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PRC Economy - New Reflections : April 20 2015

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pankajs
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Re: PRC Economy - New Reflections : April 20 2015

Postby pankajs » 14 Jan 2017 18:47

^
IIRC, per Kyle Bass in one of his vids, China needs $3T for its bank re-capitalization @ 30% of GDP. Per Bass, this is in line (i.e @30% of GDP) with what had happened last time China had to go the same route. This is one of the reason he is so confident of his CNY depreciation bet.

One has to keep in mind that his is the most pessimistic views on Chinese banks.

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Re: PRC Economy - New Reflections : April 20 2015

Postby pankajs » 14 Jan 2017 18:59

Ok, here is a writeup from back in feb 2016. The writeup is about why Kyle Bass is wrong but it does provide some interesting data points and lays out the basic maths.

http://www.marketwatch.com/story/ubs-th ... 2016-02-16

The economist estimates that China’s banking sector is 340% of the country’s gross domestic product and a 10% loss is equivalent to 30% of the GDP, or about $3.5 trillion. Losses of such magnitude would require a massive bailout by the government. However, it will likely not reach that point, Wang predicted.

<snip>

According to the International Monetary Fund’s recommended criteria, China needs $2.7 trillion in reserves to shield the economy against major shocks and attacks. As of January, China’s foreign exchange reserves stood at $3.23 trillion.

<---------------
We are fast approaching the pivotal FX level of $2.7T, per IMF. Bass's theory would be put to test sooner than later, especially if the FX draw down continues at the current pace.

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Re: PRC Economy - New Reflections : April 20 2015

Postby Austin » 15 Jan 2017 11:47

China received USD 118 billion FDI with over 4% growth in 2016

http://www.financialexpress.com/economy ... 16/507388/

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Re: PRC Economy - New Reflections : April 20 2015

Postby Austin » 16 Jan 2017 11:08

Jim Rickards https://twitter.com/JamesGRickards/stat ... 8955769856
‏@JamesGRickards

How did dictator of an atheist, Communist regime get to be poster boy for globalization? Elites don't care about you


http://www.reuters.com/article/us-davos ... 4Z07V?il=0

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Re: PRC Economy - New Reflections : April 20 2015

Postby anupmisra » 17 Jan 2017 17:02

50 Chinese factories making fake, toxic brand name sauces has been discovered

Another food scandal has been uncovered in China.
products were being falsely labelled as popular brands such as Nestlé, Knorr and Lee Kum Kee
Maggi seasoning sauce
100 million yuan ($14.5 million) worth of fake products are produced each year in Duliu, the Tianjin town in which the con was uncovered
Ingredients for the fake food seasonings include tap water and industrial-grade salt, which is banned from human consumption in China because it can cause damage to the liver and kidneys due to the presence of cancer-causing agents and heavy metals
The operations are carried out in squalid conditions, with many factories operating inside dilapidated buildings.
This has not been the first time Chinese factories have been found manufacturing fake products No $hit!!


http://mashable.com/2017/01/17/chinese- ... KqpSf6Caqn


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Re: PRC Economy - New Reflections : April 20 2015

Postby Austin » 19 Jan 2017 11:24

Davos 2017 - An Insight, An Idea with Jack Ma


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Re: PRC Economy - New Reflections : April 20 2015

Postby Austin » 20 Jan 2017 08:40

China Grows At Slowest Pace In 26 Years Despite Record Debt, Currency Devaluation

http://www.zerohedge.com/news/2017-01-1 ... ion-disapp

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Re: PRC Economy - New Reflections : April 20 2015

Postby Austin » 22 Jan 2017 14:00

India should stop roadblocking and push forward RCEP pact for its economy

http://www.bilaterals.org/?india-should ... ocking-and

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Re: PRC Economy - New Reflections : April 20 2015

Postby kmkraoind » 02 Feb 2017 14:19

China sends its billionaires a chilling message - Xiao’s abduction undermines Hong Kong’s status as a haven from arbitrary justice - FT.Com

As one person familiar with this case put it: “Most Chinese billionaires are like geese — they get fat on their political connections and close ties to party leaders, but at some point the emperor decides he wants to eat foie gras.”

