Deflation leaves China on the brink of financial crisis

[F430murci]

Perhaps the starting point for the major difference between the CCP Boyz in Beijing and Putin and Co is that, while the Boyz don't like playing second fiddle to the United States, they remain focused on having "normal" relations with Washington. The Boyz do want good relations with Washington and they make good relations with Washington their top foreign priority.

Putin, conversely, and Russians in general are confrontational with the US. Putin openly defies and challenges the US, The Boyz in Beijing are quietly resentful toward the US, but Putin boldly prioritizes a terrible relationship with Washington. While 2015 looks to be a productive year in Beijing-Washington relations, it hasn't ever looked worse between Washington and Moscow since 1991.

The direct consequence is that US will assist China when the time comes, whereas it will actively entomb Russia. With the economies of each pounding on the gates of hell, the two economies have anyway been dancing around each other.

Russia for instance had already began to feel the 2012 sudden outflow of capital from the PRChina that accelerated throughout 2013 and that turned into investors fleeing during 2014 and now has capital stampeding out. China's demand for Russian oil and mined metals starting falling in 2012, causing Russia to lower the export price of each, and those prices have continued to decline. At this point Beijing can't help Russia in this respect.

Nor does Beijing seem too anxious to help out the Kremlin because Beijing insists on buying its oil at current market prices which has Putin in a twist he can't do anything about. Indeed, nobody for thousands of years has ever accused the Chinese of being slouches in a deal involving trade, barter, money.

The $270 billion 25 year oil deal won't come online for another couple of years but Russians are increasingly nervous about how much the Chinese will actually pay per barrel as events unfold and how much the Chinese will be able to actually buy....Beijing is equally unsure at this point.

Russia is already impacted by the increase in wages of PRChinese manufacturing workers because it recently has had to pay more for the large volume of goods it imports from the PRC. There's been no relief from this either.

Beijing and Moscow will continue to try to work out currency exchange deals to circumvent the USD but that will be pro forma cooperation because it will have little impact with each economy looking into the abyss. The capital flight from the PRC and Russia are forcing capital outflows from emerging markets such as Brazil and India to name two prominent ones, which forces the same in other emerging markets, leaving no interest in either the rubble or the yuan.

The US Treasury Department has for the past six years had a newly organized financial unit specializing in what some call economic warfare which can track USDs in the hands of people such as Putin, his oligarch cronies and others under US sanctions to include in Iran and elsewhere, such as just recently imposed in Venezuela that directly impact Pres Nicholas Maduro and most of his cronies.

This makes the CCP Boyz very nervous about doing their business as usual both at home and abroad.

Can be summed much quicker than that. What % of Chinese imports go to US, GB and other countries with whom we have an alliance. Moreover, China needs US as long as Yuan remains a closed currency and until China can switch to a consumption based economy.

I think you might mean exports, but the point is well taken as the matter of the US having an alliance does in fact involve alliances, to include of course Thailand with which Washington has a mutual defense formal treaty. The CCP Boyz btw needed additionally to open their capital market to foreign investors but with capital now stampeding out of the PRC the matter has become moot....capital has been stampeding since August last year whereas it had previously been fleeing.

First however, the alliances. Nato is one. Each Japan, S Korea, Philippines, Australia, NZ are mutual defense formal treaty allies. That amounts to most of Beijing's trade, imports, exports. Beijing in fact has always had a current account deficit with the Asean countries it trades with, and most recently, Australia.

Singapore is not a formal US ally but that's only because Singapore does not want to sign a treaty......Singapore several years ago, at its own expense, dredged a channel and built a complete new docking facility for visiting US aircraft carriers that until then had had to drop anchor in the harbor....Singapore's air force is an extension of the USAF etc.

While the Boyz to want civil and good relations with Washington, the matter of US alliances throughout the region is a raw bone.

Thailand has been looking on at the new US approach to economic warfare as the former LOS watches Russia be decimated and, unless the Thai elites are blind, see the CCP-PRChina crumbling.

Washington has no problem with Thailand connecting to the Boyz for further economic development, just as long as Thailand recognizes the risk involved. The world knows China will always be there no matter what and Thailand knows this too, so the question for Thailand is whether it recognizes present trends and whether it knows the CCP regime is a considerably less than eternal one.

Thailand cannot try to sever the military defense alliance and I'd think Thailand under its present rulers well know that.

