Coronavirus has lit the fuse on a time bomb in China’s economy: debt

The Week In Asia ^ | 4/5/2020 | Cary Huang

[EBH]

The coronavirus outbreak has already taken a great toll on the Chinese economy, with all headline readings pointing towards a record slowdown in growth during the first two months of the year. But there is an even greater danger for what was once the world’s fastest-growing major economy: that Covid-19 will become the catalyst that will bring its many long-simmering problems to the boil. At the centre of these problems is a rising systemic risk in its banking and financial systems caused by a high level of debt accrued over the past decade. The outbreak could not have occurred at a worse time. The past 10 years have not only seen the economy saddled with this debt, but it has also involved a steady structural slowdown that last year saw the growth rate fall to 6.1 per cent, the lowest in decades. Now, just at the very time the country might consider spending more to prop up that growth rate, a raging pandemic means it will be making much less money than usual. The latest data from the Chinese Ministry of Finance shows fiscal revenue plunged by 9.9 per cent in the January-February period, the steepest drop since 2009.

Overall tax revenue fell 11.2 per cent, driven by a 19 per cent slump in value-added tax (VAT) revenue, the main source of fiscal income. These drops come just as the government has offered a handsome tax cut in response to the pandemic.

Meanwhile, the escalation of the pandemic in the rest of the world will only further weigh on China’s economic growth, corporate profits and personal income. In turn, this will inevitably drag down government revenue in months to come.

[EBH]

Old, but worth the financial perspective reading.

"China should exercise extreme caution: a financial virus can be as toxic, contagious and lethal as a biological one if it is allowed to spread. ■"

[captain_dave]

It would be terrible if Covid-19 destroyed the Communist Chinese Government. 😉

[Jim Robinson]

May have lit the vfuse here as well.

[Fungi]

You mean the US doesn’t have that problem?

[Zhang Fei]

J-curve theory of revolutions:

---

https://en.wikipedia.org/wiki/James_Chowning_Davies
[”Revolutions are most likely to occur when a prolonged period of objective economic and social development is followed by a short period of sharp reversal. People then subjectively fear that ground gained with great effort will be quite lost; their mood becomes revolutionary. The evidence from the Dorr Rebellion, the Russian Revolution, and the Egyptian Revolution supports this notion; tentatively, so do data on other civil disturbances. Various statistics—as on rural uprisings, industrial strikes, unemployment, and cost of living—may serve as crude indexes of popular mood. More useful, though less easy to obtain, are direct questions in cross-sectional interviews. The goal of predicting revolution is conceived but not yet born or matured.” ]

[LouAvul]

For every dollar an American saved on a pair of flip flops, money was being poured into the military expansion of our enemy.

Civilization desperately needs to see china (always a lower case 'c', out of disrespect) as the bane of civilization.

[Destroyer Sailor]

We have the natural resources and food production to survive. China has problems.

[gasport]

“In turn, this will inevitably drag down government revenue in months to come.”

Decades to come unless the ChiCom thugs are soon decorating lampposts.

[PGalt]

True. No China products. No American fascists utilizing the Chinese slaves products

[Terry L Smith]

As a Cold War veteran, who could have seen the day that a Communist regime would actually bemoan economic chaos in the West?
Such is when a mixture of Communism, followed by the absorption of the seat of the Asian free world market, with the hope of financial enslavement, only to fall trapped with your own failing economy, and then came the plague you designed to apply against them, sickening you, and freezing your commerce!

[Phil DiBasquette]

I hope

[Liz]

SOURCE—NYPOST.com

Twelve days after Hunter stepped off Air Force Two in Beijing with his VP dad and daughter, his company signed a historic deal with the Bank of China, the state-owned financial behemoth often used as a tool of the Chinese government. The Bank of China had created a first-of-its-kind investment fund called Bohai Harvest RST (BHR). According to BHR, one of its founding partners was none other than Rosemont Seneca Partners LLC.

It was an unprecedented arrangement: the government of one of America’s fiercest competitors going into business with the son of one of America’s most powerful decision-makers.

Chris Heinz (John Kerry’s stepson) claims neither he nor Rosemont Seneca Partners, the firm he had part ownership of, had any role in the deal with Bohai Harvest. Nonetheless, Biden, Archer and the Rosemont name became increasingly involved with China. Archer became the vice chairman of Bohai Harvest, helping oversee some of the fund’s investments.

Troublingly, some of those investments had major implications for national security.

Hunter Biden’s father, the vice president, met earlier with Chinese President Hu Jintao in Washington as part of the Nuclear Security Summit.

In December 2014, BHR became an “anchor investor” in the IPO of China General Nuclear Power Corp. (CGN), a state-owned energy company involved in the construction of nuclear reactors. In April 2016, the US Justice Department would charge CGN with stealing nuclear secrets from the United States — actions prosecutors said could cause “significant damage to our national security.”

