Free Republic

How did India and China, nuclear-armed nations collectively home to 36 percent of the world’s people, go from conflict to camaraderie in less than a week? At the end of August, two months into the worst border standoff between the two countries in decades, there were whispers of war. But this week, Indian Prime Minister Narendra Modi and Chinese President Xi Jinping joined Russia, South Africa and Brazil in declaring war on Pakistan-based terror groups. What just happened? Can it last? And should we trust it? For the moment, it appears Beijing’s aspirations to be a global leader in a...

Beijing's need to deliver on official growth targets is likely to make the economy increasingly reliant on stimulus, Moody's said. "While ongoing progress on reforms is likely to transform the economy and financial system over time, it is not likely to prevent a further material rise in economy-wide debt, and the consequent increase in contingent liabilities for the government," it said. While the downgrade is likely to modestly increase the cost of borrowing for the Chinese government and its state-owned enterprises (SOEs), it remains comfortably within the investment grade rating range. World stocks inched lower after the move, though Shanghai's...

The Dow Jones industrial average dropped more than 150 points before holding about 115 points lower, with Goldman Sachs contributing the most losses. The index briefly broke below the 18,000 mark and hit its lowest level since July 7. The S&P 500 fell 0.6 percent after sliding more than 1 percent earlier in the session, with financials shedding more than 1.5 percent to lead decliners. The Nasdaq composite underperformed, falling 0.8 percent. At session lows, the three major indexes traded more than 1 percent lower at session lows.

Chinese “depreciation” and all its ensuing hysteria occurred just about a year ago. It has also been a about a year since I co-wrote a book on China with Worth Wray titled A Great Leap Forward? The title was meant to be ironic. The original Great Leap Forward was imposed by Mao in the 1960s. It was one of the most economically disastrous times in Chinese history. Food production increased, yet 30 million people starved. China underwent a true financial and economic crisis due to the insanity of central control of markets. China now attempts something that is as powerful...

China has failed to curb excesses in its credit system and faces mounting risks of a full-blown banking crisis, according to early warning indicators released by the world’s top financial watchdog. A key gauge of credit vulnerability is now three times over the danger threshold and has continued to deteriorate, despite pledges by Chinese premier Li Keqiang to wean the economy off debt-driven growth before it is too late. The Bank for International Settlements warned in its quarterly report that China’s "credit to GDP gap" has reached 30.1, the highest to date and in a different league altogether from any...

Rachael LevyJuly 1, 2016 "We are facing the largest macro imbalance in global history." That's according to Kyle Bass, founder of hedge fund Hayman Capital Management. Investors better prepare for a Chinese crisis that will mimic what happened in the US mortgage crisis, Bass said in a Friday interview with Real Vision Television. "When I look at what's happening now in China, the amplitude of what's happening is two, three, or four times what happened in the US," he said. Here are Bass' main points: •The Chinese are going to have to accept a devaluation of the yuan. • When...

China’s financial system The coming debt bust It is a question of when, not if, real trouble will hit in China May 7th 2016 | From the print edition Timekeeper CHINA was right to turn on the credit taps to prop up growth after the global financial crisis. It was wrong not to turn them off again. The country’s debt has increased just as quickly over the past two years as in the two years after the 2008 crunch. Its debt-to-GDP ratio has soared from 150% to nearly 260% over a decade, the kind of surge that is usually followed...

The US dollar has suffered one of the sharpest drops in 20 years as the Federal Reserve signals a retreat from monetary tightening, igniting a powerful rally for commodities and easing a ferocious squeeze on dollar debtors in China and emerging markets. The closely-watched dollar index (DXY) has fallen 3pc this week to 96.44 and given up all its gains since late October. This has instant effects on the world’s inter-connected financial system, today more geared to the US exchange rate and Fed policy than at any time in modern history. David Bloom, from HSBC, said the blistering dollar rally...

China is set to report its weakest full-year growth figure in 25 years on Tuesday on the back of slowing output and sagging investments, troubling news that will likely dominate discussion at the European Central Bank and Bank of Canada policy meetings. Economists said the expansion of the Chinese economy was held back by sluggish domestic and external demand, weak investments, factory overcapacity and high property inventories, which exacerbated deflationary pressures in the economy. The poor figures bolster arguments for more Chinese monetary policy easing on top of the six interest rates cuts seen since November 2014 and suggest that...

Following the initial halt in CSI-300 Futures at the 5% limit down level, the afternoon session opened to more carnage and amid the worst 'first day of the year' in at least 15 years, Chinese stocks collapsed further to a 7% crash. At 1334 local time, stock trading was halted for the rest of the day across all exchanges (at least two hours early). [Snip] Dow futures are now down over 150 points from NYE close, Gold and Treasuries are bid, and offshore Yuan has plunged most since the August devaluation.