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Re: PRC Economy - New Reflections : April 20 2015

Postby Liu » 10 Feb 2017 11:19

what a wonder! here is chinese newly~developed heavy cargo train.

http://v.ifeng.com/news/society/m/20170 ... 844e.shtml

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Re: PRC Economy - New Reflections : April 20 2015

Postby vasu raya » 11 Feb 2017 21:53

From the recent goof up by Amazon by listing a doormat with the Indian flag painted on it and the consequent threat from GoI to revoke its license, they
could ask these online retailers to compulsorily list the country of origin both in product summary and tag based searches so Indian buyers are aware of it and can make choices. These retailers predominantly peddle Chinese goods.

my 2 cents.

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Re: PRC Economy - New Reflections : April 20 2015

Postby hanumadu » 13 Feb 2017 17:50

https://www.washingtonpost.com/news/worldviews/wp/2017/02/13/smog-and-mirrors-chinas-steel-capacity-cuts-were-fake-report-says/?postshare=6581486968191275&tid=ss_tw&utm_term=.f01ef7b49f0f

Smog and mirrors? China’s steel capacity cuts were fake, report says.

But the report says that 73 percent of the announced cuts in capacity were already idle — in other words the plants were not operating. Only 23 million metric tons (25 million U.S. tons) of cut capacity involved shutting down production plants that were operating.

At the same time, some 54 million metric tons (59.5 million U.S. tons) of capacity were restarted, and 12 million metric tons (13 million U.S. tons) of new operating capacity came online.

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Re: PRC Economy - New Reflections : April 20 2015

Postby Austin » 20 Feb 2017 10:59

Jim Rickards: China Disaster to Trigger Gold Run

https://www.moneymetals.com/podcasts/20 ... run-001013

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Re: PRC Economy - New Reflections : April 20 2015

Postby A_Gupta » 20 Feb 2017 18:25

https://www.bloomberg.com/news/articles ... -subsiding
"Panic Over China Is So Last Year, With Market Swings Subsiding"

* Implied volatility in the yuan has dropped along with the dollar amid doubts over Trump’s reflationary agenda and as fund outflows showed signs of slowing due to tighter capital controls.

* The Shanghai stock market isn’t swinging so wildly any more. The interest of China’s dominant retail investors hasn’t returned since the crash in 2015, and more funds are entering Hong Kong shares through a connect program, propelling the local benchmark to a 1 1/2-year high.

* China’s latest economic data from exports to new credit have beaten estimates after growth accelerated last quarter for the first time since 2014.

* Even bond yields, which jumped the most since October 2010 last month, have dropped lately as the People’s Bank of China resumed fund injections.

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Re: PRC Economy - New Reflections : April 20 2015

Postby Prem » 21 Feb 2017 02:32

http://www.marketwatch.com/story/chinas ... 2017-02-18
( Secret of China's suckcess)

China has a total debt-to-GDP ratio of close to 400%, if one includes the infamous unregulated shadow banking system that is habitually omitted from official statistics. In 2000, China’s total debt-to-GDP ratio stood near 100%. As Chinese GDP grew from $1.094 trillion at the end of the 20th century to $11.75 trillion at the end of 2016, the country’s total leverage ratio ballooned. China’s economy grew 11-fold, and total credit in the financial system surged by over 40-fold.As the Chinese economy slows (see chart), the level of borrowing is accelerating, as can be seen here in China’s “total social financing” data.This credit metric includes off-balance sheet financing outside the conventional bank lending system, such as initial public offerings, loans from trust companies and bond sales. If Chinese GDP continues to slow (and there are many observers, myself included, that do not believe the official 2016 GDP growth rate of 6.7%), and total credit in the economy continues to surge, then the Chinese economy will in effect be running as fast as it can just to stand still. An acceleration in borrowing with a slowing economy is the classic definition of a burst credit bubble.

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Re: PRC Economy - New Reflections : April 20 2015

Postby A_Gupta » 21 Feb 2017 02:53

http://www.barrons.com/articles/chinas- ... 1480046488
"China’s Debt Bubble: Why the Bears Are Wrong"

The predictions of a Chinese banking crisis have been proven wrong for more than three decades because pessimists treat China as an open-market driven system with a liberalised capital market and an open capital account, which is clearly not the case. This is not to deny China’s financial risk. But the concerns should lie somewhere else in the system rather than in a systemic blow-up.


