Breaking: China moves to discuss bailout of Greece from IMF

Dumping the bonds would radically reduce the US customer base buying Chinese goods, more so when Chinas biggest customer, Europe is failing

Not a good idea unless China has enough self sustained customer base. But it would be an attack on Chinas own growth.

Although China tripped tripped the other day, then all of sudden fell back into 7% growth overnight.

originally posted by: wdkirk

originally posted by: oilNGO
na has all those US bonds. Maybe they could dump those?

Then again, who would buy the US bonds... Not even Soros wants them

They could but it's not enough to attack the US economy with. The US still holds the largest share of its own debt. Attacking us with reserves of our own money will get them nothing.

originally posted by: AugustusMasonicus

originally posted by: JeanPaul
It's not build on or as dependent on financial markets like the USA. China also has a crap load of money saved up.

And which a huge portion just evaporated in the lastest round of margin calls.

They have trillions. Still do.

They're not in debt like the USA.

originally posted by: AugustusMasonicus
Where are you getting your information?

China's Debt-to-GDP Ratio Just Climbed to a Record High; China's debt is still growing faster than its economy.

Talking about government debt. China's government is nowhere near the USG's debt level. Don't try to "school" me again. If you had a clue you'd understand that article you posted was talking about total debt. Corporate and household.

originally posted by: JeanPaul

originally posted by: AugustusMasonicus

originally posted by: JeanPaul
It's not build on or as dependent on financial markets like the USA. China also has a crap load of money saved up.

And which a huge portion just evaporated in the lastest round of margin calls.

They have trillions. Still do.

They're not in debt like the USA.

originally posted by: AugustusMasonicus
Where are you getting your information?

China's Debt-to-GDP Ratio Just Climbed to a Record High; China's debt is still growing faster than its economy.

Talking about government debt. China's government is nowhere near the USG's debt level. Don't try to "school" me again. If you had a clue you'd understand that article you posted was talking about total debt. Corporate and household.

Then of course you are aware that most of that debt is from local governments (17 trillion) and state owned companies is owned by the state. And those those massive banks if they fail, who has to bail them out again? Their is a reason economist look at total debt as being important. In Greece the national debt is not great but not the real problem it sits at about 300 billion. However Greece's real problem is its total debt to GDP ration is 172%. While I am glad you think things in China are great lucky for the world China's leadership see the problem and are addressing moving some debt into lower interests bonds, letting some companies just go bankrupt instead of keeping them afloat and getting deeper in debt, and tightening bank lending etc. Now this has a down side of slower growth and higher unemployment but, in China's eye the debt problem is big enough to make those sacrifices. School is now out.

originally posted by: JeanPaul
They have trillions. Still do.

If things were so peachy they would not have barred trading for the investor class.

Don't try to "school" me again. If you had a clue you'd understand that article you posted was talking about total debt. Corporate and household.

The fact that you discount the debt because it is corporate and household shows that you in fact need a bit more 'schooling', their corporate and household debt is entwined due to encouragement by the government for all citizens to buy corporate debt on margin. For those that are schooled this underscores the fact that this crisis is a bit more severe than just a typical market correction.

a reply to: JeanPaul

Actually when you compare debt to GNP china is in over 200% where the US is around 100%.

Secondly China has been caught lying about it overall debt, failing to report municipal debt, which was roughly around 1 trillion dollars. Even the IMF is now concerned about the new Chinese bank system they are pushing because of how china handles its monetary affairs and how non transparent they are. A recent example is China's announcement about their gold reserves and how a lot of entities question the claims.

originally posted by: AugustusMasonicus

originally posted by: JeanPaul
They have trillions. Still do.

If things were so peachy they would not have barred trading for the investor class.

Don't try to "school" me again. If you had a clue you'd understand that article you posted was talking about total debt. Corporate and household.

The fact that you discount the debt because it is corporate and household shows that you in fact need a bit more 'schooling', their corporate and household debt is entwined due to encouragement by the government for all citizens to buy corporate debt on margin. For those that are schooled this underscores the fact that this crisis is a bit more severe than just a typical market correction.