Risk aversion prevailed throughout Asia as Saudi Arabia severed diplomatic ties with Iran on Sunday over the Kingdom’s execution of a prominent Shiite cleric Nimr al-Nimr. The Brent crude rose over 2% in early Monday morning hours but narrowed to 1.6% gain recently. In times of uncertainty, currency traders crowd to the safe haven yen, prompting the Japanese currency to rise 0.6% to 119.47. As a result, the exporter-dominated Nikkei 225 slumped 3.1% today. Adding more chills, China disappointed the market by not announcing any reserve ratio cuts over the weekend, even though December manufacturing PMI continued to point to...

China is demonstrating that it is more practical than anyone else in the industrialized world. They have announced that they will “reasonably” set limits on new local government debt in 2016. Finance Minister Lou Jiwei said at a work conference in Beijing on Monday that they will actually limit local debt; something nobody else does. China will also adopt a much more flexible fiscal policy that will include gradually increasing the fiscal deficit ratio and expanding its budget deficit. So China will increase its debt in a gradual manner to try to stimulate the economic decline it is facing. These...

Major gateways say more ocean containers are shipping out empty, a sign of weak demand in troubled global markets and the tough sell American exporters face abroad ___ One of the fastest-growing U.S. exports right now is air. Shipments of empty containers out of the U.S. are surging this year, highlighting the impact the economic slowdown in China is having on U.S. exporters. The U.S. imports more from China than it sends back, but certain American industries—including those that supply scrap metal and wastepaper—feed China’s industrial production. Those exporters have suffered this year as China’s economy has cooled. In September,...

On Sunday, we got still more evidence to suggest that China’s economy isn’t growing at anywhere near the clip the official figures suggest as industrial production came in light of expectations and FAI rose at the slowest pace since 2000. “This is very disappointing data,” said ANZ economist Li-Gang Liu.“It’s very difficult to see Premier Li Keqiang getting his 7% growth target this year.” The statistics bureau warned of continued headwinds. “The foundation for the recovery is not solid,” it said on its website. “External and internal demand for industrial products remains weak and industrial production still faces relatively big...

The European Central Bank proudly announced on Friday that it is erecting a 17-metre-high bronze and granite tree outside its Frankfurt headquarters – an artwork intended to “convey a sense of stability and growth” – and, with its gilded leaves and massive trunk, presumably also wealth and power. But when Mario Draghi, the ECB’s president, appeared before the world’s media on Thursday at his regular press conference, it was the limit to central bankers’ power that was on display. Draghi was forced to admit that the outlook for eurozone growth and inflation had darkened considerably as a result of the...

Ben MoshinskySeptember 7,2025China is spending billions propping up its struggling currency and as a result its foreign currency reserves fell by a record amount last month. China spent $93.9 billion in August, reducing its cash pile to $3.56 trillion. This is almost double the drop in July, when $50 billion was spent. The People's Bank of China is spending all this cash on propping up its currency, the yuan, which has been suffering since China devalued it against the dollar. China's central bank is selling the dollars it holds and buying yuan in a bid to boost the price by...

The world is worried about China's economy. Mark Schwartz, Goldman Sachs' man in Beijing, not so much. Yes, China's stock market has tumbled 40% since June. And yes, the country has hit a rough patch. "A few things have gone wrong this summer," said Schwartz. But he also thinks the doomsday scenarios are way off the mark. "I think the market reaction globally is overdone," said Schwartz, who is chairman of Goldman Sachs in Asia-Pacific. "I think China is going through a very normal transition, from a state-controlled, state-dominated system, to a more market-oriented system."

Shortly after the PBoC’s move to devalue the yuan, we noted with some alarm that it looked as though China may have drawn down its reserves by more than $100 billion in the space of just two weeks. That, we went on the point out, would represent a stunning increase over the previous pace of the country’s reserve draw down, which we began documenting months ahead of the devaluation (see here, for instance). We went on to estimate, based on the projected size of the RMB carry trade unwind, how large the FX reserve liquidation might need to be to...

China is stirring up the U.S. Treasury market’s pot again. Early last week, sales from China were blamed by traders on why the rally in long-term Treasury debt was muted despite a sharp plunge in global stocks and crude oil prices. Tuesday, the movements in bond market prices again raised speculation that China was in the market selling bonds again to keep in check the bond market’s price strength. While the sales help explain why long-term U.S. bond yields have failed to drop sharply over the past few weeks, analysts and traders don’t expect yields to rise significantly. The bond...

David Scutt, Business Insider Australia August 26, 2015 The outlook for Chinese economic growth is not as bad as some commentators are suggesting, and while it is uncertain, it is certainly not collapsing. The view presented by Goldman Sachs' portfolio strategy research team, in a note released earlier this week, suggests that Chinese economic growth will recover in the final quarter of this year on the back of flexibility with fiscal, monetary, and reform policy. Here's Goldman on the recent slowdown in China's growth momentum: China growth has slowed meaningfully in recent months, as evidenced by the disappointing official data,...