China's economy is very sick. What to prepare for?

[DrBeer]

You are right that on the threshold of crisis and uncertainty - the population, and even governments - begin to accumulate the most ancient, liquid asset - gold. by the way, note - not cryptocurrencies

OMG... finally... I have found LOVE!!!
 

Regarding the gold reserves of the state of China - it is a complicated topic, because China has classified its real data on gold reserves and currencies. It is possible to guess, and to PREPARE. Even if we know that China buys a lot of gold, we cannot say where this gold is really located and who owns it .  For example, the same kinesis  has a regular audit ! Who can confirm China's statements about gold ?

To be honest neither the USA nor any other country let their gold reserves be audited.
China wants to expand the use of their Yuan. They want the Yuan to be accepted when they buy energy, metals, foods and other resources from abroad.
They have amassed gold reserves because backing a national currency with gold it's the only way to make that currency internationally acceptable.
The strength of the $ derives by 8.000 tons of gold supposedly stored in Forth Knox or some other place.

 

Regarding reserves - yes I agree, most if not all countries do not allow auditors to see their reserves. And they won't ! Hence we conclude that if they officially announce reserves but do not allow audits, it means there is something to hide! And it is unlikely that it will be an excess of real reserves over the declared reserves

If we go back to China, the problem there is more complicated and wider - manipulation of economic evaluation has been going on for a couple of decades. And there are many examples when official figures diverge from reality. And very strongly. The reason is also trivial: China needed to show "amazing economic effect" in order to continue attracting huge investments. But as you know - you can lie for a long time, but the reality will not change and the economy will not grow. Apparently now China has come to the point where manipulation and lies can no longer hide the real picture. That is why total control of the media was introduced as early as 2022.

[Peter90]

And the day before yesterday the news came out: China is considering the option of withdrawing 2 trillion yuan ($278 billion) from offshore accounts of state-owned companies to save the record falling stock market. Bloomberg writes about it.

Well Bloomberg is wrong
Chinese authorities are repatriating their assets to protect themselves from NATO countries freezing (stealing) them.
If Chinese monetary authorities need capital in order to prop up their stock market, they won't go abroad, they have plenty at home.

On the one hand, it seems to be the world's second economy

Well, considering the Purchasing Power Poverty (PPP), China seems to be the first one 

[DrBeer]

And the day before yesterday the news came out: China is considering the option of withdrawing 2 trillion yuan ($278 billion) from offshore accounts of state-owned companies to save the record falling stock market. Bloomberg writes about it.

Well Bloomberg is wrong
Chinese authorities are repatriating their assets to protect themselves from NATO countries freezing (stealing) them.
If Chinese monetary authorities need capital in order to prop up their stock market, they won't go abroad, they have plenty at home.

On the one hand, it seems to be the world's second economy

Well, considering the Purchasing Power Poverty (PPP), China seems to be the first one 

1. assets are being withdrawn only to try to save the market. And no one is going to freeze them. China is neither a terrorist country nor an international aggressor-criminal country at the moment.
If they are preparing to change their status to the listed ones, they can probably withdraw their assets But, having broken the connection with Western markets, China will shoot itself in the foot... Or even in the head....
The second problem is that - they have enough in words, but the real picture is different. At a minimum they would find the means to keep the construction and related markets from collapsing, and keep Evergrand from going bankrupt.
And the reality of China's stock market is as follows, and it's easy to verify: China is recording insane losses on the stock exchanges. In total, Chinese and Hong Kong stocks have lost $6.3 trillion since peaking in 2021.
And the rate of decline is only increasing.

2. Nominal GDP at PPP is a good but specific indicator. It was best described by one economist, I don't remember his name now, but I'll try to find it, so he said - this indicator was introduced so that poor countries/countries with troubled economies could show that they are doing well.

PS please don't think I'm a China-hater Just now I read their media, and listen to people who live in China, read analytics, and realize how it reminds me of the "death spasms" of the USSR.  True, China has a little more safety margin, although it is leveled by deteriorating relations with the West.