Yep, my booboo. I was typing on the elliptical while at the gym. No way Chine cuts off US and European Union. Don't we account for about 30% than add in Japan and South Korea . . . China f'ed if they screw that up yet we all remain relatively cool because we can get crap product from any third world country in the world.

[samran]

Nice discussion being had here in the 'neutral zone'.

[NeverSure]

Russia survived for ho many years in isolation? You don't know Russian pride. They eat some crazy arse s@@t. I make fun of my wife all the time. Nevertheless, they are going back into isolation as long as Putin is at the helm, but they will retains contacts with China, maybe India and a few other loser countries.

I don't know. Are you talking about Russia, or the USSR? The USSR went broke and had to disband. There are countries in the former USSR which can feed themselves and could help Russia but Russia needs money that isn't made of straw.

But the thread isn't about Russia other than how it affects China which is going tits up. Russia is tits up.

Another way of describing "strange bedfellows," I would think.

[Scott]

Thanks for the responses. When a nation as big and as important as China runs into trouble, I think it could have dire consequences a large number of people. Unlike the West, Asia has less experience in dealing with the consequences of economic problems. Thailand has some experience, but that was with the IMF bailing them out and a lot of help and sympathy from developed countries. Nobody is in much of a financial or political position to help China.

There closest friends are Putin and Little Kim. Not much help coming from that direction.

[F430murci]

Russia survived for ho many years in isolation? You don't know Russian pride. They eat some crazy arse s@@t. I make fun of my wife all the time. Nevertheless, they are going back into isolation as long as Putin is at the helm, but they will retains contacts with China, maybe India and a few other loser countries.

I don't know. Are you talking about Russia, or the USSR? The USSR went broke and had to disband. There are countries in the former USSR which can feed themselves and could help Russia but Russia needs money that isn't made of straw.

But the thread isn't about Russia other than how it affects China which is going tits up. Russia is tits up.

Another way of describing "strange bedfellows," I would think.

Yes, but at the end if the day China has enough money to help Russia out of its predicament. Russia has about $ 150 million in liquid reserves. China had a couple of trillion in liquid reserves. Honestly, I have no clue what will happen , but I can tell you most of Russia will say kiss out arse before they yield to any US sanctions even if it hurts them.

[ExPratt]

I'd say they'll just print money to avoid any kind of Cledit Clunch

[F430murci]

Thanks for the responses. When a nation as big and as important as China runs into trouble, I think it could have dire consequences a large number of people. Unlike the West, Asia has less experience in dealing with the consequences of economic problems. Thailand has some experience, but that was with the IMF bailing them out and a lot of help and sympathy from developed countries. Nobody is in much of a financial or political position to help China.

There closest friends are Putin and Little Kim. Not much help coming from that direction.

The US also ran into its own problems. Every large country seems to go through them. China will be okay. Russia will be okay, but many in Russia will feel a hardship like people in US are not accustomed to.

China does have serious internal problem with income disparity that will take at least a decade to cure . . . And then I am not sure China will ever become a consumption economy.

I hate to see any of these countries suffer. Screw the politics. The people are generally good, hardworking people.

[lovetotravel]

Ah the fluctuation of life. One day the USA will recover.

Your right. And that day was last year.

[lovetotravel]

Thanks for the responses. When a nation as big and as important as China runs into trouble, I think it could have dire consequences a large number of people. Unlike the West, Asia has less experience in dealing with the consequences of economic problems. Thailand has some experience, but that was with the IMF bailing them out and a lot of help and sympathy from developed countries. Nobody is in much of a financial or political position to help China.

There closest friends are Putin and Little Kim. Not much help coming from that direction.

The US also ran into its own problems. Every large country seems to go through them. China will be okay. Russia will be okay, but many in Russia will feel a hardship like people in US are not accustomed to.

China does have serious internal problem with income disparity that will take at least a decade to cure . . . And then I am not sure China will ever become a consumption economy.

I hate to see any of these countries suffer. Screw the politics. The people are generally good, hardworking people.

One of the big problems, as you know better than most, is you can't trust the economic stats coming out of China. Whatever is being reported is probably fictitious, or at least doctored a bit.

Some on the inside have said the problems are much worse than being reported.

http://online.barrons.com/articles/anne-stevenson-yang-why-xi-jinpings-troubles-and-chinas-could-get-worse-1417846773?tesla=y

Why Beijing’s Troubles Could Get a Lot Worse Bank rate cuts and anticorruption campaign are unlikely to stave off woes, says Anne Stevenson-Yang.

