How low can China go?

[webfact]

How low can China go?
Curtis S Chin
Special to The Nation


Traders watch the boards from the floor of the New York Stock Exchange on Tuesday after US stocks fell amid the first of China's surprise devaluations of the yuan this week. //Reuters

BANGKOK: -- With talk of a currency war after multiple devaluations of the yuan this week, what can Beijing do to win back confidence in its economy?

With China's surprise devaluations of the yuan this week sending currencies, from the baht to the Korean won, tumbling across the region, one economic reality is increasingly clear. The Chinese economy is sputtering, perhaps more than the official numbers show, and Beijing is struggling to find a solution.

The latest disappointing Chinese trade data may well have contributed to the Chinese central bank's move. The record 1.9-per-cent devaluation on Tuesday was followed by further cuts of 1.6 per cent on Wednesday and 1.1 per cent yesterday, which sent the Chinese currency tumbling at its fastest rate since 2001, potentially aiding Chinese exporters.

The move, however, may spark a regional "currency war" should other exporting nations, particularly in Southeast and East Asia, feel compelled to lower the value of their currencies to help domestic companies remain competitive with lower-priced Chinese goods.

Yet, "How low can China go?" is only the latest question being raised about China's commitment to its 2013 pledge to "give a decisive role to markets" in its economy. Talk persists of a possible Chinese stimulus programme and "quantitative easing with Chinese characteristics" to spur the nation's slowing, but still growing, economy. Such questions are understandable as Beijing still struggles with its ongoing interventions in its equity markets.

A month after Chinese stocks lost trillions of dollars in value as prices plummeted to lows not seen since the global financial crisis, tremendous volatility remains a core theme for today's China.

What's clear is that no matter how large the Chinese government's wallet to finance purchases and how strong the government's ability to order brokerages to do its bidding or even to devalue its currency, more state money and less will power for reform are not the long-term solutions to China's ongoing woes.

Direct and indirect government involvement to help shore up stock prices and placate the Chinese small-scale shareholders who dominate the marketplace has included allowing some shares not to trade, the suspension of new IPOs, financial support for brokerages and the establishment of a market-stabilisation fund to help inject funds into the market. In a further attempt to reduce volatility, China recently banned same-day margin lending, as well as barring some accounts under the control of US hedge fund Citadel and even China's state-owned Citic Securities from trading for three months.

Two broad steps

Even in a "command economy" with trillions of dollars in reserves, it would be a mistake for China's leadership to think that central government's ability to "command" domestic behaviour can replace the fundamental need for changes and continued reform.

So, what can Beijing do to win back confidence in its economy? With the "little Bric" of excessive bureaucracy, poorly conceived or enforced regulation, increased interventionism and persistent corruption taking their toll, here are two broad steps that China should take.

First, Beijing must recommit to the opening of its financial markets and to a deepening of capital market reforms. This is well in line with the one-time pledge to give a decisive role to markets, and is also in line with President Xi Jinping's "Chinese Dream" and goal of a "moderately well off society" by 2020.

Last year, China's State Council announced it would move forward on a number of financial reforms. These included making progress towards direct bond issuances by local governments, removing some of the limits on using financial derivatives, and streamlining the approval process for IPOs as well as increasing quotas for both inward and outward foreign investment.

Some progress has already been made with innovations, including the introduction last November of Shanghai-Hong Kong Stock Connect. While subject to quotas, this link between the Shanghai Stock Exchange and the Hong Kong Stock Exchange has increased two-way market access and should be built on.

Second, China must allow more of its businesses and entrepreneurs to succeed or to fail on their own. With every market intervention, investors may well be left wondering whether any business will ultimately succeed based on its fundamental merits versus government involvement, including the ability of the central bank to intervene forcefully in currency markets.

Already, it is clear that the nation's stock markets are now reliant on official support, and shareholders eager to sell are being prevented from doing so, for now. With a continuing lack of transparency in the level and duration of government support measures, volatility persists.

While the recent focus has been understandably on the nation's equity markets, China's credit markets also need to be allowed to continue to mature - onshore and offshore. This will include permitting Chinese companies, including state-owned enterprises, to default on corporate bond payments.

As with the United States' own bailouts and market interventions during the global financial crisis, decisions taken in the heat of moment will be debated and second-guessed down the road. This will be true for China.