[Peter90]

New York/London
gold 2150
silver 25

Shanghai
gold 2190
silver 27,40

NY/London, paper markets
Shanghai, physical market

[Peter90]

With its Belt and Road Initiative (BRI, also known as “One Belt, One Road”), China has become South America’s largest source of infrastructure investment and second-largest trading partner, increasing trade from $18 billion in 2002 to $450 billion in 2022.

Twenty-five of 31 Central and South American countries have negotiated infrastructure investments from China, and 22 of those nations, most recently Honduras, have formally signed onto the BRI program.

Chinese companies, either owned or subsidized by the Chinese Communist Party (CCP), operate mines in Mexico, Argentina, Peru, and Venezuela, electrical grids in Peru and Chile, 5G wireless systems in Costa Rica, Bolivia, Brazil, and Mexico—80 percent of Mexico’s telecommunications equipment is provided by Chinese companies—space launch and satellite tracking facilities in Argentina, and the world’s largest embassy in the Bahamas.

The U.S. State Department estimates China’s trade with Latin American nations and investments in sea, space, telecommunication, critical minerals, and energy will match the United States by 2035 in the region. China’s military ties with Venezuela, Cuba, Peru, and Chile—which now include port visits by Chinese warships and technical advisers—will mature into base agreements within a decade.

China has, or plans to build or improve, 40 ports across 16 Latin American and Caribbean countries without restrictions on military use, including on both ends of the Panama Canal, where CCP-sponsored companies are bidding with Panama to work on the U.S.-built canal.

Next fall, Chinese leader Xi Jinping will be in Peru to commemorate the completion of “a $3.6 billion ‘mega port’ that was financed by China, built by Chinese workers, and it will be owned and operated by a CCP-backed company,” House Armed Services Committee Chair Rep. Mike Rogers (R-Ala.) said.

zerohedge.com

[DrBeer]

With its Belt and Road Initiative (BRI, also known as “One Belt, One Road”), China has become South America’s largest source of infrastructure investment and second-largest trading partner, increasing trade from $18 billion in 2002 to $450 billion in 2022.

Twenty-five of 31 Central and South American countries have negotiated infrastructure investments from China, and 22 of those nations, most recently Honduras, have formally signed onto the BRI program.

Chinese companies, either owned or subsidized by the Chinese Communist Party (CCP), operate mines in Mexico, Argentina, Peru, and Venezuela, electrical grids in Peru and Chile, 5G wireless systems in Costa Rica, Bolivia, Brazil, and Mexico—80 percent of Mexico’s telecommunications equipment is provided by Chinese companies—space launch and satellite tracking facilities in Argentina, and the world’s largest embassy in the Bahamas.

The U.S. State Department estimates China’s trade with Latin American nations and investments in sea, space, telecommunication, critical minerals, and energy will match the United States by 2035 in the region. China’s military ties with Venezuela, Cuba, Peru, and Chile—which now include port visits by Chinese warships and technical advisers—will mature into base agreements within a decade.

China has, or plans to build or improve, 40 ports across 16 Latin American and Caribbean countries without restrictions on military use, including on both ends of the Panama Canal, where CCP-sponsored companies are bidding with Panama to work on the U.S.-built canal.

Next fall, Chinese leader Xi Jinping will be in Peru to commemorate the completion of “a $3.6 billion ‘mega port’ that was financed by China, built by Chinese workers, and it will be owned and operated by a CCP-backed company,” House Armed Services Committee Chair Rep. Mike Rogers (R-Ala.) said.

zerohedge.com

I agree that China presents itself as a "dear brother and helper of the third world countries." Yes, they are allocating huge amounts of money from their shrinking budget... But China is a very cunning, pragmatic and cynical player. There is no need to consider what is happening as altruism and friendly help - this is a cynical calculation whose goal is precisely to create a belt of economically dependent colonies that will save... no, not their own economy, but the Chinese one. First of all, sales markets are critically important to China. They are losing the Western one. Moreover, this is the most highly profitable market. Having lost the sale of 1 conditional product on the Western market, China needs to find territories where it can sell 3 units of this product, because The margin on the Western market and on the third world market is several times different.
The second problem is the so-called investments. I have already given the example of Sri Lanka, where investments in the port became a “slave financial yoke” for the country for many decades, while Sri Lanka did not receive any benefits. The main, no, even the MONOPOLY beneficiary of Chinese investments is China itself, and the country receiving the investments becomes an obedient slave of the Chinese economy.

