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Chinese Financial System on the Brink of Collapse

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posted on Nov, 3 2012 @ 12:05 PM
You do realize that China is sitting on 3.3 Trillion in cash reserves, that they own the majority of rare earth metals in the entire world?

70 billion in bad debts doesn't even consume the interest owed.

That is all

posted on Nov, 3 2012 @ 12:07 PM

Originally posted by ressiv
in holland we had an topic on MSM about the ghost city's china had build (33) and need to be re-financed...
goes about trillions of dollars....

Yes, they keep building because it creates jobs. But it has to end sometime. The buildings are sitting empty and the loans have not been paid. Developers are slashing prices.

posted on Nov, 3 2012 @ 12:08 PM
China's business design is to flood the Worlds markets with cheep goods, and collapse everyone's markets. Could the United States have stopped it? You bet. But they didn't. China doesn't buy US debt for any other reason, but to make the Dollar Stronger. The US has manipulated China this whole time. I firmly believe this has been silent "economic"war leveled against them. It is the same as Japan, in the 80's. Many of our wars were not to secure Oil for the United States. It was designed to make sure the Iraqs of the World didn't let China get a free ride on oil. Just look at how China is engaged with Japan on a few small Islands. Why? Because of the oil there. They are dependent on it, as they grow.

posted on Nov, 3 2012 @ 12:15 PM

Originally posted by ChaoticOrder
reply to post by beezzer

I think you need to be more specific about what you mean when you say "collapse". There's a moderate chance that the loans being discussed will have a high enough default rate that it will result in a considerable debt crisis. But by no means would it collapse the Chinese banking system. The United States has ALREADY experienced a huge bubble implosion back around 2008, and that collapse was even worse than this one could be, judging by the numbers. But the United States did not "collapse" and the banking system is still as it was, with perhaps a few small changes. If you were saying this is being over-hyped, you are completely correct in my opinion.

To be honest, I'm not sure how this would affect their economy and infrastructure. We can't compare our recession to theirs because they have a vastly different societal structure.

T'is why I'm curious to see what would happen.

posted on Nov, 3 2012 @ 12:27 PM
reply to post by beezzer

Banks operate in nearly the same way all around the world, and when it comes to debt, well... debt is debt. The thing which can really tell you how damaging the crisis will be, is the amount of debt at risk of default. When you simply look at the figures, the extent of the these high risk loans is not terribly bad. It is certainly not to be scoffed at, because the amount at risk is now getting close to 100 billion... but it could be worse (as I stated already, the US student loan market has over $120 billion now at risk). This Chinese debt crisis will probably have some sort of noticeable impact, but it wont be monstrously devastating.
edit on 3/11/2012 by ChaoticOrder because: (no reason given)

posted on Nov, 3 2012 @ 12:29 PM
Chinas nominal GDP in 2011 was 7.29 trillion, matured and overdue loans 77.6 billion.

77.600 000 000/7.290 000 000 000 x 100 = 1,0644%

Roughly 1% of bad credits is going to collapse China's economy?

September’s figures suggest China’s economy will once again defy its doubters, who have long expected a dramatic investment bust. Growth is unlikely to slow further in this cycle. But nor will it return to the heady rates of 2010. China’s policymakers seem to have reconciled themselves to growth of 7-8%, not 9-12%, over the medium term. China’s nostalgic bulls will have to do the same.
the economist

edit on 3-11-2012 by talklikeapirat because: N° r in $

posted on Nov, 3 2012 @ 12:39 PM
Honestly speaking.....
The Gov will step in and 'control' it, like they do with the currency (RMB). Figures can be easily manipulated keeping a low key. Loose the money, loose the people as they say here (I'm based in China).
The apartment prices here are ALL CONTROLLED by local governments, doesn't matter about what the real market is displaying they will never accept a large loss. Guangdong gov makes 30-40% of their annual profit from developments but I feel they are starting to loose their grip.
Tons of new developments have popped up where I am with the intent of flogging them in bulk, this has failed this year with many developments still trying to sell the 1st phase while well into their 3rd building phase and actually reducing prices YES THAT's right Chinese developments reducing prices!!!
There's a block of land opposite me that construction as been 'abandoned' for the last 6 months, I guess they know to wait it out till they get their desired over inflated price.

Back to banks, Chinese LOVE 'doing business', take MASSIVE loans out dump it all in on their un-thought out pipe dream and see 20 other people doing exactly the same thing as they are doing right next to them. Business fails, banks can't chase them up.
Worst offenders are the state owned enterprises who hemorrhage money (mainly in the managers pockets) like Obama with absolutely free reign.

posted on Nov, 3 2012 @ 12:54 PM
The way I see it, everyone will eventually be effected by this systemic and global economic collapse. Some were first to deal with the mess, and either put correct policies in place and are on the up and up (Iceland), else they're just delaying the inevitable. Others have stalled the poo from hitting them just yet, but will be faced with some of the same tough decisions eventually.