That is no reason though for China to avoid concentrating on the broader economic reforms that others in the Asia-Pacific region have slowly come to embrace. This will include continuing to take steps to build an enabling environment for the private sector - one marked by strengthened rule of law, greater transparency and accountability, and best practices in corporate governance. Such a commitment would in the long run benefit all of China's listed companies and can help drive long-time growth and job creation.

China certainly has the power to intervene in its own markets. The nation also has the power to go lower, further devaluing its own currency - to the detriment of many of its Asian neighbours. More important, however, will be the will power to refrain from such interventionism in favour of pursuing the fundamental changes and continued reform that will help ensure more sustainable growth and greater comfort with China's long-term economic rise.

Curtis S Chin, a former US Ambassador to and member of the board of directors of the Asian Development Bank, is managing director of advisory firm RiverPeak Group, LLC. Find him on Twitter at @CurtisSChin.

Source: http://www.nationmultimedia.com/opinion/How-low-can-China-go-30266535.html

-- The Nation 2015-08-14

[fang37]

My understanding of history is - the faster & higher they rise. the faster & lower they fall.

China is a big player in the financial world.

The next 5 years? A bumpy downward spiral for all.

[aussiandrew]

I do remember leaders crying that China was holding its currency high now complaining about China lowering it value.

[Naam]

I do remember leaders crying that China was holding its currency high now complaining about China lowering it value.

you need reading glasses mate the complaints were always the opposite, i.e. China kept its currency artificially low.

[pokerface1]

The Chinese government is in the umbrella business or in other words it is the business of China. The war on currencies has already started. I had inside info months ago about the future plans Beijing has for it's economy going forward, it's my business to know and try to capitalize on global events such as this.

[pokerface1]

Summary:

The People’s Bank of China offered a rare in-person press conference to brief reporters on the recent actions in the Yuan; providing assurances that recent devaluations are in effort of opening up Chinese markets as opposed to trying to optimize to exports.

Global equity markets are trading higher on the back of the PBOC’s reassurances.

1. China provides calm: After opening the session with yet another devaluation, The People’s Bank of China gave a rare public news conference to discuss recent actions in the Yuan. Usually, the PBOC communicates via lengthy notes posted to their website late in the evening; but last night the no. 2 at the bank, Mr. Yi Gang, held a press conference in which both foreign and state-controlled media reporters were invited.

Mr. Yi providedassurances to markets that the Yuan’s value will stabilize. The PBOC said that that there was no basis for the Yuan’s depreciation to persist, and that the bank would intervene in to the market, as needed, to strengthen the Yuan. Mr. Yi also gave assurances that China has the financial firepower to defend the currency as needed and dismissed reports that claimed the PBOC wanted to engineer a 10% decline in the currency to aid exporters.

Edited August 14, 2015 by pokerface1

[sammygood]

a new world wide crisis soon thanks to our chinese friends?

[fang37]

a new world wide crisis soon thanks to our chinese friends?

Very soon, they will be jumping out the windows.

Grab your videos.

This is going to be a 1st class dive ie a 10!

[Varangkul]

I have a theory! Chines people are probably the most financially astute in the world. For hundreds of years they have been running their own affairs behind the backs of the "FOREIGNERS" who invaded them - and doing very well. China is a vast country and can support itself economically for far longer than most other countries, especially those in SE Asia. It currently has vast reserves in foreign currency and can "free-wheel" for a considerable time.

My thought are that they are planning to bring about the financial downfall of Se Asia to such an extent that they will be able to offer full financial support to those countries and slowly take them over. I foresee SE Asia becoming a satellite of China within a vey short period of time! Do you want ton tell me I'm way off track?

[Publicus]

Summary:

The People’s Bank of China offered a rare in-person press conference to brief reporters on the recent actions in the Yuan; providing assurances that recent devaluations are in effort of opening up Chinese markets as opposed to trying to optimize to exports.

Global equity markets are trading higher on the back of the PBOC’s reassurances.

1. China provides calm: After opening the session with yet another devaluation, The People’s Bank of China gave a rare public news conference to discuss recent actions in the Yuan. Usually, the PBOC communicates via lengthy notes posted to their website late in the evening; but last night the no. 2 at the bank, Mr. Yi Gang, held a press conference in which both foreign and state-controlled media reporters were invited.