If China were an open and mature market and given its NPL {Non-Performing Loan} problem, the creditors would lose faith in the debtors and cut funding, leading to a systemic collapse in the form of a debt-currency crisis. However, the majority of the creditors in China are the households, who are ultimately backed by the government’s implicit guarantee policy.

So long as there is no loss of public confidence, the creditors in China will not cut off funding to the banking system which, in turn, will not cut off funding to the corporate sector. This “irrational” behaviour suggests that no one could pull plug on China’s financial system easily, so there would not be a financial crisis or capital flight or a collapse in the renminbi exchange rate. Meanwhile, China’s closed capital account helps lock up domestic liquidity and keep the banking system whole.


Chinese banks may have bad assets, but they have stable funding from domestic deposits. Despite years of gradual increase, the system’s credit-to-deposit ratio is only 100% (Chart 2). This is less than half of the ratios seen in many other countries. Foreign creditors play no role in funding Chinese banks, so the system is not susceptible to withdrawal of foreign funds.


The loan-to-deposit or credit-to-deposit ratio is a warning sign per Bloomberg (Nov 2016)
https://www.bloomberg.com/news/articles ... p-deposits
The adjusted loan-to-deposit ratio, which includes a range of off-balance sheet items and is an indicator of the banking system’s ability to weather stress, climbed to 80 percent as of June 30, according to S&P Global Ratings. For some smaller lenders, the ratio has already topped 100 percent, S&P estimates.

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Re: PRC Economy - New Reflections : April 20 2015

Postby A_Gupta » 21 Feb 2017 03:03

Another story on this (Jan 2017)
https://www.bloomberg.com/gadfly/articl ... -you-think
Take Bank of Jinzhou Co. With just 0.3 percent of the $22 trillion in assets of the 35 publicly traded Chinese lenders, the bank appears remarkably liquid. Its 57 percent loan-to-deposit ratio in June was below the median reading of 67 percent. The Hong Kong-listed institution's 200 billion yuan ($30 billion) deposit base offered ample support to a loan portfolio only a little higher than half that amount.

Loans are steady, but Bank of Jinzhou's investments marked as receivables are racing ahead of deposits.

Of late, however, liquidity in China has been a mere accounting artifact. Customers' deposits aren't sufficient to finance Bank of Jinzhou's 213 billion yuan in shadow loans, which are debt securities that the lender classifies as receivables. To make up the shortfall, it has borrowed 142 billion yuan from other financial institutions. Of this, as much as 78 percent is short-term financing. After adjusting for shadow lending, S&P Global Ratings pegged Bank of Jinzhou's loan-to-deposit ratio at the end of 2015 at 153 percent.

Bank of Jinzhou is hardly the only Chinese bank flirting with illiquidity: Almost all are sitting on a pile of debt masquerading as receivables.

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Re: PRC Economy - New Reflections : April 20 2015

Postby A_Gupta » 21 Feb 2017 03:16

Describes shadow banking in China:
https://international.thenewslens.com/article/61049

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Re: PRC Economy - New Reflections : April 20 2015

Postby A_Gupta » 28 Feb 2017 18:29

http://www.reuters.com/article/us-china ... 6716C?il=0
"China voices disquiet over new EU anti-dumping move on steel"
The EU executive said it acted after an investigation found Chinese companies to be heavily dumping their products on the EU market by selling them at well below half of the price on the producers' home market.

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Re: PRC Economy - New Reflections : April 20 2015

Postby A_Gupta » 07 Mar 2017 17:58

https://www.bloomberg.com/news/articles ... s-thwarted
Chinese corporate chiefs are turning vocal critics of the nation’s capital controls as the pile of scrapped deals grows.

While the restrictions have helped alleviate pressure on the yuan, they’ve also curbed overseas acquisitions. Executives in Beijing during the National People’s Congress bemoaned the measures, saying they’re derailing expansion abroad -- a key tenet of China’s long-term economic ambitions.

