Collapse of China

[JamesE]

3 hours ago, Poolie said:

China hasn't 'borrowed' anything from anybody.

Least of all the Americans.

China financed its domestic expansion with domestic debt created in its state controlled banking system. The looming collapse of the development sector, led by Evergrande,et al. financed through foreign investor-backed bonds, is the problem. That's who they can't repay and that's why it's a big deal. If they were domestic investors it stays in the family and no big deal.

[Poolie]

9 minutes ago, JamesE said:

China financed its domestic expansion with domestic debt created in its state controlled banking system. The looming collapse of the development sector, led by Evergrande,et al. financed through foreign investor-backed bonds, is the problem. That's who they can't repay and that's why it's a big deal. If they were domestic investors it stays in the family and no big deal.

There is no looming collapse. That's western speak. A slight ripple might occur.

[JamesE]

45 minutes ago, Poolie said:

There is no looming collapse. That's western speak. A slight ripple might occur.

But what it will do is dry up any interest by foreign investors in making big bets in China. I envision some kind of bail-out package much like the US did in 2008/09 that will allow the developers to make their payments and possibly consolidate. This is the first big test of the Chinese take on the capitalist system. It will be interesting to see how its managed.

[AussieBob]

7 hours ago, JamesE said:

But what it will do is dry up any interest by foreign investors in making big bets in China. I envision some kind of bail-out package much like the US did in 2008/09 that will allow the developers to make their payments and possibly consolidate. This is the first big test of the Chinese take on the capitalist system. It will be interesting to see how its managed.

Very true - this will be interesting to watch. Will it be a 'storm in a teacup' like some say, or is this really a crack in the teapot of the China economic growth that was built on property speculations. There are many ghost cities and buildings in China - eventually someone has to pay. 

 

[ThailandRyan]

11 hours ago, Convert54 said:

Easy baseless quip. Offshore finances into China have mostly been speculative , not loans. The only protection for the $US is that as the currency of exchange  they can continue pumping it out with minimal relative impact on  exchange value. That is...until exchanges seek a different format. Something to go to war over?

Better do some reading

https://www.scmp.com/economy/china-economy/article/3084979/china-debt-how-big-it-who-owns-it-and-what-next

 

The Institute of International Finance (IIF) estimated that China’s total domestic debt rose to 335 per cent of gross domestic product (GDP) in 2020.China’s National Institution for Finance and Development, a government-linked think tank, put the nation’s overall debt at 270.1 per cent at the end of 2020, from 246.5 per cent of GDP at the end of 2019.

 

China’s consumer debt is among the fastest growing segment of overall debt, particularly in the form of mortgage and consumer loans. Household debt rose to 62.2 per cent of China’s GDP in 2020, up 6.1 percentage points from 56.1 per cent of China’s GDP in 2019, according to the National Institution for Finance and Development.

China’s outstanding foreign debt, including US dollar debt, reached US$2.29 trillion at the end of September in 2020, up from US$2.13 trillion at the end of June, according to China’s State Administration of Foreign Exchange.

https://www.cgdev.org/blog/china-borrows-lot-money-world-bank-and-thats-okay

 

[Convert54]

18 minutes ago, ThailandRyan said:

Better do some reading

https://www.scmp.com/economy/china-economy/article/3084979/china-debt-how-big-it-who-owns-it-and-what-next

The Institute of International Finance (IIF) estimated that China’s total domestic debt rose to 335 per cent of gross domestic product (GDP) in 2020.China’s National Institution for Finance and Development, a government-linked think tank, put the nation’s overall debt at 270.1 per cent at the end of 2020, from 246.5 per cent of GDP at the end of 2019.

 

China’s consumer debt is among the fastest growing segment of overall debt, particularly in the form of mortgage and consumer loans. Household debt rose to 62.2 per cent of China’s GDP in 2020, up 6.1 percentage points from 56.1 per cent of China’s GDP in 2019, according to the National Institution for Finance and Development.

China’s outstanding foreign debt, including US dollar debt, reached US$2.29 trillion at the end of September in 2020, up from US$2.13 trillion at the end of June, according to China’s State Administration of Foreign Exchange.

https://www.cgdev.org/blog/china-borrows-lot-money-world-bank-and-thats-okay

Viewed in isolation to global situation the domestic debt is certainly excessive but not so much more than Japan. China also continues to have a trade surplus and a small external debt relative to trade economy .

Better placed than many .

 

[Stardust]

Evergrande didn't pay thousands of suppliers worth over 100 billion usd. Unemplyment in China is rising and rising.

https://www.scmp.com/business/banking-finance/article/3151669/evergrande-default-alarms-put-thousands-suppliers-jobs-and

 

[Stardust]

12 hours ago, Poolie said:

There is no looming collapse. That's western speak. A slight ripple might occur.