How bad can the situation be when the Chinese economy grew by 7.3% in the latest quarter?

People are crazy if they believe any government statistics, which, of course, are largely fabricated. In China, the Heisenberg uncertainty principle of physics holds sway, whereby the mere observation of economic numbers changes their behavior. For a time we started to look at numbers like electric-power production and freight traffic to get a line on actual economic growth because no one believed the gross- domestic-product figures. It didn’t take long for Beijing to figure this out and start doctoring those numbers, too.

[Scott]

Are there any predictions as to how this descent will occur? Will it be a fast descent and chaotic, or will be a somewhat gradual descent?

One of my concerns is that the Chinese stress social order and people don't always respond well to losing money. Any social chaos in China will be met with a strong hand.

[slipperylobster]

I stopped believing doom and gloom economy predictions. When you hear stuff like this, everyone starts jumping around, pulling out of stocks, buying gold, exchanging currencies...but the following week....nothing really spastic happens, related to the original news.

Perhaps leaked out for some tactical maneuvering?

[lovetotravel]

I stopped believing doom and gloom economy predictions. When you hear stuff like this, everyone starts jumping around, pulling out of stocks, buying gold, exchanging currencies...but the following week....nothing really spastic happens, related to the original news.

Perhaps leaked out for some tactical maneuvering?

It's an independent website, focusing mainly on financial matters. Don't really see how it's just tactical maneuvering? Plus, articles talking about this are all over the web from a variety of sources.

Remember the doom and gloom in 2008 about the US? Many were predicting the demise of the dollar, the collapse of the US, etc. None of that happened. Actually, quite the opposite.

China has a lot of options to pursue. And if they are having problems, the rest of the world will also. So many will step in to make sure this doesn't happen. We hope!

But, it is an issue and one to be considered if you are investing there or even here in Asia.

[NeverSure]

Russia survived for ho many years in isolation? You don't know Russian pride. They eat some crazy arse s@@t. I make fun of my wife all the time. Nevertheless, they are going back into isolation as long as Putin is at the helm, but they will retains contacts with China, maybe India and a few other loser countries.

I don't know. Are you talking about Russia, or the USSR? The USSR went broke and had to disband. There are countries in the former USSR which can feed themselves and could help Russia but Russia needs money that isn't made of straw.

But the thread isn't about Russia other than how it affects China which is going tits up. Russia is tits up.

Another way of describing "strange bedfellows," I would think.

Yes, but at the end if the day China has enough money to help Russia out of its predicament. Russia has about $ 150 million in liquid reserves. China had a couple of trillion in liquid reserves. Honestly, I have no clue what will happen , but I can tell you most of Russia will say kiss out arse before they yield to any US sanctions even if it hurts them.

China doesn't have any money!! It doesn't have reserves it can spend.

The huge misconception that "the US owes China money" is crap. China HAS to hold a certain amount of USD because it needs them to engage in international trade. Few would accept Yuan for anything. (Except maybe stupid people like Thailand it seems.)

China holds US Treasuries to back it's import purchases. No one has to believe China, the US will say that China has dollars. BTW even Thailand holds Treasuries to back its imports. No one would take baht for oil or much else.

If China got so desperate that it sold its US Treasuries it would be out of business globally so those aren't liquid reserves.

Let's get real and keep it real.

[Publicus]

Can be summed much quicker than that. What % of Chinese imports go to US, GB and other countries with whom we have an alliance. Moreover, China needs US as long as Yuan remains a closed currency and until China can switch to a consumption based economy.

I think you might mean exports, but the point is well taken as the matter of the US having an alliance does in fact involve alliances, to include of course Thailand with which Washington has a mutual defense formal treaty. The CCP Boyz btw needed additionally to open their capital market to foreign investors but with capital now stampeding out of the PRC the matter has become moot....capital has been stampeding since August last year whereas it had previously been fleeing.

First however, the alliances. Nato is one. Each Japan, S Korea, Philippines, Australia, NZ are mutual defense formal treaty allies. That amounts to most of Beijing's trade, imports, exports. Beijing in fact has always had a current account deficit with the Asean countries it trades with, and most recently, Australia.

Singapore is not a formal US ally but that's only because Singapore does not want to sign a treaty......Singapore several years ago, at its own expense, dredged a channel and built a complete new docking facility for visiting US aircraft carriers that until then had had to drop anchor in the harbor....Singapore's air force is an extension of the USAF etc.

