One of my employees is marrying this weekend. Chinese wedding banquets on average are quite expensive affairs: photo shoots that last a day long; banquet tables for perhaps hundreds of family members, friends and party crashers; gowns, dresses, ill-fitting tuxedos; way more food than anyone can eat; rental cars -  Mercedes Benz, of course, though BMW doesn’t hurt, either; and perhaps accommodation for the out-of-towners.

Chinese wedding banquets, though, are profitable for the newlyweds. Guests pass the happy couple red envelopes of money, instead of buying gifts. Each packet can easily have several hundred dollars U.S. folded inside. Literally at the end of the day, once everything has been paid for, the couple may walk away from the entire affair several thousand dollars ahead in cold, hard cash.

Of course, money-givers expect to receive the same in kind from the couple at future wedding banquets. It’s a safe, effective way to share the wealth, as it were, amortizing investments over time.

The Chinese central government is doing the same thing, effectively, in having local governments and banks subsidize Beijing’s grand plans for priming the domestic economy. The International Herald Tribune reports:

China and the United States leverage themselves in different ways. America uses government credit to raise money directly from the market.

China uses quasi-government financing, so that the real costs of the plan – though indirectly ultimately a cost to Beijing – are impossible for investors to gauge…

As one Hong Kong analyst comments in the article, it’s the Chinese Way to keep transactions opaque. However, the article points out a potential downside risk to the approach:

Beijing will have no trouble finding local governments and banks eager to help finance the stimulus plan for two reasons: It’s in their political interest to please the central authority, and with liquidity abundant, they are eager to lend. Projects in the stimulus plan at least have government backing…

“The main problem with relying on banks rather than incurring a larger explicit budget deficit is one of transparency,” said Tao Wang, head of China economic research at UBS. “Relying on bank financing makes it less transparent how much spending takes place in relation to various stimulus projects…”

“On the surface the government has little financial burden but the reality is it just puts risks at another place,” said Vincent Chan, head of China research at Credit Suisse.

Still, Beijing just in the end might be able to afford itself a nice honeymoon, after all.  Hainan, anyone?