Mr. Yi providedassurances to markets that the Yuan’s value will stabilize. The PBOC said that that there was no basis for the Yuan’s depreciation to persist, and that the bank would intervene in to the market, as needed, to strengthen the Yuan. Mr. Yi also gave assurances that China has the financial firepower to defend the currency as needed and dismissed reports that claimed the PBOC wanted to engineer a 10% decline in the currency to aid exporters.

Dr. Yi Gang cited in the post had been declaring all year the party's People's Bank of China would not devalue the yuan. And strangely enough, Dr. Yi who is deputy sec-gen of the party's PBOC had been right. All but a few of the technical experts and strategic planners at the party's PBOC were educated in the West, the USA especially, so they are by and large a competent group that would not devalue the yuan, even or especially in the present emergency time or circumstance.

The devaluation is a political decision taken by the CCP Boyz, not the party's PBOC. Keep in mind the People's Bank of China is an institution of the CCP and both serves the CCP and is run by the CCP. Which explains why the exasperated Dr. Yi is scrambling to try to catch up to the political lightening strike of yuan depreciation.

Everyone had known all year yuan depreciation was coming. Everyone knew it would need to be a sudden and a radical depreciation, which it is. Few knew or expected the occasion or the timing that would precipitate depreciation, which turned out to be the July near-collapse of exports by 8.3% yoy. An export decline had been expected but in the close neighborhood of 1.5%. So this was such a huge shock the CCP Boyz moved swiftly, radically, recklessly, desperately.

Mr. Yi had moreover been forecasting yuan stability well in to 2016. It's not that Dr. Yi doesn't know macroeconomics or monetarism or monetary policy. It's that the people at the Party's People's Bank of China don't matter. It's simply a matter of when PM Li Kejiang who is vice-chairman of the 7-member Standing Committee of the Politburo says to devalue the yuan, the Party's PBOC jumps.

Chairman Xi Jinping is looking out for the CCP, or so he thinks. Xi and Li along with Dr. Yi will have a completely new set of problems when the Fed raises rates soon, as threatened. 2016 looks like the year of Asean and CCP China capital controls as capital outflow becomes a giant sucking sound.

[Naam]

I have a theory! Chines people are probably the most financially astute in the world. For hundreds of years they have been running their own affairs behind the backs of the "FOREIGNERS" who invaded them - and doing very well. China is a vast country and can support itself economically for far longer than most other countries, especially those in SE Asia. It currently has vast reserves in foreign currency and can "free-wheel" for a considerable time.

My thought are that they are planning to bring about the financial downfall of Se Asia to such an extent that they will be able to offer full financial support to those countries and slowly take them over. I foresee SE Asia becoming a satellite of China within a vey short period of time! Do you want ton tell me I'm way off track?

yes, you are light years off track

[Publicus]

The picture at the end of trading today....

CNY:USD 6.366

That is a currency depreciation since Tuesday of 4.4 percent. Credit Swiss said today the yuan would be at 6.6 after three more months calculating a Fed rate increase in September as many are expecting. A later Fed increase still inside 2015 would itself take the yuan to 6.4 or 6.5.

Each one point of devaluation means a loss of $40 bn of foreign capital. That is $160+ billion alone as a result of this week's three days of panic in Beijing. Add to that the loss of $520 bn of fleeing foreign capital the past five quarters and the instability of the CCP economy and financial system begins to become more clear.

Add to that the CCP Boyz in Beijing have this year to date spent almost $400 bn from reserves to support the yuan and the export economy. It was the export drop of 8.3% in July that precipitated the depreciation so more reserve funds will be used.

The crash of the equity markets the past two months caused global investors and governments to question the CCP's claims to be in control of their economy. Now and with the precipitous devaluation of the currency there is serious doubt of the control.

People are now wondering what's behind door number three, i.e., moribund economic reforms. The IMF full board is scheduled in October to consider including the yuan in the SDR basket of reserve currencies, however, last week its internal monitoring committee recommended the full board delay a decision to next year, October 2016.

