Posted on 09/12/2024 8:31:03 AM PDT by Miami Rebel
HONG KONG, Sept 11 (Reuters Breakingviews) - China's financial sector has serious heartburn. For decades, Beijing has leaned on its state-controlled banks to turbo-charge growth by extending credit. But lenders are now clogged with risky assets. The result is something like indigestion: not critical, but painful for the $17 trillion economy.
On paper, the country's banks look remarkably healthy given 2020's twin shocks of the pandemic and a burst property bubble. Official data, opens new tab show them sitting on 3.3 trillion yuan, roughly $460 billion, of non-performing loans. Add in another $670 billion of less-problematic-but-still-pesky "special mention" loans, which include credit extended to struggling property developers and cash-strapped local governments, and it doesn’t even reach 4% of their aggregate lending.
The problem is, asking China’s official data collectors about bad debt is like asking a dyspeptic patient how much junk food they really eat. Other sources take a gloomier view. Bad loans in the property sector today alone could be over $1 trillion, reckons research firm GavekalDragonomics.
Even so, the chances of a chaotic implosion of China's tightly-controlled financial system are extremely low. China's four biggest lenders - Industrial and Commercial Bank of China (601398.SS), opens new tab, (1398.HK), opens new tab, Bank of China (601988.SS), opens new tab, (3988.HK), opens new tab, China Construction Bank (601939.SS), opens new tab, (0939.HK), opens new tab and Agricultural Bank of China (601288.SS), opens new tab, (1288.HK), opens new tab - are all state owned and too big to fail in every way. Moreover, regulators and bank executives have spent years devising ways to manage the bad debt problem, and while that system is strained, it still more or less works.
(Excerpt) Read more at reuters.com ...
BRIC the Chinese Communist party scam to rob them blind
The USA has lots of recently young men from Latin America and the Carribean.
China has vacant apartments and a need for low-cost factory workers.
Perhaps a labor export treaty might solve both problems.
Dear Asylum Applicant:
Your application for asylum has been approved under the Trump-Xi Asylum Treaty. Please arrive at the dock for your trip to China....
The only success the Chinese are having right now is bribing and blackmailing The Democrat Party Organized Crime Syndicate to weaken and destroy The United States.
Anyone who still supports the Democrats has a criminal heart, mind and soul.
Yet someone in China keeps buying gold. Lots of it.
“Bad loans in the property sector today alone could be over $1 trillion”
Student loans in the US I believe are more. About half aren’t being paid on. I suspect most are on the higher balance side.
How much will you give me for this DEI college party animal?
US student loans total $1.74 trillion. Defaults are fewer than 5%.
Meanwhile, back at our ranch:
$35,367,563,656,596 and rising rapidlyThe world's in a debt mess, over-extended massively.
“Yet someone in China keeps buying gold. Lots of it.”
Russia and China accounted for 80% of gold purchases last year.
Gold buying is NOT a sign of confidence in the ruble or the yuan quite the contrary.
China’s economic crisis is still in the early stages. Eventually, China will have to buy up the bad loans and recapitalize her lenders, but doing so will be tricky and time-consuming. In addition, the effort will eat up much of China’s accumulated foreign currency holdings and other state assets. That in turn will require an unacknowledged abandonment of attempts to take Taiwan by force and will diminish the credibility of the BRICs scheme.
You’re certainly correct, but unlike China we don’t have state-run banks funding the construction of ghost cities.
(Look up Pudong, Shenyang State Guest Mansions, Tianducheng.)
I couldn’t agree more. The BRICs myth is the product of bluffing and wishful thinking. Without an ascendant China, BRICs is nothing.
It shows confidence in the long-term value of gold. Who has the cash to buy it right now? The CCB?
Seen the REITs problems in SF and most recently a multi-hundred million dollar building sold for 8% of its former "valuation?" Courtesy of governments -- plural -- we're all in quite a similar boat. And Madame Yellen has talked about 50+ trillion in public debt not being so bad....
If, and while, their money still has some value, that is the thing to do.
There is much in the wind about the BRICS people accumulating gold in preparation toward making their proprietary currency based at least 40% on the metal -- hence the phenomenal run-up in its price.
Yup. And even with China ascendant, who in their right mind would trust them to promote and maintain the value of their currency if doing so clashed with China’s immediate interest?
No matter how bad china is, we are worse off. Givt debt, consumer debt, aborting our future, importing a 3rd world future, rudderless govt, ethics-less courts and judicial system.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.