Of particular interest to CGN were sensitive, American-made components that, according to experts, resembled components used by the US on its nuclear submarines.

[PGR88]

China is a centrally-planned economy that has a completely printed, fiat currency. So how do politicians “solve” problems with their budgets and with what are deemed politically important parts of the economy? They throw borrowed money at it. Bbecause its a fiat money, the amounts they can borrow and spend are theoretically unlimited.

The United States now does many of the same things.

[circlecity]

This is my only question with the “China released this intentionally” theory. An economic time bomb triggering a collapse takes down everybody - especially China because they were profiting most off the existing system. And the obvious result of a pandemic would be an economic collapse.

[Liz]

SOURCE functionhttps://dailycaller.com/2016/09/02/flashback-bill-clinton-collected-donations-then-us-missile-tech-shipped-to-china/

(Lobbying a president at a WH gala was unheard of till the greedy Me-First Clintons came to town....)

Pres Clinton was lobbied at a WH gala by big buck donor Bernard L. Schwartz, CEO of Loral Space & Communications Ltd......

First Clinton made sure to collect donations ........then he shipped Loral's US missile tech to China.

JOHNNY CHUNG: "Gotta put coins in---ka-ching---to make Clintons do something.

=============================================

The monumental disaster of the US-China Relations Act is becoming clearer.It was Bill Clinton’s last (cough)
"presidential accomplishment," the historic moment when a Democrat president of the greatest superpower of all time,
sap-happily handed its demise to a backward country, poised to strip America of its intellectual and
technological superiority.

[Liz]

JUST THE NEWS.COM---John Solomon's new web site
By David Brody, April 24, 2020 - 12:22pm

Pompeo blasts 'wildly soft' Obama-Biden coddling of Beijing: 'Allowed China to walk all over us'
Secy of State says Biden ignores US efforts to get health experts into China to investigate coronavirus

When it comes to China policy and the U.S. presidential election, a battle is brewing about toughness. More precisely, who is tougher when it comes to dealing with the Chinese Communist Party? Trump or Biden?

For Secretary of State Mike Pompeo, the answer is obvious, and it lies in plain view in the Obama-Biden administration’s record of dealing with China. “Relative to this administration, they were wildly soft,” the secretary of state bluntly told Just the News Thursday.

A new campaign ad by the presumptive Democrat nominee for president lambastes the president for not calling out China earlier and for failing to send American health experts to China to investigate the coronavirus. Biden is ignoring the facts, says Pompeo. “This president and this administration worked diligently to work to get Americans on the ground there in China,” the secretary of state said in a one-on-one interview. “We were rebuffed. The Chinese government wouldn't let it happen.”

The China issue is a sensitive one for the Biden campaign. Trump and his surrogates have been hammering the former vice president as being soft on China, with Trump recently tweeting, “China wants Sleepy Joe sooo badly ... Joe is an easy mark, their DREAM CANDIDATE!”

Past campaign ads have also highlighted how Biden’s son Hunter had lucrative business relationships with China. Pompeo opted to zero in on Biden’s last time in federal office.

“The previous administration allowed China to walk all over us,” Pompeo says. “This president has taken a fundamentally 180-degrees different approach with respect to how we respond to the challenges that China presents to American Security."

Specifically, Pompeo points out how the Obama-Biden administration showered the Chinese government with trade benefits, while meekly acquiescing to Chinese regional military ambitions.

“It was during the previous administration that the Chinese government began to arm the South China Sea,” said Pompeo. “The previous administration didn't respond. It allowed them to continue to develop their capacity to move their People's Liberation Navy out and around in the South China Sea. That was the kind of thing that the previous administration permitted.”

Starting in January, after the worldwide coronavirus outbreak began, the Trump Administration tried numerous times to get CDC doctors into China — but to no avail. In March, the president said he asked Chinese President Xi Jinping “whether or not we could send some people, and they didn’t want that.”

Biden’s campaign contends that the administration didn’t push China hard enough. Back in February, Biden told reporters, “I would insist that China allow our scientists in to make a hard determination of how it started.” Biden’s current campaign ad doesn’t mention that two American health officials were included as part of a World Health Organization medical team that visited China back in February.

https://justthenews.com/government/security/pompeo-zaps-wildly-soft-obama-biden-coddling-beijing-allowed-china-walk-all

[sport]

Decades to come unless the ChiCom thugs are soon decorating lampposts.

You understand if this happened, it would wipe out both Houses of Congress, don't you?

[UnwashedPeasant]

"slowdown that last year saw the growth rate fall to 6.1 per cent"

Their slowdown rate is double what we consider a great growth rate.

[Right Wing Assault]

We're in debt, China's in debt. Who does China owe? Which country is not in debt? Can every country be in debt?

[grey_whiskers]

You understand if this happened, it would wipe out both Houses of Congress, don't you?

You say that like it's a bad thing.