[Naam]

CNY:USD 6.366

That is a currency depreciation since Tuesday of 4.4 percent.

hmmm... looks like we had different 'rithmatics' teachers

USD CNY Mon 10-08-2015 = 6.2093

USD CNY Fri 14-08-2015 = 6.3982

difference..........................= 0.7289

depreciation 0.7289 / 6.2093 = 3.0422108772325%

note: physicists are a pain in the butt up to a dozen digits after the decimal point whether it concerns maths or simple arithmetics

[TheAppletons]

CNY:USD 6.366

That is a currency depreciation since Tuesday of 4.4 percent.

hmmm... looks like we had different 'rithmatics' teachers

USD CNY Mon 10-08-2015 = 6.2093

USD CNY Fri 14-08-2015 = 6.3982

difference..........................= 0.7289

depreciation 0.7289 / 6.2093 = 3.0422108772325%

note: physicists are a pain in the butt up to a dozen digits after the decimal point whether it concerns maths or simple arithmetics

Yeah, actually 6.3982 - 6.2093 = .1889

.1889/6.2093 is indeed 3.04%, however.

[Srikcir]

Summary:

The People’s Bank of China offered a rare in-person press conference to brief reporters on the recent actions in the Yuan; providing assurances that recent devaluations are in effort of opening up Chinese markets as opposed to trying to optimize to exports.

Global equity markets are trading higher on the back of the PBOC’s reassurances.

1. China provides calm: After opening the session with yet another devaluation, The People’s Bank of China gave a rare public news conference to discuss recent actions in the Yuan. Usually, the PBOC communicates via lengthy notes posted to their website late in the evening; but last night the no. 2 at the bank, Mr. Yi Gang, held a press conference in which both foreign and state-controlled media reporters were invited.

Mr. Yi providedassurances to markets that the Yuan’s value will stabilize. The PBOC said that that there was no basis for the Yuan’s depreciation to persist, and that the bank would intervene in to the market, as needed, to strengthen the Yuan. Mr. Yi also gave assurances that China has the financial firepower to defend the currency as needed and dismissed reports that claimed the PBOC wanted to engineer a 10% decline in the currency to aid exporters.

Dr. Yi Gang cited in the post had been declaring all year the party's People's Bank of China would not devalue the yuan. And strangely enough, Dr. Yi who is deputy sec-gen of the party's PBOC had been right. All but a few of the technical experts and strategic planners at the party's PBOC were educated in the West, the USA especially, so they are by and large a competent group that would not devalue the yuan, even or especially in the present emergency time or circumstance.

The devaluation is a political decision taken by the CCP Boyz, not the party's PBOC. Keep in mind the People's Bank of China is an institution of the CCP and both serves the CCP and is run by the CCP. Which explains why the exasperated Dr. Yi is scrambling to try to catch up to the political lightening strike of yuan depreciation.

Everyone had known all year yuan depreciation was coming. Everyone knew it would need to be a sudden and a radical depreciation, which it is. Few knew or expected the occasion or the timing that would precipitate depreciation, which turned out to be the July near-collapse of exports by 8.3% yoy. An export decline had been expected but in the close neighborhood of 1.5%. So this was such a huge shock the CCP Boyz moved swiftly, radically, recklessly, desperately.

Mr. Yi had moreover been forecasting yuan stability well in to 2016. It's not that Dr. Yi doesn't know macroeconomics or monetarism or monetary policy. It's that the people at the Party's People's Bank of China don't matter. It's simply a matter of when PM Li Kejiang who is vice-chairman of the 7-member Standing Committee of the Politburo says to devalue the yuan, the Party's PBOC jumps.

Chairman Xi Jinping is looking out for the CCP, or so he thinks. Xi and Li along with Dr. Yi will have a completely new set of problems when the Fed raises rates soon, as threatened. 2016 looks like the year of Asean and CCP China capital controls as capital outflow becomes a giant sucking sound.

There are similarities between China and Thailand current economic decision making. While both nations have very educated and professional economic guidance for best course of actions, both are instead being driven by political power brokers - CCP in China and NCPO in Thailand.

Both operate in a vacuum of public scrutiny and accountability. Both are willing to sacrifice public welfare and security to retain absolute power.

[Publicus]

CNY:USD 6.366

That is a currency depreciation since Tuesday of 4.4 percent.

hmmm... looks like we had different 'rithmatics' teachers

USD CNY Mon 10-08-2015 = 6.2093

USD CNY Fri 14-08-2015 = 6.3982

difference..........................= 0.7289

depreciation 0.7289 / 6.2093 = 3.0422108772325%

note: physicists are a pain in the butt up to a dozen digits after the decimal point whether it concerns maths or simple arithmetics

Take it up with Credit Swiss thx.