While the Boyz to want civil and good relations with Washington, the matter of US alliances throughout the region is a raw bone.

Thailand has been looking on at the new US approach to economic warfare as the former LOS watches Russia be decimated and, unless the Thai elites are blind, see the CCP-PRChina crumbling.

Washington has no problem with Thailand connecting to the Boyz for further economic development, just as long as Thailand recognizes the risk involved. The world knows China will always be there no matter what and Thailand knows this too, so the question for Thailand is whether it recognizes present trends and whether it knows the CCP regime is a considerably less than eternal one.

Thailand cannot try to sever the military defense alliance and I'd think Thailand under its present rulers well know that.

Yep, my booboo. I was typing on the elliptical while at the gym. No way Chine cuts off US and European Union. Don't we account for about 30% than add in Japan and South Korea . . . China f'ed if they screw that up yet we all remain relatively cool because we can get crap product from any third world country in the world.

The PC-16 countries are another reason the PRChina is losing its briefly held status as the world's factory.

PRChina factories continue to produce cheap stuff for export to the West, but manufacturing in the PRC has fallen because wages have had to increase (but remain pathetically low). Most foreign investors in mfg have moved on to greener fields, namely what are called the PC-16 cheap labor countries......the Post China 16.

Cheap manufacturing is going to these countries, from the low cost production of clothes and shoes to assembling mobile phones.....probably assemble cars before too much longer so Thailand had better take notice to get more from Beijing than some construction contracts and meaningless little currency swaps.

The new cheap labor manufacturing countries are: Ethiopia, Kenya, Tanzania and Uganda from sub-Saharan Africa; Indonesia, Myanmar, Cambodia, Laos, the Philippines, Bangladesh, Sri Lanka and Vietnam from Asia; and the Dominican Republic, Mexico, Nicaragua and Peru from the Americas.

No one can replace the PRChina as the single engine of cheap manufacturing simply because there is only one China of the world. India has no interest, neither does Brazil. So manufacturing capital has scattered to these smaller countries that are eager to receive it.

The PC-16 development is still shaping up so stats are not readily available but the movement of capital to these countries from the PRC the past few years is definable. A few other countries may join this grouping and a few presently in it may become eclipsed, but the movement of cheap manufacturing out of the PRC to lesser economies is full steam underway.

The China cheap labor market has been fully exploited and the Chinese people in the people's republic remain screwed.

Edited January 11, 2015 by Publicus

[Publicus]

Thanks for the responses. When a nation as big and as important as China runs into trouble, I think it could have dire consequences a large number of people. Unlike the West, Asia has less experience in dealing with the consequences of economic problems. Thailand has some experience, but that was with the IMF bailing them out and a lot of help and sympathy from developed countries. Nobody is in much of a financial or political position to help China.

There closest friends are Putin and Little Kim. Not much help coming from that direction.

China's passing (collapse) will reverberate throughout the global economy and it will be something more than a ripple but it will be neither a shock nor a shocker.

The US has been aware and preparing for it for it mildly since the G.W. Bush first term and more intensively since 2012. The EU is well aware.

Those in denial such as the other Brics will get slammed hard, India not so much however.Thais need to be cautious but the present rulers only know tear gas and coups so they are eminently unqualified to make the proper judgements and preparations.....woe be to the former LOS.

The advanced economies and other free developing economies such as Mexico, Columbia, Poland, and aspirationally the Ukraine, are actively looking at $5 Trillion of infrastructure investments in emerging economies that between now and 2020 will be of mutual benefit to everyone. Countries such as Australia which is experiencing a downturn due to the precipitous decline in commodities demand from the PRChina will enjoy these new markets and investments.

Japan and S Korea on the other hand which have enormous FDI and/or trade with the PRChina will have to adjust, but Japan since 2012 has been gradually reducing its FDI in the PRChina and is significantly better positioned today to absorb the shock than it had been in '12. Japan and the CCP have made no currency swaps or exchange agreements as the Japanese correctly expect the yen to become the dominant East Asian currency in the not too distant future.

The Boyz in Beijing have been collecting forex to the tune of $3 Trillion because they have always known the rains were going to come, that the rivers were going to rise, that a bad moon would come. Russia will see nothing of these reserves, not presently, not ever. There are other reasons for this huge forex accumulation, but that is the root of it as the one million wealthy PRChinese continue to stream abroad. The ordinary Chinese is the one who's going to get clobbered in his wallet pocket.