China was doing great this last decade, but it may have been a bit more fluff than actual growth at the rate it seemed to be on paper. If that's the case, a correction is inevitable. Another factor to mention is that China has actual savings and very little debt for the size of it's economy and population, compared to practically every other nation! I think it's just that they got into centralized banking late in the game, and were a bit more wise about how they went about things from the get go. They are long range strategists.

We'll see how this all turns out, but anyone saying that China will sink or lead the way for this century simply is speaking out their arse. There's too many wild cards in the deck and it's far too early to tell. This, and the next decade seems as if it'll give us a more accurate picture of the true state of the US and China. Right now people are mostly guessing based on phony metrics. Too many real-world variables to take into account for these large nations to really know, from what I can tell. We both have issues to address, and seem to be mostly in "damage control" mode, full on.

posted on Nov, 3 2012 @ 12:56 PM
reply to post by crackerjack

I appreciate the feedback and insight.

To me, while others are blinded by the supposed "Miracle" I saw the Chinese do the same old Communist bit and that is if 10 of something is great then 100 of the same is even better. The Soviets fell into this quagmire with regards to building tractors and manufacturing toilet paper to keep their economy going meanwhile people wanted TVs and Stereos and needed food...

But in China, this communist mentality took the form of loans. If 1 Million good loans helped boost the economy then 20 Million questionable ones are better.
edit on 3-11-2012 by SLAYER69 because: (no reason given)

posted on Nov, 3 2012 @ 01:00 PM

Originally posted by ArcAngel
that they own the majority of rare earth metals in the entire world?

That's a Fallacy.

They have them tied up with contracts of all available locations that were up for leasing. The US, Canada, Argentina and many others are still sitting on unused and untapped rich locations.

posted on Nov, 3 2012 @ 02:17 PM
reply to post by SLAYER69

Very true on that for contract vs. ownership. That's an important point I sometimes lose sight of myself. I'd imagine every nation that entered World War II had contracts on this or that...somewhere else..before their whole world changed. I'll also bet, almost none of those pre-war contracts were worth more than a novelty sheet after 1945.

So... what is on paper today doesn't translate to direct control and the reality of having those resources mined, processed and in their possession. Indeed!

...if only the US can be more aggressive in seeking to compete for those contracts, eh? There is a finite amount of the stuff and we seem to have been almost passive as China locked up so much in long term contracts.

edit on 3-11-2012 by Wrabbit2000 because: typo

posted on Nov, 3 2012 @ 02:29 PM
reply to post by Wrabbit2000

At the moment. It's doesn't just benefit China. Remember, China partners with Corporations from around the world who do most of the manufacturing in China. So, Those Corporations have Western Investors who are making a mint on the items manufactured there and sold abroad using those minerals and China is still a very cheap place to manufacture for now.

That is, of course, until inflation raises it's ugly head and it inevitably will.....

posted on Nov, 3 2012 @ 02:45 PM
It looks as though China's idea of "Cowboy Capitalism," is hitting a bump in the road? People are scoffing at the amount, and attributing it too a mere blip on the radar? We must remember that the Chinese government controls the flow of information, and this is probably the financial data that the government was comfortable with releasing? It could be far worse than what is publicly known at this point? Here is the point, the Chinese ship is taking on water. The thing about debts is that they spread, and if not contained? They debilitate the economy over time.

We saw what the phony mortgage-backed derivatives did to the US economy, and elsewhere? It came very close to destroying it. The countries closely involved in that debacle are still reeling from it to this day. I think there is far more beneath the surface than what is being publicly reported about China's financial health? They could be sitting on a volcano? If China collapses? A lot of other countries are going to feel the pain, because many are overly exposed to that financial system through trade, business, and other facets of global economics. Meanwhile, in other news . . .

China Confronts Mounting Piles of Unsold Goods

After three decades of torrid growth, China is encountering an unfamiliar problem with its newly struggling economy: a huge buildup of unsold goods that is cluttering shop floors, clogging car dealerships and filling factory warehouses.

edit on 3-11-2012 by Jakes51 because: (no reason given)

posted on Nov, 3 2012 @ 02:52 PM

Originally posted by Jakes51
China Confronts Mounting Piles of Unsold Goods

After three decades of torrid growth, China is encountering an unfamiliar problem with its newly struggling economy: a huge buildup of unsold goods that is cluttering shop floors, clogging car dealerships and filling factory warehouses.

They'll eventually have to compete with their own past production. This can play out very badly if their economy is contracting as has already has been posted. While they will be trying to bolster production to maintain profits and jobs they wont want to eat the loss of whats sitting in the warehouses. They'll want to move it [at a loss] while simultaneously attempt to keep profitable production of more items up.