Sure according to the 50 cent wumao writers

[Poolie]

12 hours ago, JamesE said:

But what it will do is dry up any interest by foreign investors in making big bets in China. I envision some kind of bail-out package much like the US did in 2008/09 that will allow the developers to make their payments and possibly consolidate. This is the first big test of the Chinese take on the capitalist system. It will be interesting to see how its managed.

Yes, interesting, not disastrous.

[AussieBob]

3 hours ago, ThailandRyan said:

Better do some reading

https://www.scmp.com/economy/china-economy/article/3084979/china-debt-how-big-it-who-owns-it-and-what-next

The Institute of International Finance (IIF) estimated that China’s total domestic debt rose to 335 per cent of gross domestic product (GDP) in 2020.China’s National Institution for Finance and Development, a government-linked think tank, put the nation’s overall debt at 270.1 per cent at the end of 2020, from 246.5 per cent of GDP at the end of 2019.

 

China’s consumer debt is among the fastest growing segment of overall debt, particularly in the form of mortgage and consumer loans. Household debt rose to 62.2 per cent of China’s GDP in 2020, up 6.1 percentage points from 56.1 per cent of China’s GDP in 2019, according to the National Institution for Finance and Development.

China’s outstanding foreign debt, including US dollar debt, reached US$2.29 trillion at the end of September in 2020, up from US$2.13 trillion at the end of June, according to China’s State Administration of Foreign Exchange.

https://www.cgdev.org/blog/china-borrows-lot-money-world-bank-and-thats-okay

Well said.  But Margaret said it better:  "“The problem with socialism is that you eventually run out of other people's money.”  The socialists in China have taken the bold step to enter the world markets in 1980s and to 'play' with capitalism in order to gain great economic benefits - while at the same time holding on to their socialist beliefs and structures so that they can control things and avoid the downsides of capitalism. Those downsides - the two biggies being unequal wealth generation and cycles of 'boom and bust' - are starting to bite. That is why China is currently clamping down on many things to do with the economy and financial capital in/outflows.  The last thing China wants is to have a lot of social discord when all that promised 'wealth for all' starts to come apart at the seams. They are only just starting to run out of other people's money - but just like the USSR did, it is inevitable.  Covid has exposed things they didnt want exposed globally - when and how far their house of cards falls is hard to say, but fall it will. 

 

[Poolie]

2 minutes ago, AussieBob said:

Well said.  But Margaret said it better:  "“The problem with socialism is that you eventually run out of other people's money.”  The socialists in China have taken the bold step to enter the world markets in 1980s and to 'play' with capitalism in order to gain great economic benefits - while at the same time holding on to their socialist beliefs and structures so that they can control things and avoid the downsides of capitalism. Those downsides - the two biggies being unequal wealth generation and cycles of 'boom and bust' - are starting to bite. That is why China is currently clamping down on many things to do with the economy and financial capital in/outflows.  The last thing China wants is to have a lot of social discord when all that promised 'wealth for all' starts to come apart at the seams. They are only just starting to run out of other people's money - but just like the USSR did, it is inevitable.  Covid has exposed things they didnt want exposed globally - when and how far their house of cards falls is hard to say, but fall it will. 

Wishful western thinking.

[AussieBob]

5 minutes ago, Poolie said:

Wishful western thinking.

Anti-China - yes I am - they should never have been allowed inside the 'hen house'. 

Wishful thinking - maybe - but I reckon there is a lot of reasonable points in there too - not just wishes.

Over a year ago I said the Thai Baht was heading for a crash. Some 'locals' back then also said I was 'wishful thinking'. They said that the Thai Baht would never drop back to the levels it was decades ago. Another year or two and it will be. China will take longer, but their economic and trading 'free run' is coming to an end.

[gummy]

3 minutes ago, AussieBob said:

Anti-China - yes I am - they should never have been allowed inside the 'hen house'. 

Wishful thinking - maybe - but I reckon there is a lot of reasonable points in there too - not just wishes.

Over a year ago I said the Thai Baht was heading for a crash. Some 'locals' back then also said I was 'wishful thinking'. They said that the Thai Baht would never drop back to the levels it was decades ago. Another year or two and it will be. China will take longer, but their economic and trading 'free run' is coming to an end.

I seriously hope not as historically when countries become economically weakened it only gives rise to conflict. In the last 100 years Germany and Japan are prime examples of major nations taking military action. I would not want to see China go  down that path.

[Poolie]

47 minutes ago, AussieBob said:

Anti-China - yes I am - they should never have been allowed inside the 'hen house'. 

Wishful thinking - maybe - but I reckon there is a lot of reasonable points in there too - not just wishes.

Over a year ago I said the Thai Baht was heading for a crash. Some 'locals' back then also said I was 'wishful thinking'. They said that the Thai Baht would never drop back to the levels it was decades ago. Another year or two and it will be. China will take longer, but their economic and trading 'free run' is coming to an end.

Not being one to repeat myself............