[Publicus]

Russia survived for ho many years in isolation? You don't know Russian pride. They eat some crazy arse s@@t. I make fun of my wife all the time. Nevertheless, they are going back into isolation as long as Putin is at the helm, but they will retains contacts with China, maybe India and a few other loser countries.

I don't know. Are you talking about Russia, or the USSR? The USSR went broke and had to disband. There are countries in the former USSR which can feed themselves and could help Russia but Russia needs money that isn't made of straw.

But the thread isn't about Russia other than how it affects China which is going tits up. Russia is tits up.

Another way of describing "strange bedfellows," I would think.

Yes, but at the end if the day China has enough money to help Russia out of its predicament. Russia has about $ 150 million in liquid reserves. China had a couple of trillion in liquid reserves. Honestly, I have no clue what will happen , but I can tell you most of Russia will say kiss out arse before they yield to any US sanctions even if it hurts them.

China doesn't have any money!! It doesn't have reserves it can spend.

The huge misconception that "the US owes China money" is crap. China HAS to hold a certain amount of USD because it needs them to engage in international trade. Few would accept Yuan for anything. (Except maybe stupid people like Thailand it seems.)

China holds US Treasuries to back it's import purchases. No one has to believe China, the US will say that China has dollars. BTW even Thailand holds Treasuries to back its imports. No one would take baht for oil or much else.

If China got so desperate that it sold its US Treasuries it would be out of business globally so those aren't liquid reserves.

Let's get real and keep it real.

That is absolutely for sure and for real.

The CCP Boyz in Beijing go in to a place such as Africa and they sit down with the ruling elites of the different countries there and they say, hey, look, we are rich and powerful so you want to be with us. We have a trillion dollars of US money in our pockets, so if you think we are not smart rich and powerful you would be wrong and stupid. Do you think someone with more than a trillion USDs bulging out of his pockets is stupid or weak? Join us clever and rich guys and we will make you rich too.

The Boyz have this money for every reason neversure says, which is to cover their vital imports and exports......and they have it for these kind of reasons number two.

The reasons the Boyz have $3 Trillion in forex reserves are multi-faceted but the bottom line is that the Boyz need to have the dollars. The Boyz have euros and they have GBPs and even some yen, but those are additional small bowls on the table. The store of USD is their huge rice bowl. It protects them personally, it protects them domestically, and it allows them to bully abroad.

If they release or lose their USD they are sunk and they know it. So does Washington and Brussels know it. So does Putin himself know it which is another reason Putin knows he's never going to see any meaningful amount of Beijing's forex reserves, and very likely none of it at all, ever.

[elgordo38]

I asked Mr Google why low inflation is bad, and he showed me an article that said this for instance.

When prices don’t rise very much, neither do company sales or salaries. That is, workers won’t receive higher pay if their employers’ profits aren’t expanding.

Well the part in red says it all, don't you think. Why do their profits always have to expand?

Answer because they are not satisfied with 3 Ferrari's anymore, they need 5.

Watch out for the financial tusami coming.

[max72]

I'm not a complete noob in financial matters, but after all those years I still don't understand why a low inflation is so bad.

A low inflation is not bad, but DEFLATION (negative inflation) is TERRIBLE.

Ask Japanese about that....

[elgordo38]

I think the issue with deflation is that it is symptomatic of other underlying problems. The biggest obstacle China faces is shifting its economy to a consumption from an export reliance model.

Dropping prices may be indicative of low domestic demand and that measures to become a consumption based economy are failing. There are just too many factors at play and all of this is an oversimplification.

The largest problem China faces is the impact of artificially propping up its GDP by building cities and high rise residential buildings that were never needed and remain empty. This creates a lot of bad debt and puts a lot of developers and investors into default.

China's shadow bankers and private investors currently hold trillions in bad debt. The total of these bad debt pools is something like 2.5 times China's GDP. Deflation and the upcoming credit crunch will make it harder to restructure or pay off that debt.

Did you ever stand on the curb here in the land of 300 bahts a day minimum wage and count the new cars going by? 9 out of 10 are only a couple years old. Around 50% are 4 door pickups with 4 wheel drives and all that spinning chrome on the wheels. Much like overbuilding in China, Thailand suffers from the same problem overbuilding of condo's and apartments. Looking out my condo window I can count 5 big cranes and 2 small ones on the horizon. Also people that should not own new cars because of their income are still buying them with bank loans. I often wonder how they get the money from banks.