I'm not see how one could have both if they themselves will be flooding the market at a loss.

posted on Nov, 3 2012 @ 03:00 PM
reply to post by SLAYER69

Something is going on in China? From the cities being built unoccupied, alleged currency manipulation, problems with their exports business, and other things we probably don't know about? I think it is safe to say that the ship may be taking on water? We are getting glimpses of it by the information that trickles past the censors. However, we will never get the full story, because everyone knows that the Chinese government tells the world what they want them to hear. Lets see where this thing goes . . .
edit on 3-11-2012 by Jakes51 because: (no reason given)

posted on Nov, 3 2012 @ 03:12 PM

Originally posted by TheOneElectric
If anyone thought that China would be a serious player within the 21st century then all I have to say is:

Congratulations for completing the school of Zionist brainwashing and fear mongering. Everything China has is fake, empty, hollow and nonexistent.

Carry on.

If they were in a hole like the rest of the world, then yes, I would agree. But you have to take into consideration that China has vast resources, and the USA has $16 TRILLION of debt. The USA imports billions of $'s worth of products from China, numerous US corporations have interests there and plenty of your largest banks have massive chunks of their cash invested in this Chinese smokescreen too.

If the rest of the world were rosy and doing fine, your point would stand, but we have a Euro on the point of collapse, several EU nations needing more bailout money, the UK groaning under increasing austerity and public backlash, and the USA hasn't even STARTED their cuts and Austerity measures yet.

When you take into consideration that all nations are failing economically, someone has to come out on top, and that is STILL either China or Russia (or both).

I never thought of it as a "Zionist" thing either. How do Zionists benefit from convincing the world that China is the next global superpower? That just doesn't make sense.
And even if it were true, they've obviously failed, because no MSM is talking about it, and if you ask any layman in the street about who will be the next global superpower they'll look at you with a blank stare before going back to watching American Idol and stuffing their face with burgers.

Just because we are aware of these scenarios and possible catastrophes coming down the line, doesn't mean the masses have a clue.

As for the OP, I think there have been reports from plenty of people over the last five years warning of the collapse of the Chinese property bubble. This is one of the biggest bubbles the world has ever seen, they've been building out of control for a decade, with extreme corruption the likes of which we've never seen before.

The fact that anyone considers this a surprise is in fact the real surprise in my opinion.

So, what is going to collapse first? Will the Euro collapse when Spain finally admits that it's bankrupt (another property bubble there) or will it be China taking the world to hell in a hand-basket?

posted on Nov, 3 2012 @ 03:18 PM
reply to post by detachedindividual

I've argued against this point time and time again.

The numbers are backed by physicals, one way or another. If they're backed by a belief, and people call shenanigans, then the story is over.

That's not the case with the US, because we have the military will to enforce a pushing of our currency through trade policies, backed by military might.

So if this chapter of the story ends, the western world can get a restart, and how China reacts is up to them. It matters more which "neutral" or "enemy" countries side with China, and how much sway their group of friends ends up having which will be proportionate to the slice of the global economic pie they hold in real world physicals.

posted on Nov, 3 2012 @ 04:33 PM
reply to post by SLAYER69

You know, your past post here triggered an epiphany about this situation for me. You're absolutely right and I've been looking at this the wrong way..... Like many, I've been looking at a mere trillion in Chinese Debt vs what is described as Foreign reserves (terms can cover many things for reality of course) over 3 trillion. This compared to our 16+ trillion in debt. Their society and way of Governance is totally foreign to my thinking is why I think I missed it...

Tell me though, if this doesn't make sense?

However they entered the crisis with 1 trillion and change for debt...unlike us..they can't really get much deeper to draw much more, even if they HAD to for survival. I mean, the U.S. can peddle T-Bills and Bonds till dooms day, literally, and some schmuck out there will still believe they could all be cashed at once somehow ( exists to back them) and buy more. It;s how we have numbers this large now, in a fair % of it.

Chinese though? Would they START the process of buying their own nation's debt as a routine thing when it hasn't been a part of the scenery in society for their entire lives? It's been part of history here..just think War Bonds right up to Patriot Bonds after 9/11. The boat has sailed for getting debt from other nations....China has the money _at the moment_ one else DOES, and that's the whole point. If China does stumble, they have no one to grab for help. They go nose first, don't they?

posted on Nov, 3 2012 @ 05:21 PM

You all don't get it, do you?

China is using paper money to buy anything of physical value. Especially gold. They're the only ones that will be left standing when this is over. Overdue loans? Who cares! They want the default to happen. You guys want more paper? Have it! Hell, the amounts we're talking don't even need to expense the cost of linen and ink. Nope, just some guy punching numbers into a computer.

edit on 3-11-2012 by GreenGlassDoor because: Link borked.

posted on Nov, 4 2012 @ 05:17 AM
This is quite interesting. I will be looking into this more, although I have doubts that the government would allow this to happen. There are ways around collapse. Just look at what happened here in the US. Also, it is a myth that the Mayans said the world would end. I don't know if that is what you were implying, but I just thought I would mention that.

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