: Mass Line according to Wikipedia (http://en.wikipedia.org/wiki/Mass_line):

"The Mass Line (from the Chinese qunzhong luxian) is the political, organizational and leadership method developed by Mao Zedong and the Chinese Communist Party (CCP) during the Chinese revolution. As described in a Revolutionary Communist Party USA pamphlet, it is the "concentrate[d] .. correct ideas that the masses gain in everyday life", as gathered and published by the party. Mao developed it into a coherent organizing methodology that encompasses philosophy, strategy, tactics, leadership and organizational theory that has been applied by many Communists subsequent to the Chinese revolution. Chinese communist leaders generally attribute their conquest of power to the faithful pursuit of effective "mass line" tactics, and a "correct" mass line is supposed to be the essential prerequisite for the full consolidation of power.

According to Frederick Teiwes, Emeritus Professor at the University of Sydney, the "mass line" was related to the CCP's mass organizations. "Fundamentally, for all the CCP rhetoric concerning the 'mass line,' the unions and other mass organizations functioned more as Stalinist "transmission belts" in laying down the party line and extending the reach of the state," he wrote."

New leaders, new party line ... we'll see.