A House of Straw – Paperback

In 2004, a young graduate took a job at the cash window of the People’s Bank of China in Shenzhen, counting other banks’ money by hand and balancing the day’s books to the last fen. Over the next eleven years – in the central bank’s anti-money-laundering bureau in Beijing, on secondment to the Hong Kong Monetary Authority, and at Shanghai headquarters through the launch of the free trade zone – he watched, and helped keep the record of, a parallel financial world being built from nothing.

That world had to be invented piece by piece: an anti-money-laundering regime assembled while China negotiated its way into the FATF; a licensing system for a third-party payments industry that had erupted before anyone wrote its rules, and the float it fed on; a free trade account fenced off inside Shanghai’s free trade zone, from which a formula for cross-border borrowing quietly spread to the whole country; and, in a borrowed conference room in Beijing, the design of CIPS – China’s own cross-border payment system – and the compromises that decided who would build it, who would run it, and who would settle.

A House of Straw is the record-keeper’s account of how China built its own money rails. It is a book about settlement – about where money finally comes to rest, and who bears the risk when it does not. Told in plain language from inside the machine, with the public record set out at the end of every chapter and four chronologies of sources appended, it is essential reading for anyone who works with, competes with, or simply wants to understand the plumbing of Chinese finance.