...
...
The complaints reflect a tumble in foreign deals, with the $19 billion of acquisitions abroad announced by Chinese companies so far this year amounting to a 74 percent drop from a year ago, according to data compiled by Bloomberg. The blow has seen Chinese executives join their foreign counterparts in criticizing the Communist leadership’s restrictions.
...
...
Three straight years of capital outflows and yuan declines spurred authorities to ramp up controls in the second half of last year. The measures have paid off -- in December, the capital account saw its first net inflows since a mini-devaluation of the yuan in August 2015 -- but the danger is that there’s been collateral damage to businesses. Data Tuesday showed China’s foreign-currency reserves rose in February for the first time in eight months amid the tighter controls and gains in the yuan.

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Re: PRC Economy - New Reflections : April 20 2015

Postby Austin » 13 Mar 2017 14:05

Chinese Commerce Secretary Warns US it 'Can't Live Without China'

https://sputniknews.com/asia/2017031210 ... ina-zhong/

"A trade war would not benefit either country or either country's people; you could say it would have no advantage whatsoever," Chinese Commerce Minister Zhong Shan said, Reuters reported.

He also cautioned against misunderstanding the symbiotic relationship between the two economic giants.

"Many American and western friends think that China can't live without the United States but that's only half true," he said. "At the same time, the United States can't live without China." He pointed out that US exports to China have grown more over the past 10 years than have Chinese exports to the US.

Zhong also reported that China's exports in January and February were 4% higher than in the same period last year, with imports more than 26% higher. But the potential for a protectionist US and other economic uncertainties make the overall outlook unclear, he said.

The commerce secretary also commented that he was looking forward to meeting new US Commerce Secretary Wilbur Ross, saying that as an "experienced negotiator," his counterpart must be willing to "play the long game and think strategically." Ross is also known as a lover of Chinese art and culture.

Ross told Bloomberg Television a few days ago, "we've been in a trade war [with China] for decades, that's why we have the [US budget] deficits." He also said he expects to begin renegotiating the trilateral North American Free Trade Agreement in the coming weeks.

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Re: PRC Economy - New Reflections : April 20 2015

Postby vina » 29 Mar 2017 11:23

Hmm. Why do I get the feeling that Chinese are having "regrets" now with being shut out of the Indian economy. The last 2 days have Economic ToiLET (ET) spouting articles from Chinese intermediaries on the following.

1. Indian "cannot" do without Chinese "assistance" in Railways and should allow the Chinese to operate as well. Seems like the new massive orders for GE, Altsom and the Japanese (rails) and their Indian partners have got the Chinese squirming

2. Lectures to Indian on how it is in our own "self interest" to get the Chinese in, especially in the building construction equipment sector.

Seems like the Chinese have massive over capacity in these areas and want in. Modi of course offered opportunities to the Chinese , but they went with the Pakis and the Belt & Road through Indian territory in control of Pakistan. Then they supported the Pakis with terrorism , along with harangues about asking India to "respect" China's "Core" interests, but no respect for India's "core" interests .

Sure.. You made your choice. Stick with it.

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Re: PRC Economy - New Reflections : April 20 2015

Postby Singha » 29 Mar 2017 13:15

^^ exactly. Namo in 2014 visit of chinese premier made a special effort to reach out and try to establish normal relations but all we got were CPEC through aksai chin, support for masood azhar, blocking of entry into international bodies, deliberate poking in the border, diatribes on tawang and threats to the dalai lama and ofcourse the "talking down".

even then we have let people like alibaba, tencent, xiaomi, lenovo, Mi, power generation gear, huawei, zte et al operate safely in india - in america they would be chased out on some national security concern or the other esp in telecom infra.

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Re: PRC Economy - New Reflections : April 20 2015

Postby Singha » 29 Mar 2017 13:21

recent issues of liquidity for Leeco group and its retreat from silicon valley indicates they tried to be google+tesla too fast, without the underpinning of solid finances. building flashy protos is one thing, production at global scale is another.

maybe in construction and steel the problem is the "machinery" has reached the stage it needs ever more markets and resources to survive and any slowdown will result in lot of closures and pain and huge loan writedowns by banks who are hiding NPAs as receivables . hence these hunts for new markets like pakistan. once the chinese are done with TSP, the pakis will not even be making cement or mining jade - all will flow soothingly from the east via the highways.

