[Zhang Fei]

Normally, China would pretend to cave, and we'd pretend that they were caving, while keeping to the same old rules. Given the rival factions circling and plotting to oust him out of simple self-preservation, Xi is likely to hang tough, since any concessions would reek of weakness. We are unlikely to see any movement on Chinese protectionism even if the Chinese bubble finally bursts and the economy starts contracting big time (i.e. 15-20%). At that point, Xi's hold on power will be seriously weakened, and he'll be spending all his time quashing intra-party factional plots against him rather than worrying about trade policy.

[Zhang Fei]

What’s significant about this move is that it’s the fourth time the central bank has cut the reserve requirement ratio in 2018. That’s not normal.

[ZULU]

Trump is setting up the Economic version
of the Battle of Canna to take out these thugs with trade.

[be-baw]

Great analysis.

[mrsmith]

China m,arkets down 4% and Yuan down 1/2% LOL!

[Vince Ferrer]

The People's Bank of China announced on Sunday a 100 basis points cut to the reserve requirement ratio (RRR) for most banks, which will result in an injection of 750 billion yuan ($109.2 billion) in cash into the banking system.

So what? China's economy is slowing down, it doesn't need money for new factories, its overseas investments in places like Africa are slowing. What would anyone do with the money?

[Jeff Chandler]

They’re afraid the market for tilapia will dry up and they’ll have to drain the sewage ponds they grow them in.

[Gene Eric]

It should be. Communism is without fortitude.

[BeauBo]

“Normally, China would pretend to cave, and we’d pretend that they were caving, while keeping to the same old rules.”

I think it is different this time. I don’t think that Trump wants a new trade deal with China, like he wanted with the EU, NAFTA, Korea, or Japan. I think his objective is to pull the supply chain out of communist China for good. I think he will place across the board tariffs, and then just sit back to let them do the work.

Although exports to the USA might only be 4-5% of China’s GDP, supporting supply chain activity accounts for more, and exports to other areas may take a smaller hit as well, from the new deals the USA signed with other nations.

Much more significant than even the contraction in the manufacturing sector (concentrated in Guangdong), will be the relatively huge reduction in foreign currency earnings(real money). China needs to import a relatively high proportion of its raw materials and energy, for which it needs foreign reserves. Its foreign reserves from exports have given it the buffer in the past, to protect its currency and stock markets from crashing.

This is not going to be a gradual adjustment either, in global/historical terms. So far, President Trump has spent his time in office preparing to force this adjustment - warning companies, lowering US taxes and regulations to pick up the business, and renegotiating trade arrangements with the EU, NAFTA, Japan and Korea; to close the major backdoors for Chinese exports to avoid tariffs.

The tariffs themselves are just now going into effect. 24 September 2018 was the real start, with the first round a few months earlier being relatively trivial. On January 1st, 2019, they kick up to significant levels (25% tariffs on almost half of communist Chinese imports). By then however, the comment period will be up on the next round of tariffs - essentially all the rest.

There is a train wreck coming for communist Chinese exports next quarter. Everyone can see it coming, and no one can stop it. The supply chain will come out, faster than it went in.

[JudgemAll]

Less than 3% growth in China and the cities cannot absorb the peasantry, and the whole shebang goes to hell

China is hungry, and it reminds me of the crazy beast in Revelations which tramples on everything.