[DrBeer]

New information about the real problems of the Chinese economy, for thought:

1. As Bloomberg reports:
The total debt of Chinese provinces and municipalities amounted to 66 trillion yuan, or 9.2 trillion dollars in dollar terms.
8 out of 33 provinces in China are currently in a situation where more than 100% of their revenues are needed just to pay interest on debts.
This is unimaginable - in order not to pay off the debt, but simply to pay the interest on it, you need to give away all the income and borrow a little more!

2. MSCI, which calculates various stock market indices, decided to exclude 66 Chinese stocks from its MSCI China index after the Chinese stock market fell by trillions of dollars.
https://www.bloomberg.com/news/articles/2024-02-13/msci-cuts-swath-of-china-firms-showing-how-downtrodden-market-is?srnd=markets-vp

[Peter90]

I agree that China presents itself as a "dear brother and helper of the third world countries." Yes, they are allocating huge amounts of money from their shrinking budget... But China is a very cunning, pragmatic and cynical player. There is no need to consider what is happening as altruism and friendly help - this is a cynical calculation whose goal is precisely to create a belt of economically dependent colonies that will save... no, not their own economy, but the Chinese one. First of all, sales markets are critically important to China. They are losing the Western one. Moreover, this is the most highly profitable market. Having lost the sale of 1 conditional product on the Western market, China needs to find territories where it can sell 3 units of this product, because The margin on the Western market and on the third world market is several times different.
The second problem is the so-called investments. I have already given the example of Sri Lanka, where investments in the port became a “slave financial yoke” for the country for many decades, while Sri Lanka did not receive any benefits. The main, no, even the MONOPOLY beneficiary of Chinese investments is China itself, and the country receiving the investments becomes an obedient slave of the Chinese economy.

The point of my posts is to deliver infos in order to judge how strong is China economy, it's not about showing how saint the Chinese are.

That said, there must be a reason why so many countries prefer China to the USA doc

[DrBeer]

I agree that China presents itself as a "dear brother and helper of the third world countries." Yes, they are allocating huge amounts of money from their shrinking budget... But China is a very cunning, pragmatic and cynical player. There is no need to consider what is happening as altruism and friendly help - this is a cynical calculation whose goal is precisely to create a belt of economically dependent colonies that will save... no, not their own economy, but the Chinese one. First of all, sales markets are critically important to China. They are losing the Western one. Moreover, this is the most highly profitable market. Having lost the sale of 1 conditional product on the Western market, China needs to find territories where it can sell 3 units of this product, because The margin on the Western market and on the third world market is several times different.
The second problem is the so-called investments. I have already given the example of Sri Lanka, where investments in the port became a “slave financial yoke” for the country for many decades, while Sri Lanka did not receive any benefits. The main, no, even the MONOPOLY beneficiary of Chinese investments is China itself, and the country receiving the investments becomes an obedient slave of the Chinese economy.

The point of my posts is to deliver infos in order to judge how strong is China economy, it's not about showing how saint the Chinese are.

That said, there must be a reason why so many countries prefer China to the USA doc

And I'll explain
My posts are not about the fact that “the Chinese are bad”, in no case - they are people just like the rest of us. This means that China's economy is a "paper tiger" that is artificially supported by the government, not by reforms but by information manipulation. And also about the fact that China is leaving at the peak of economic degradation, and the real state of affairs in the Chinese economy is much worse than what the Chinese Communist Party and its supporters are trying to portray to us. The essence of my posts is also that it is worth starting today to take steps to diversify economic ties with China, preparing “spare” sites for production, and this is also a “signal” to start investing today in other countries, for example India. I’m not happy about China’s troubles, I’m just saying what’s happening there and what we should prepare for, moreover, in the complex - economics, politics, world processes.

