Roll over Karl Marx

The Bank of China is going public.

HONG KONG -- Office worker Carol Au scurried out of the Bank of China's dazzling skyscraper in central Hong Kong with a subscription form to buy shares in the lender's $9.9 billion initial public offering--slated to be the world's biggest IPO in six years.

The 28-year-old was like hundreds of thousands of other Hong Kongers who flocked to bank branches during the past week to pick up forms for the June 1 listing on Hong Kong's stock market. They are ready to bet that the No. 2 bank in China's booming economy will be a great investment.

But Au was also aware of the risk of investing in a bank with a history of bad loans and corruption. The bank's former chairman and president, Wang Xuebing, is serving a 12-year prison term for taking bribes.

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One of the factors feeding the frenzy for Bank of China is the remarkable success of two other big Chinese lenders that had IPOs in Hong Kong last year.

The share price for China Construction Bank, the nation's No. 4 lender, has shot up 50 percent since its IPO in late October. Bank of Communications, the fifth-largest, has nearly doubled since it hit the market in June.

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Launching IPOs for state-owned banks in overseas capital markets is key to China's plan to clean up its financial system. For decades the big banks have been plagued with poor governance, graft and bad loans to clunky state-owned enterprises that squandered the money as they asked for more.

Bank of China had one of the worst records. To prepare the lender for its IPO, the government pumped $22.5 billion into the bank to clean up bad loans. The bailout reduced the bank's non-performing-loan ratio to 4.4 percent in mid-2005 from a whopping 33.41 percent in 2003, Fitch Ratings said.

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The bank is China's oldest, founded in 1912 shortly after the fall of the last dynasty, the Qing. The bank's Hong Kong skyscraper--designed by world renowned architect I.M. Pei, whose father worked for the bank--is one of the world's most stunning buildings, with its diagonal cross braces, triangular shapes and glass roofs.

Frankly unbelievable. Those dastardly Communist Chinese. Scratch that, Capitalist Chinese. Who would have thunk it?

Between expanding business and event like the asorption of Hong Kong, I think events like this had to be expected. China is part of the world marketplace. It has to conduct itself like the rest of the capitalist, no matter what the supposed ideology of the country is. Economic freedom is an incredible thing.

Can political freedom be next?

Open Post- Right Wing Nation, Basil's Blog,