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Re: PRC Economy - New Reflections : April 20 2015

Postby disha » 15 Apr 2017 06:22



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Re: PRC Economy - New Reflections : April 20 2015

Postby A_Gupta » 17 Apr 2017 18:48

https://www.bloomberg.com/news/articles ... er-weakens
China Roars Back to Lift Global Outlook as U.S. Consumer Weakens
China’s economy stormed back in the first quarter, clocking its first back-to-back acceleration in seven years and bolstering the global growth outlook just as signs of subdued consumer spending have surfaced in the U.S.

The Chinese economy accelerated to a better-than-expected 6.9 percent, powered by strength in housing, infrastructure investment, exports and retail sales. And it looks to have done so without worsening credit risks, a welcome development for economists worried about the nation’s towering debt burden.

The world’s second-biggest economy accounted for about one-third of global growth last year and, given the strong first quarter data, is on track to contribute at least as much in 2017, according to Rob Subbaraman, chief economist for Asia ex-Japan at Nomura Holdings Inc. in Singapore.

"China, at least in the near term, is in a sweet spot with growth momentum strong and inflation pressures easing," said Subbaraman. "Whichever way you dice it, the first quarter was a strong set of numbers."

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Re: PRC Economy - New Reflections : April 20 2015

Postby Austin » 13 May 2017 15:44

In A U-Turn, US Confirms Attendence At China's Silk Road Summit

http://www.ndtv.com/world-news/us-to-se ... topstories

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Re: PRC Economy - New Reflections : April 20 2015

Postby nam » 13 May 2017 16:27

Austin wrote:Chinese Commerce Secretary Warns US it 'Can't Live Without China'


It can if an alternate manufacturing place is found, like foxconn is doing. Hope someone in India is listening.

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Re: PRC Economy - New Reflections : April 20 2015

Postby disha » 20 May 2017 06:23

There is something odd going on with Chinese economy., earlier there was a massive flight of capital by individuals - resulting in inflated house prices in US.

Now Chinese companies are buying up businesses., businesses in which they do not have any synergy. For example there is this company called "talking tom" which has a "phone app pet" which keeps people entertained. It has some $100 M in revenues using the app and paraphernalia around the app. The app is a gateway for ads.

This company I believe has been acquired for $1 Bn by a chinese chemical company. Put it this way, chinese chemical company wanted to diversify and funded a chinese consortium called 'united luck' which bought outfit7 (talking tom is its property) for $1 Bn.

Why would a chinese chemical company want to diversify into entertainment? Or who else is behind 'united luck' consortium?

This is basically a massive money laundering from China (china loses here) OR the chinese economy is sinking and whatever be the ROI., they are buying up any properties they can get hold off.

Either way., is this frenzy a canary in mine?

https://www.forbes.com/sites/janeho/2017/03/02/talking-tom-app-maker-outfit7-flipped-to-chinas-jinke-at-over-1-billion/#1ba07cb661ed

With this kind of frenzy., somebody is gonna hurt and somebody is gonna hurt very badly.
Last edited by disha on 20 May 2017 21:45, edited 1 time in total.

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Re: PRC Economy - New Reflections : April 20 2015

Postby disha » 20 May 2017 06:28

A_Gupta wrote:https://www.bloomberg.com/news/articles/2017-04-17/china-roars-back-to-lift-global-outlook-as-u-s-consumer-weakens
China Roars Back to Lift Global Outlook as U.S. Consumer Weakens


Thanks for the above article! My suspicion of chinese economy going bakistani way is now confirmed!

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Re: PRC Economy - New Reflections : April 20 2015

Postby panduranghari » 20 May 2017 21:43

disha wrote:There is something odd going on with Chinese economy., earlier there was a massive flight of capital by individuals - resulting in inflated house prices in US.

With this kind of frenzy., somebody is gonna hurt and somebody is gonna hurt very badly.


Indeed. The funny thing is the debt market is driven by data while equity market is driven by sentiment. It suggests peak everything. Confirmed by almost any index. Restaurant data in US is a leading indicator of recession. But there is nothing reliable about Chinese data. So what should we make of it?

I propose using a 'out of musharraf' Chinese war indicator? Will China start a war somewhere? Potentially. There seems to be some expectation that US-China will do something like a Plaza accord. I don't know how successful will it be? If the Chinese do sign such an accord, it might be another indication of things not being too well amongst the Chinese.