They're doing it on purpose to reform the economy. Whether or not this will succeed in the long run is up for debate. Of interest is the "Risks and buffers" section (A,B,C 12-18).

www.imf.org...
"B.
Domestic Risk Assessment
14.
Notwithstanding the rise in vulnerabilities, an abrupt adjustment in the near term is
unlikely, given China’s policy buffers. Cross country evidence suggests that credit booms of a similar size often led to sharp corrections (Box 5). However, in China the government still has the capacity to absorb shocks and prevent the kind of loss of confidence or sudden stop that have triggered major problems in other countries such as a deposit run, freezing up of the interbank market, collapse of the real estate market, or capital flight. Total public debt is relatively low; public sector assets are large (including foreign exchange reserves); domestic savings are high and foreign debt exposures low; capital controls limit the risk of capital flight; and the government retains substantial levers to control economic and financial activity. For these reasons, the probability of a hard landing in the near term is low. At the same time, repeated use of this policy space in particular, through credit financed investment stimulus risks compounding the underlying
vulnerabilities."

I repeat, according to the IMF report, "“Total public debt is relatively low; public sector assets are large (including foreign exchange reserves); domestic savings are high, and foreign debt exposures low; capital controls limit t he risk of capital flight; and the government retains substantial levers to control economic and financial activity.”

a reply to: JeanPaul

Nice of you to cite a paper from July.

Of 2014.



News flash, the margin calls started last month.

originally posted by: AugustusMasonicus
a reply to: JeanPaul

Nice of you to cite a paper from July.

Of 2014.



News flash, the margin calls started last month.

It highlights the governments ability to react. That's why I posted it. And that they weer almost expecting a bust after pushing dangerous levels of growth. Fact of the matter remains, China has different circumstances than the USA. They still maintain massive productive capabilities, have a large cushion and their financial markets aren't nearly as important as US financial markets are to the US economy.

China is attempting to massively reform their economy. They've been planning for market failures. And like I said they have no issue with prolonged market intervention. There's really no precedent for all this. These are new unseen territories so predictions aren't going to really matter. It's not like economists are able to predict much anyway.

Are you predicting the long term fall of China? What's your point? That "planned economies" will always fail? That's essentially what they're reforming. Trying to push more small business, trying to create a more consumer based economy which necessitates entrepreneurship on a larger scale.

The real threat to China is massive capital flight. This could happen if they succeed in reforming their economy but they have authoritarian aspects in play. They can subjugate labor and maintain a cheap industrial labor force while also pushing reforms in others sectors of the economy. None of this has ever been attempted. Not in Russia, not in the western world so nobody really knows what's going to happen.

originally posted by: JeanPaul
[
It highlights the governments ability to react.

Last year's news is just that. It is now irrelevant. If you have an article stating the same thing that is from THIS YEAR, I would be happy to read it, otherwise the remainder of your post is outdated opinion.

originally posted by: oilNGO
China has all those US bonds. Maybe they could dump those?

Then again, who would buy the US bonds... Not even Soros wants them

China's economy is basically all a lie.......Why build cities and malls and high rise apartment buildings no one lives or works in. This is done to meet growth estimates and they still can not meet them. Another poster mentioned the debt to GDP level in China......This really is bad and will come crashing in within the next 5 years I believe.



The US outlook.......You do not need to run faster than the bear.....Just the guy next to you. Many other countries will fail first.

originally posted by: AugustusMasonicus

originally posted by: JeanPaul
[
It highlights the governments ability to react.

Last year's news is just that. It is now irrelevant. If you have an article stating the same thing that is from THIS YEAR, I would be happy to read it, otherwise the remainder of your post is outdated opinion.

Of course you will ignore information that counters your silly attack on my post. My point was they have cushions in place. China is attempting a massive reform project. More decentralization, more entrepreneurs, more of a consumer based economy. We wont know the outcome for another ten years or so. Debt is a part of these reforms. Placing more capital in more peoples hands. How these people use these funds is another question. How they maintain long term growth around 7% is another question.

China isn't just going to "go away". It's the worlds second largest economy with massive productive capabilities in place. Right now retail sales are up as is factory output. How many Chinese citizens own stocks? Fewer than 10%. The finacial market crash simply isn't going to devastate the Chinese economy long term. No matter how much team USA nationalistic fervor you hold.

The larger risk is the long term reform plans themselves. Shifting China's economy to a more consumer based economy. When their productive capabilities begin to seriously decline that's when the real risk manifests. They're entering unprecedented waters.

I don't care either way, I'm more concerned about the strength of the US dollar (as in investor). China's plans to create a reserve currency and development projects with a development bank should be more concerning to people heavily invested in the US. If China can push development on the Eurasian content that would minimize US trade and impact the US dollar then we have something to be concerned about.

originally posted by: JeanPaul

Of course you will ignore information that counters your silly attack on my post.

Of course I will, it is outdated and non-topical. Tell me, did the article you cited factor in the margin calls? Mine did...