Skip to comments.China's Great Wall of Credit Begins to Crumble
Posted on 01/26/2014 5:33:57 AM PST by EBH
Chinas credit-fueled bubble economy is falling to pieces before our very eyes.
Between 2008 and 2013, Chinas credit market increased from $9 trillion to an incredible $23 trillion.
To give this number some perspective, Chinas GDP is a little over $7 trillion. So China today has a credit market well north of 300% of its GDP.
There is simply no other way to view this than as a bubble. Indeed, we see all of the clear signs of a bubble in the real estate markets today with countless ghost cities, massive empty malls, and other excess capacity.
Whats truly stunning to witness however, is the fact that in spite of all of this expansion in credit, Chinas GDP growth continues to fall.
Indeed, GDP is now trending downwards for the first time in a decade. Chinas Government has realized that this is a major problem for the country and so has announced that GDP is no longer a measure of success.
This is an incredible admission from the Chinese Government as everyone on the planet knows Chinas GDP measure has been a work of fiction for decades. The fact that GDP growth is slowing in spite of all the manipulation of the metric is a major sign that things are sharply turning for the worse in the Peoples Republic.
Indeed, we get additional indications that Chinas economic data is dramatically overstated from other less massaged metrics.
China recently announced that it would be implementing a crackdown on fraudulent trade invoicing. It is not coincidence that right after this, China posted a truly horrible steel export results for the month of May: a mere 1% increase from the year before (hardly the stuff of which 8% GDP growth is made of).
(Excerpt) Read more at zerohedge.com ...
In that case, the $23 billion of credit can suddenly become 400% or 500% of GDP.
Looks like the Chinese that have been stockpiling natural resources have already voted with their money.
Speaking of “massaged metrics” It’s the “new normal”. “Hope and change”? It’s what happens when socialists/totalitarians/criminals are running the show.
Why i the data cited 6 months or more old in this article; steel exports for May, first quarter 2013 energy growth?
The Sixth Trumpet
15And the four angels, who had been prepared for the hour and day and month and year, were released, so that they would kill a third of mankind. 16The number of the armies of the horsemen was two hundred million; I heard the number of them. 17And this is how I saw in the vision the horses and those who sat on them: the riders had breastplates the color of fire and of hyacinth and of brimstone; and the heads of the horses are like the heads of lions; and out of their mouths proceed fire and smoke and brimstone.
Sorry. Revelation 9: 15-17
Blah, blah, blah...
Not at all sure what this article is about.
China is doing fine. Because America has sent a whole bunch of American jobs there, and now they are Chinese jobs.
Then, America simply buys things from China. Eliminating American workers from the process completely.
The problem with this is, no American workers, means no American growth, and no American taxes. So we continue to shrink, and China continues to grow.
Enough. Bring back American jobs.
We may see a crash that makes 1929, 1987, and 2008 look like Sunday picnics.
Then the world will look for a "global" solution, and man with a plan to get us there.
Asia has been buying back and hoarding real gold for several years now, and Germany is finally getting back their gold from the Fed after being stonewalled for months and months.
They know what is coming.
And the joke on the Chinese is we pay them for real stuff with Bernanke Bucks made up from thin air. suckers.
The obvious question. Is it worse to be the man who owes a large debt and cannot pay, or to be his debter?
What are they going to do repossess their stuff?
They're in the process of building a large blue water navy. They just might want to come over for a visit.
Yeh they loaned us $1.1 trillion. How smart could they be? :-)
Because it goes hand in hand with
Looming $500 million default to test China’s banking system
A high-yield investment product offered by China’s largest bank is facing imminent default, an event that will cost investors millions and raise questions about the country’s banking system.
The doomed 3 billion yuan ($500 million) trust — cheerfully named Credit Equals Gold #1 Collective Trust Product — is expected to go belly up at the end of January, the victim of a soured loan to a troubled coal mining company.
Along with “Bank-Run Fears Continue; HSBC Restricts Large Cash Withdrawals” Following research last week suggesting that HSBC has a major capital shortfall, the fact that several farmer’s co-ops were unable to pay back depositors in China, and, of course, the liquidity crisis in China itself, news from The BBC that HSBC is imposing restrictions on large cash withdrawals raising a number of red flags. The BBC reports that some HSBC customers have been prevented from withdrawing large amounts of cash because they could not provide evidence of why they wanted it. http://www.bbc.co.uk/news/business-25861717
Remember China is still a centrally controlled government and one doesn’t truly know ‘how things really are’ until the fall happens.
Sure. Red Dawn.
On my list of things to worry about that’s near the bottom.
was just ther last week - in shanghain there are a third fewer cranes then 2 years ago and only 1 in 10 was actually operating while I was there. Given rent for a crane of those sizes I found that particularly odd. One building in suzhou (i call it the pants building because it looks like a pair of upright jeans) has been underway for the full 2 years when similar were completed in 1/2 that time. I’m convinced things are worse than most know and that they are slowing down quickly now.
QID and Gold stocks.... At least some things are better than stocks and money.
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