[Rain]

3 hours ago, AussieBob said:

Anti-China - yes I am - they should never have been allowed inside the 'hen house'. 

Wishful thinking - maybe - but I reckon there is a lot of reasonable points in there too - not just wishes.

Over a year ago I said the Thai Baht was heading for a crash. Some 'locals' back then also said I was 'wishful thinking'. They said that the Thai Baht would never drop back to the levels it was decades ago. Another year or two and it will be. China will take longer, but their economic and trading 'free run' is coming to an end.

Unfortunately, there are those cut-in-stone circles that are oblivious to the true evil that is almost single handedly responsible for the destructive manner and turns that the world has taken. 

The real boggiemen surely aren't recognized.

[ThailandRyan]

4 hours ago, gummy said:

I seriously hope not as historically when countries become economically weakened it only gives rise to conflict. In the last 100 years Germany and Japan are prime examples of major nations taking military action. I would not want to see China go  down that path.

You don't mean a "Wag the Dog" scenario do you?

[Rookiescot]

9 hours ago, AussieBob said:

Well said.  But Margaret said it better:  "“The problem with socialism is that you eventually run out of other people's money.”  The socialists in China have taken the bold step to enter the world markets in 1980s and to 'play' with capitalism in order to gain great economic benefits - while at the same time holding on to their socialist beliefs and structures so that they can control things and avoid the downsides of capitalism. Those downsides - the two biggies being unequal wealth generation and cycles of 'boom and bust' - are starting to bite. That is why China is currently clamping down on many things to do with the economy and financial capital in/outflows.  The last thing China wants is to have a lot of social discord when all that promised 'wealth for all' starts to come apart at the seams. They are only just starting to run out of other people's money - but just like the USSR did, it is inevitable.  Covid has exposed things they didnt want exposed globally - when and how far their house of cards falls is hard to say, but fall it will. 

Thatcher was wrong. As we saw in 2008 Capitalism eventually runs out of everyone elses money. Hence why we had to bail out the entire rotten core.

Profits were private but loses became public.

Now China started to open up to capitalism because of greed. The elites within the CCP saw the opportunity to exploit a low wage economy for their own financial gain. But once they decided to go down that route of capitalist greed there is ONLY one outcome. There will be a crash. The same as we have every few years in the west. The bubble grows until it bursts.

There is a way to fix this. Its called regulation. But of course the media has everyone believing that financial regulations are a bad thing.

[Rain]

18 hours ago, Poolie said:

Yes, interesting, not disastrous.

They would like it to be - it ain't that bad.

Their own world is crumbling right in front of 'em, yet they have been conditioned to chase [at any cost] the proverbial Oriental boogieman. 

Pathetic and deluded.

 

[gummy]

46 minutes ago, Rain said:

They would like it to be - it ain't that bad.

Their own world is crumbling right in front of 'em, yet they have been conditioned to chase [at any cost] the proverbial Oriental boogieman. 

Pathetic and deluded.

yes a bit like the middle ages where  they believed that there were witches everywhere.

[ThailandRyan]

1 hour ago, Rain said:

They would like it to be - it ain't that bad.

Their own world is crumbling right in front of 'em, yet they have been conditioned to chase [at any cost] the proverbial Oriental boogieman. 

Pathetic and deluded.

We shall see as the majority of Banks in Thailand are preparing for a hit one way or another as well as the countries that China has expanded into with the building of casinos and such.  Hope for the best but prepare for the worst is a saying I have heard many times in the business sector when Bankruptcy protection and asking for assistance from lenders and extensions from those they owe.  Eventually the wall appears and the only way out is either to liquidate and downsize or Poof "Dissapear".

[Poolie]

4 hours ago, ThailandRyan said:

We shall see as the majority of Banks in Thailand are preparing for a hit one way or another as well as the countries that China has expanded into with the building of casinos and such.  Hope for the best but prepare for the worst is a saying I have heard many times in the business sector when Bankruptcy protection and asking for assistance from lenders and extensions from those they owe.  Eventually the wall appears and the only way out is either to liquidate and downsize or Poof "Dissapear".

Yes of course you heard that said.

In the west.

[Hamosity]

1 hour ago, Poolie said:

Yes of course you heard that said.

In the west.

Well of course this thread is going to have a “Western” spin since the majority(?) of members/posters hark in one shape or form/generation from the “West”. 
 

Who amongst us can represent the “Eastern” POV. Maybe there is an economic Sinologist on the TT. (Is that you Rudders??)

[Hamosity]

I suspect, while there maybe nervous eyes cast northward, most Thai Banks will be more concerned with their own credit house of cards. 

[ThailandRyan]

1 hour ago, Poolie said:

Yes of course you heard that said.

In the west.

Nope, directly involving China

 

[Poolie]

8 minutes ago, ThailandRyan said:

Nope, directly involving China

Obviously.

You don't feel the chance to expand on that?