[Johpa]

There are similarities between China and Thailand current economic decision making. While both nations have very educated and professional economic guidance for best course of actions both are instead being driven by political power brokers

I think Robert Heilbroner summed it up best by describing economists as worldly philosophers rather than worldly scientists. And that is perhaps why the most highly educated and most highly professional economists can often be found to be at absolute loggerheads with each other. And that is perhaps why all economics is driven by politics, usually the politics of greed. Unless of course one actually believes in the invisible hand of some god actually influencing events.

[ABCer]

If I may be allowed a small correction.

China economics is not going low. However entwined with US and the rest of the World - it is going up.

China currency can be manipulated by China - it is their right. If any country does not like it - tough!

US can take their own actions. It is a free market game. Why blame China childishly?

Let US try to stop buying China products. Than US will see the answer to the question - how low can go US industries in their costs and profits.

Edited August 15, 2015 by ABCer

[Thongkorn]

All China is doing is falling in Line with the International Monetary fund, It has kept the Chinese yen high for a long while to high, Now they have just realized that their goods are no longer cheap, So hence allowing their money to devalue.

Edited August 15, 2015 by Thongkorn

[willyumiii]

It looks like China has their eye on both Thailand and the Philippines right now.

After that, they may go as low as the South Pole!

[LomSak27]

I have a theory! Chines people are probably the most financially astute in the world. For hundreds of years they have been running their own affairs behind the backs of the "FOREIGNERS" who invaded them - and doing very well. China is a vast country and can support itself economically for far longer than most other countries, especially those in SE Asia. It currently has vast reserves in foreign currency and can "free-wheel" for a considerable time.

My thought are that they are planning to bring about the financial downfall of Se Asia to such an extent that they will be able to offer full financial support to those countries and slowly take them over. I foresee SE Asia becoming a satellite of China within a vey short period of time! Do you want ton tell me I'm way off track?

Vanag just another CONSPIRACY THEORY, sort of a dime a dozen, although yes they make the world an easier to understand place. The neighbor, a Brit, is forever on about the Rothschild's and the CIA, both are powerful but this guy explains every nuance in world politics through them and their mechanizations'.

Conspiracy theories are the new/old religion. It provides more security than thinking the world is spinning out of control.

[rijb]

If I may be allowed a small correction.

China economics is not going low. However entwined with US and the rest of the World - it is going up.

China currency can be manipulated by China - it is their right. If any country does not like it - tough!

US can take their own actions. It is a free market game. Why blame China childishly?

Let US try to stop buying China products. Than US will see the answer to the question - how low can go US industries in their costs and profits.

Yes, yes... and before China, it was Japan.

But, we all know the real truth... the US can't survive without Thailand.

'childishly' How did you determine that?

[pokerface1]

In the world of trading those of us who know how markets enter, exit and evolve through trends will understand what is on the horizon as far as China's Yuan is concerned. There comes a time and it may have arrived already when China no longer has to depreciate it's currency as they have already set the downward trend. From this point forward hedge funds, speculators, SM, etc.. will be out to make a killing short selling the Yuan and reinforcing the trend as they go along pushing every rebound back and through any support that appears.

This is the longer term game plan that has to be played out and it will only be thrown into reverse once China is seen to be back into the market buying the Yuan again.

So join in the fun times and short sell as much as you can afford. it's pay day for traders !!!!

[Publicus]

CCP China stock markets continued their freefall yesterday by diving another 6% while opening today down by 2% more.

People who have given up on finding a floor to the stock market freefall are now looking down in to the abyss as the CCP Boyz in Beijing have also zeroed in on the depreciation of the yuan currency. More devaluations are coming which is driving capital out while not improving the balance of payments or the reduction of exports.

The yuan is entering a slow motion freefall, same as the equity markets are experiencing

Add the rush of $125 billion of foreign capital out of the CCP China during July and so far in August to the $520 billion that fled during the previous five quarters and the yuan begins to look like a piece of scrap paper.

Goldman Sachs is now including a premium on investments due to the great risk the CCP People's Bank of China will make a serious policy mistake, as if the party's personal bank hadn't made a whole series of gross errors over the past year and a half already with only more of 'em expected and coming soon.