[spermwhale]

This headline is misleading. There is no deflation in China. The article says inflation is low and that... "fact that China is also likely to slip into deflation increases the likelihood that officials at the People’s Bank of China will cut interest rates further in response."

We'll see.

The same thing is going on in Europe right now too.

[spermwhale]

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I'm not a complete noob in financial matters, but after all those years I still don't understand why a low inflation is so bad.

Low inflation per se is not bad, unless it also ends up stagnate wage growth.

Deflation, however is not good. Prices going down typically translates into slowing economic activity as consumers and businesses put off purchases thinking that prices will go lower in the coming months. That turns into a vicious circle of further deflation and slowing economic activity.

[elgordo38]

With China and Russia cooperating closely, what affect will China's economic problems have on Russia?

What affect will it have on S.E.Asia, particularly Thailand?

A lot.

Both Russia and Thailand have seen China as an economic powerhouse and have aligned themselves with China's future.

Look how Thai leadership is getting into bed with China, almost appearing to shun the West due to criticism and sanctions. It's been agreeing on currency swaps, signing rail deals, concentrating on tourism and exports... If China goes down now, Thailand is in a mess.

Putin has known the West won't play ball with him including imposing sanctions and has increasingly turned to China. Putin and China have believed that together they can be a world unto themselves but both are failing in front of our eyes.

I have no clue why so many have believed that China is a rising star when in fact it is a communist dictatorship with a hidden banking system (Shadow banking) and debt up the ying yang. Pundits say that China's real debt is about 250% of GDP while the UK's is 100% and the US has about 90%.

The EU and the US actually invent and produce things. China either makes cheap copies or manufactures for the West where Western companies make the big bucks and the Chinese pick up the scraps with cheap labor. Think of what Nike shoes sell for in the West after having been made in China for peanuts.

I will feel vindicated after the Chinese collapse after soooo many people have predicted that it will rise above the West. It can't rise above capitalism which spurs innovation for profit by individuals while its leaders try to fake it.

You may be right as to Thailand. Thailand also gets in trouble when Yuan appreciates and

Chinese exports are no longer cheap. Thailand is trying to participate in global markets and needs a better hedge due to its exposure and reliance on global markets.

Russian on the other hand is fully capable of going isolationist again and simply maintain ties with China and perhaps India for oil exports. Both systems can go to or remain closed currencies.

If the baht keeps appreciating along with the SET exports will be in trouble. The government should be talking the baht down like most other countries.

[Naam]

The house of cards are coming tumbling down!!

And we are all going to be affected!!

speak and fear for yourself!

[thailiketoo]

I watched Jack Ryan Shadow Recruit last night. It is the same thing but roles of Russia and USA are reversed in this situation.

[Lupatria]

I wonder if these news will ever make it to the dear leaders desk before he sells the entire Kingdom to China.

[Alwyn]

They'll just do what they always do at times like this. They'll build a couple of cities which nobody will live in but private investors will support. Same each time.

[BlackJack]

Maybe time to sell the shares and buy gold.

US $ as the Fed has warned that they will put up the interest rates before June 2015

this will suck money from emerging markets back into the USA

it will be devastating for many countries

USA wins again

[drand11]

Low inflation means future slower than desired growth. Slower growth means less jobs, less growth in profits, slower financial markets etc..

China wants to grow to meet the needs of a 1.3B population!

[Scott]

Inflammatory post removed.

[rickirs]

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With China and Russia cooperating closely, what affect will China's economic problems have on Russia?

What affect will it have on S.E.Asia, particularly Thailand?

My guess:

1) Neither China nor Russia will have the capital to invest in each other's economies. That might delay the Russian-Chinese gasline project. It also means Russia will not make any investments in Crimea which has been cut-off now for a year from Ukrainian capital and financial institutions left after the Russian takeover.

2) China may delay or cancel its dual rail project with Thailand (and other Asian projects) being financed by Chinese capital who may better use its capital domestically to prevent civil discontent and uprisings.

3) China's economic problems with Russia will have no effect on the Thai economy. Unfortunately, the reason is that the Junta has already mismanaged Thailand's economy for 2015 with negligible to slow domestic investment, flat export growth, and increasing household debt. Its populist policies have been too limited in scope (ie., based on political support) and economically insignificant to promote national economic growth.

4) China's deflation of the yuan will leave the average Chinese with little means to vacation in Thailand.