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The severity of China’s inventory overhang has been carefully masked by the blocking or adjusting of economic data by the Chinese government ”” all part of an effort to prop up confidence in the economy among business managers and investors.
Current Condition
Overall Business Conditions 46.76 (prior 49.73)
New Orders 46.57 (prior 52.32)
Production 43.33 (prior 49.03)
MoM Level Change
Overall Business Conditions-2.97 (prior -3.48)
New Orders -5.75 (prior -2.12)
Production -5.70 (prior -0.97)
With all the figures below 50 showing that the Chinese economy is shrinking further than last month . The official survey of China business sentiment will be release in one week .
The battle between the banks and steel traders also exposes flaws in the 4 trillion ($629 billion) stimulus round in 2008, and offers a warning to those calling for pumping more money into the system. At that time, Chinese banks threw money at the steel trade - a crucial cog in supplying the country's massive construction and infrastructure growth.
In one Shanghai courtroom, steel trading firm boss Li tries to fend off a fed-up lender. China Minsheng Bank, the country's eighth-biggest lender, is trying to recover 3 million yuan ($472,100) of loans it made to the trading firm.
When the bank recalled the loan in June, Li tried to sell two Shanghai apartments she had used as collateral. In a flat property market, she came up empty-handed.
Her plea for more time to repay is one of more than 20 court cases Chinese banks have taken against steel traders. The targets tend to be mainly smaller trading firms with fewer than 50 employees, as the larger state-backed steel firms have more cash reserves.
These traders are mainly based in and around Shanghai, a tight-knit community drawn from Zhouning in the southern province of Fujian. At its peak in 2009, some 12,000 steel trading companies were scattered across the city, accounting for close to 3 percent of Shanghai's GDP, according to the local business chamber.
By some estimates, the number of steel traders has fallen by half, as steel prices crumpled in the third quarter of 2011.
"The court cases you see are usually when things get desperate," said a loans official at a Shanghai branch of Bank of Communications, who asked not to be named because of the sensitivity of the subject. "We've had people go missing. Some have fled overseas, while others just take on a new identity and move somewhere else."
The owner of one of China's biggest steel trading firms, Yizhou Group, skipped the country with his wife and children after piling up about 1 billion yuan ($157 million) in loans to banks including Bank of Communications, the official said.
Calls to Yizhou were not answered.
In the Shanghai courtroom, lawyers for Minsheng Bank told Li after the hearing that banks were desperate to recall loans as they had heard of some borrowers going missing with tens of millions of yuan still owed.
"One trader fled to Australia after borrowing 23 million yuan, while others used their property as collateral to several banks at the same time " Li said, recounting what she'd heard from a lawyer. "So banks are very cautious and taking immediate action against borrowers if they don't repay."
More stimulis would be like pushing on a piece of spaghetti?
Hard landing.......for us too......as the 2 speed economy becomes one, again?
Commodity prices yoy
View attachment 48819
More stimulis would be like pushing on a piece of spaghetti?
Hard landing.......for us too......as the 2 speed economy becomes one, again?
Commodity prices yoy
View attachment 48819
Sean Brodrick @SeanBrodrick
You ever get the feeling that @zerohedge will only be satisfied when the Earth splits apart in a fiery doom?
speaking of zero......
tw@terring:
like that segway ?
Here's a 3-yr comparison chart of the Baltic Dry Index (BDI), Shanghai and the Aust Mining (XMM)
Notice how deadly accurate the BDI as a long term leading indicator.
And here's the kick - while the BDI had dropped 75% in 8 months from May 2010 to Jan 2011, Shanghai see-sawed but the Aust resources continued to rally up to the peak in April 2011.
I reckon the Big Boyz (int'l hedge funds) made squillions shorting RIO and BHP.
I reckon the Big Boyz (int'l hedge funds) made squillions shorting RIO and BHP.
Except they haven't cuz the short positions on them have been tiny all year.
Trembling Hand - Sorry if this is a really stupid question, but how can you tell the above?
Chinese manufacturing PMI declined to 47.9 in September, from 47.6 in August and the 11th consecutive monthly decline, according to HSBC/Markit. Export orders declined at the fastest rate in 42 months, whilst purchasing activity fell for the 5th consecutive month. Input and output prices continued to decline and businesses shed labour for the 7th consecutive month.
Though worldwide demand for solar panels and wind turbines has grown rapidly over the last five years, China’s manufacturing capacity has soared even faster, creating enormous oversupply and a ferocious price war.
The result is a looming financial disaster, not only for manufacturers but for state-owned banks that financed factories with approximately $18 billion in low-rate loans and for municipal and provincial governments that provided loan guarantees and sold manufacturers valuable land at deeply discounted prices.
China’s biggest solar panel makers are suffering losses of up to $1 for every $3 of sales this year, as panel prices have fallen by three-fourths since 2008.
GUANGZHOU, China ”” 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.
The glut of everything from steel and household appliances to cars and apartments is hampering China’s efforts to emerge from a sharp economic slowdown. It has also produced a series of price wars and has led manufacturers to redouble efforts to export what they cannot sell at home.
The severity of China’s inventory overhang has been carefully masked by the blocking or adjusting of economic data by the Chinese government ”” all part of an effort to prop up confidence in the economy among business managers and investors.
China's economy will likely expand by 7.7 percent this year, down from a May estimate of 8.2 percent, while the growth forecast for 2013 was cut to 8.1 percent from an earlier 8.6 percent.
As for the region as a whole, the World Bank now expects developing East Asia to grow by 7.2 percent this year and 7.6 percent in 2013, down from earlier estimates of 7.6 percent and 8.0 percent, respectively.
The representative of the International Monetary Fund (IMF) in Hong Kong recently said that China's economy has no risk of hard landing. He believes that when the economic downturn, the People's Bank could cut interest rates again, and the central needs not to launch massive economic stimulus measures.
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