Chinese stocks plunged on Tuesday as the yuan weakened against the dollar, reigniting fears that Beijing may be intent on a deeper devaluation of the currency despite the central bank's comments that it sees no reason for a further slide. The central bank made its biggest injection of funds into money markets in more than six months early on Tuesday, adding to worries that liquidity was tightening as investors moved more capital out of the country.

http://www.cbc.ca/news/business/chinese-stocks-tumble-6-as-yuan-devalued-again-1.3194713

[Publicus]

A brief update....

If Chinese policymakers don’t alter course soon, the current Chinese equity market correction could turn into a stock market plunge similar to what happened in the United States in 1929.

— Scott Minerd, Guggenheim Partners chief investment officer

And therein lies the problem—China’s financial markets are not markets driven by supply, demand, and underlying economics. Instead of letting the market correct itself and promoting healthier growth patterns, the regime has deemed almost every corner of the country’s economy—from real estate to state-owned enterprises, from banks to the stock market—as “too big to fail.”

A man standing outside a temple in the heart of Shanghai China reads inspirational government statements

in a newspaper.

An export decline by 8.3% caused the People's Bank of China to devalue the yuan by almost 4%, thus

further aggravating the rapid decline of USDollars circulating in China. PBOC has this year expended $400

billion of its $4 Trillion forex reserves to support the yuan and the export market which has in fact been

stagnant since 2012. With yuan depreciation and as fewer USD enter China external debt denominated in dollars becomes more

expensive to pay. The external trade debt amounts to $465 billion.

A Chinese summer at the stock markets, 2015.

People ride a roller coaster in Chongqing Municipality, China, on Sept. 27, 2006. (China Photos/Getty Images)

Tuesday and Wednesday the past week the markets crashed another 10 percent as the state owned China

Securities Finance Corp threw $140 billion at it. Between June 10 and July 8 the markets had plunged by

32 percent. All doubt has been removed that the equities markets are policy driven by the state rather than

market driven.

https://youtu.be/zPdHAleapI0

Edited August 20, 2015 by Publicus

[Publicus]

The CCP China financial crash doomsday clock hit 12:59 pm today which is being called "Black Monday" after $5 Trillion was lost from global equity markets. That is an equivalent greater than the GDP of Germany.

Compared to the CCP Chinese economy as of two hours ago, Greece is beginning to look like a haven of financial wisdom and fiscal responsibility. Tomorrow is the due date for $120 billion in seven-day loans made to commercial lenders by the CCP People's Bank of China (central bank). While it is a relatively small amount, it communicated to global markets the great concern the CCP Boyz have of an "impending massive financial collapse."

Another sign of desperation in Beijing is the announcement last month of six years of covert gold buying by the PBOC, bringing Beijing's total gold holdings to 1,658 tonnes, an increase of 60% over ten years ago. The CCP Boyz in Beijing are now 5th in global gold holdings. The CCP Boyz broke their public secrecy of long term gold buying to try to sway global markets to believe the increased gold holdings provides greater security in the yuan and stability to the overall financial system. No one is quite impressed however as the amount is inadequate to support the depreciating currency, foreign debt obligations, the collapse of manufacturing, the fleeing of capital from the country, the bursting property bubble, debt overhang more than twice reported GDP, massive corruption, no cash in banks, and much more. Markets consider that the CCP China would need 3000 tones of gold to sustain itself in the current Black Monday developments.

Global markets however have lost all confidence the CCP Boyz are in charge of the immediate crisis or that they can manage or control it. Global markets are fearing catastrophe.

Fraser Howie, the co-author of Red Capitalism: The Fragile Financial Foundation of China’s Extraordinary Rise, said Beijing’s handling of the stock market calamity raised real questions about the leadership of president Xi Jinping and prime minister Li Keqiang.

“I think there is now growing realisation – domestically and offshore - that the Chinese leadership are not in control of the situation. Not only are they not in control of it, they don’t even seem to grasp the problems,” Howie said.

“There are no short term fixes for what China is going through,” Howie added.

“The real casualty over the summer is the government’s credibility. When you look at the stock market intervention, when you look at the FX botch as I would call it a couple of weeks ago, and then you look at the Tianjin blasts, you see a government that is most certainly not in control. You look at this and it sends a very poor picture about China’s competency at the leadership level. Who else is responsible here? Xi Jinping seems invisible.”

“This is ultimately a painful unwinding of imbalances and leverage in the system and those processes are always tough and sore. It’s a bit like saying what’s a quick solution to my hangover?