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Re: PRC Economy - New Reflections : April 20 2015

Postby panduranghari » 20 May 2017 21:44

Or OBOR might be Plaza accord redux. Now that's a thought. Will tweet it.

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Re: PRC Economy - New Reflections : April 20 2015

Postby DavidD » 21 May 2017 07:51

It seems like there's nothing reliable about China's data because China has a very rapidly changing economy. Reliable indicators 5 years ago may not be so reliable today. Take trade data for example, China's economy used to go as its exports went, but since 2011 trade has made up a smaller percentage of China's GDP than India's. It wasn't long ago when manufacturing was the dominant industry in China, and electricity usage could be used as a reliable indicator of the Chinese economy, but services surpassed manufacturing as a percentage of GDP a few years back, and now constitutes over 50% of China's GDP and over 75% of the GDP growth.

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Re: PRC Economy - New Reflections : April 20 2015

Postby panduranghari » 23 May 2017 13:42

DavidD, this is not propaganda website like you have in China. Debt market is data driven. Its a factual statement. Your bosses at Beijing might be able to grease the stock market thus improving the sentiment and making people feel they are becoming rich.

If it was not the case, please explain this;

Image

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Re: PRC Economy - New Reflections : April 20 2015

Postby Suraj » 24 May 2017 23:23

China Hit by First Moody's Downgrade Since 1989 on Debt Risk
Moody’s Investors Service cut its rating on China’s debt for the first time since 1989, challenging the view that the nation’s leadership will be able to rein in leverage while maintaining the pace of economic growth.

Stocks and the yuan slipped in early trading after Moody’s reduced the rating to A1 from Aa3 on Wednesday, with markets paring losses in the afternoon. Moody’s cited the likelihood of a “material rise” in economy-wide debt and the burden that will place on the state’s finances, while also changing the outlook to stable from negative.

Total outstanding credit climbed to about 260 percent of GDP by the end of 2016, up from 160 percent in 2008, according to Bloomberg Intelligence. At the same time, China’s external debt is low by international standards, at around 12 percent of gross domestic product, according to the International Monetary Fund, meaning that a downgrade isn’t likely to be as disruptive as it would be for nations more reliant on international funding.

China's Downgrade Could Lead to a Mountain of Debt
The downgrade of China’s debt by Moody’s Investors Service may push Chinese companies to borrow even more money from domestic banks as overseas debt becomes more expensive, increasing risks for the nation’s finance industry.

With growing indebtedness at home, compounded by a slowing economy, there’s a risk of a “negative feedback loop,” said Khoon Goh, head of Asia research for Australia & New Zealand Banking Group who sees state-owned enterprises and property developers feeling the biggest impact. The downgrade will particularly hurt airlines and shipping companies, said Corrine Png, chief executive officer of Crucial Perspective in Singapore.

Mainland firms “will need to go back to the Chinese banks in order to get loans,” ANZ’s Goh said. “That means that Chinese banks will grow more exposed to the corporate sector.”

Since the start of the global financial crisis, Chinese companies have borrowed to keep the economy growing, pushing corporate debt to 156 percent of gross domestic product, from 100 percent in 2008, according to Bloomberg Intelligence. Most of that debt is held by state-owned enterprises, putting the government on the hook in case of defaults.

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Re: PRC Economy - New Reflections : April 20 2015

Postby NRao » 25 May 2017 05:47


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Re: PRC Economy - New Reflections : April 20 2015

Postby DavidD » 25 May 2017 08:49

panduranghari wrote:DavidD, this is not propaganda website like you have in China. Debt market is data driven. Its a factual statement. Your bosses at Beijing might be able to grease the stock market thus improving the sentiment and making people feel they are becoming rich.

If it was not the case, please explain this;

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Not sure why you're changing the topic, I didn't mention anything about debt.

Austin
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Posts: 19750
Joined: 23 Jul 2000 11:31

Re: PRC Economy - New Reflections : April 20 2015

Postby Austin » 09 Jul 2017 21:14

Jim Rickards‏ @JamesGRickards https://twitter.com/JamesGRickards

Gotta love China. They buy WMPs with interbank loans. Make your Ponzi a carry trade! Place is like a frat house on fire, bros keep drinking.

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Here's the China WMP graph. Once a Ponzi shrinks in size it collapses quickly. Bernie Madoff can explain where this goes. Game over in China

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