I don’t consider the economy strong, I consider it BIG, and in some sense efficient if there are markets. But even this did not save it from the collapse of the internal sectors of the economy.

[philipma1957]

New information about the real problems of the Chinese economy, for thought:

1. As Bloomberg reports:
The total debt of Chinese provinces and municipalities amounted to 66 trillion yuan, or 9.2 trillion dollars in dollar terms.
8 out of 33 provinces in China are currently in a situation where more than 100% of their revenues are needed just to pay interest on debts.
This is unimaginable - in order not to pay off the debt, but simply to pay the interest on it, you need to give away all the income and borrow a little more!

2. MSCI, which calculates various stock market indices, decided to exclude 66 Chinese stocks from its MSCI China index after the Chinese stock market fell by trillions of dollars.
https://www.bloomberg.com/news/articles/2024-02-13/msci-cuts-swath-of-china-firms-showing-how-downtrodden-market-is?srnd=markets-vp

If true that is pretty fucked up. So the question is how reliable is the info.  I could see 2025 as a big shake up Trump gets in and tries to cut China off at the knees .while pivoting to India as a labor source.

[DrBeer]

New information about the real problems of the Chinese economy, for thought:

1. As Bloomberg reports:
The total debt of Chinese provinces and municipalities amounted to 66 trillion yuan, or 9.2 trillion dollars in dollar terms.
8 out of 33 provinces in China are currently in a situation where more than 100% of their revenues are needed just to pay interest on debts.
This is unimaginable - in order not to pay off the debt, but simply to pay the interest on it, you need to give away all the income and borrow a little more!

2. MSCI, which calculates various stock market indices, decided to exclude 66 Chinese stocks from its MSCI China index after the Chinese stock market fell by trillions of dollars.
https://www.bloomberg.com/news/articles/2024-02-13/msci-cuts-swath-of-china-firms-showing-how-downtrodden-market-is?srnd=markets-vp

If true that is pretty fucked up. So the question is how reliable is the info.  I could see 2025 as a big shake up Trump gets in and tries to cut China off at the knees .while pivoting to India as a labor source.

This information is available in open Western sources. I am not sure that the Chinese media, controlled by the Chinese Communist Party, will openly publish such negative data.

No matter how much I dislike Trump, I can partially admit that he has reasonable ideas regarding efforts to “revive” the power of the United States, lost in recent years. Revival or strengthening, both economic and political. And China will be one of the “victims” of this policy. Moreover, many already understand that if the world now does not stop showing weakness and making concessions to certain aggressors, then for China this will become a “green light” to attack Taiwan. Moreover, in 2-3 years, the Chinese economy will weaken even more, tension within China will increase further, and war is one of the options for maintaining power and influence in China.

[DrBeer]

China, realising who he depends on and what the rules of the game are, started doing what he was told

About ten Chinese banks have stopped accepting payments in yuan from Russia.

Several Chinese banks have stopped accepting payments in yuan from Russia and started returning such transactions to clients. The new restrictions are caused by fears due to the possible introduction of secondary sanctions and pressure from the United States.

This is reported by "Izvestia" with reference to interlocutors representing the business and payment market.

In particular, the general director of JSC "First Group" Alexei Poroshin told about it and confirmed the commercial director of the company "Impaya Rus" Alexei Razumovsky.

Other interlocutors of the newspaper said that Chinese banks have not publicly notified clients from Russia about their refusal to accept payments in yuan, but Russian businessmen have alternative ways for settlements.

According to Poroshin, among those who have refused to accept payments in yuan are Ping An Bank, Bank of Ningbo, China Guangfa Bank, Kunshan Rural Commercial Bank, Great Wall West China Bank, Shenzhen Rural Commercial Bank, Dongguan Rural Commercial Bank and China Zheshang Bank.


Looks like China is beginning to realise that its own opinion of its 'power' is a fantasy....