And that is exactly where China is at the moment. There are no quick solutions.”

http://www.theguardian.com/business/live/2015/aug/24/global-stocks-sell-off-deepens-as-panic-grips-markets-live

Read more: http://www.businessinsider.com/chinas-financial-problems-may-create-a-ripple-effect-across-asia-2015-8#ixzz3jiwkrKrC

1 trillion yuan might be deployed to prevent a stock market meltdown in China

Read more: http://www.businessinsider.com/1-trillion-yuan-might-be-deployed-to-prevent-a-stock-market-meltdown-in-china-2015-8#ixzz3jjBgYnQA

Edited August 24, 2015 by Publicus

[Usernames]

The Chinese weasel just popped. Decades of the world foolishly pouring its money, technology, and production into this opaque economy run by a secret cabal could usher in very desperate times around the world, and especially here in SE Asia. The fact is that the corruption in China seems bottomless. Things may be so bad that they simply can't figure out how broke they are. The peasants were expecting it all to go onward and upward forever. Nothing is worse than rising expectations when they face dramatic reversals. The countryside could end up marching on Beijing and lynching the Politburo--at least one healthy side effect from this disaster.

[Publicus]

The lightening is closing in to strike the China financial outhouse.

A lightning bolt streaks across the sky above a replica of the Eiffel Tower at the Tianducheng ghost city section of Hangzhou near Shanghai Aug 1st. Aly Song / Reuters

[Publicus]

The CCP China stock market crash continued today with another rash decline, this time by 8%. This brings the market crash and burn since June 10 to 40% with no bottom in sight. The artificial gains of H1 are now wiped out as are many real CCP Chinese. Until yesterday the CCP Boyz had had their personal People's Bank of China buying stocks during the last 30 minutes of each day to provide an artificial floor to the nosedive, but today the Boyz didn't do that. The stock markets are now in an official freefall while the CCP Boyz are described as paralyzed.

The Boyz' hands are just too cut up and bloody to catch any more falling knives.

The flailing Boyz are going to reduce interest rates for the fifth time this year and yet again reduce the triple-R requirements. Equally desperately, the Boyz are throwing 1 Trillion yuan at the stock markets by suddenly allowing pension funds to invest up to 30% of capital in the dying quail of equities. Why or whether CCP corporate pension funds might want to jump off a high mountain remains to be seen. No one believes any more that the CCP Boyz know what they are doing or that they can deal at all with this broad and cascading financial collapse.

Moreover, even the Boyz have abandoned their projected 7% GDP growth for the year. The Boyz are expected to say it will be more like 5%. Reality is that GDP growth this year was anyway going to be 2.2%. But now it will be a miracle to see it come in at zero. That's if the CCP China is still there January 1st. SE Asian currencies and markets are looking at another 1997 financial disaster this time times ten because it is occurring in the CCP China. People are wagering against Asean currencies so we know what that means once again.

Charlene Chu who is widely recognized as the leading global expert on the CCP China economy and finance, wrote in a now revealed July 30 report to global bankers and governments that the sudden depreciation of the yuan also strongly suggests an unreported problem of significant unemployment. Dr. Chu said everyone needs to consider the real possibility of social unrest across the CCP China.

Recognized and respected CCP China expert Gordon G. Chang endorsed the view the CCP Boyz are paralyzed and said Xi Jinping will have to go to Washington hat in hand on his scheduled mid-September first official state visit with Prez Obama. Dr. Chang projected that Prez Obama is going to have a very busy remaining 18 months of his presidency as not only is China in the tank, but so are Russia and Brazil to include all emerging markets.

The Fed has its scheduled Jackson Hole rounds of meetings beginning Thursday. It is expected to delay its expected September rate increase to December or early next year. More important however is that the Fed will probably need to draft a new five year plan for the CCP Boyz in Beijing.

[Naam]

The Chinese weasel just popped. Decades of the world foolishly pouring its money, technology, and production into this opaque economy run by a secret cabal could usher in very desperate times around the world, and especially here in SE Asia. The fact is that the corruption in China seems bottomless. Things may be so bad that they simply can't figure out how broke they are. The peasants were expecting it all to go onward and upward forever. Nothing is worse than rising expectations when they face dramatic reversals. The countryside could end up marching on Beijing and lynching the Politburo--at least one healthy side effect from this disaster.

it is always not only interesting but fascinating reading the @nalysis of a country's economic and political situation by a real eggsburt