THE GREAT BIG CHINA THREAD

[interestrateripoff]

http://www.zerohedge.com/news/2014-01-02/guest-post-pollution-threatens-chinas-food-security

A Reuters report this week noted that nearly 3.33 million hectares (eight million acres) of Chinese farmland are too polluted to grow crops. The article, which was re-posted by the state-run China Daily news site, quoted Wang Shiyuan, China’s vice minister of land and resources. Wang says that the government is determined to address the issue of polluted farmland, and will commit “tens of billions of yuan” each year to help return the land to a usable state.

Food security is a major concern for Chinese leaders, and worries over this issue already had the potential to severely slow down other planned reforms such as urbanization. The announcement on China’s pollution levels further complicates the balance of preserving farmland and speeding up urbanization. Wang Shiyuan noted that the amount of polluted land represents nearly 2 percent of the country’s arable land, which is not something the Chinese government can ignore. China’s per capita arable land area is already less than half of the world average — the country simply can’t afford to lose any more land to pollution.

China’s government wants to ensure enough arable land is left reserved for farming, and the large swath of polluted fields cuts into that amount. Xinhua reports that China’s arable land survey counted about 135.4 million hectares (334.6 million acres) of farmland — but after removing from that count land reserved for “forest and pasture restoration” as well as land too polluted for crop-growing, the “actual available arable land was just slightly above the government’s red-line” of preserving 120 million hectares (296 million acres) of usable farm land. In other words, pollution is presenting a dangerous threat to one of the government’s highest priorities.

This presents a tough choice for Chinese leaders: let the land lie farrow and risk disrupting food supplies, or allow crops to be grown on tainted soil. Wang’s remarks show the government is leaning towards the former. Tainted crops have already caused scares among China’s citizens. A report by Guangzhou in May found that nearly half the rice in the cities’ restaurants had excessive levels of the heavy metal cadmium. The city’s residents were outraged when the report was published. The rice in Guangzhou was linked to polluted plots in Hunan province, which produces 11 percent of China’s total rice each year. Caixin published an article arguing that cover-ups by both local and provincial governments allowed the problem to spread before it exploded into the public consciousness in late spring 2013.

A food crisis looming or does China need a conventional war to avoid starving people?

[sharper]

http://www.zerohedge.com/news/2014-01-02/guest-post-pollution-threatens-chinas-food-security

A food crisis looming or does China need a conventional war to avoid starving people?

My understanding is China is still very backward in agriculture - which means a lot of room to increase yields through capital investment on the same land

[Saving For a Space Ship]

My understanding is China is still very backward in agriculture - which means a lot of room to increase yields through capital investment on the same land

Haven't they poisoned 20% of their land & rivers with lack of environmental / pollution laws ?

[interestrateripoff]

http://www.zerohedge.com/news/2014-01-06/head-chinas-railway-company-commits-suicide-first-graft-probe-casualty

Bai Zhongren, the president of state-run China Railway Group - the state-owned engineering giant behind many of the country's largest railway projects - committed suicide over the weekend. As SCMP reports, Bai is among several senior railway officials and executives who have committed suicide since corruption scandals implicating the senior railway officials began to come to light three years ago.

However, there have been no direct links between China Railway Group and the corruption cases (yet); but Chinese courts are about to hand down verdicts for Zhang Shuguang, a former deputy chief engineer of the now-defunct Ministry of Railways, and Ding Shumiao, a businesswoman with close tie with disgraced former railway minister Liu Zhijun. Xinhua quotes a colleague as saying that part of the cause of Bai's depression might be the heavy debts that his company has run up.

..

By the end of October, 2013, China Railways Group had total assets worth 626.5 billion yuan, and total outstanding debts of 531.9 billion yuan, with a debt-to-asset ratio of almost 85 per cent, according to the company's Q3 filings.

Unless the total assets have been fudged the outstanding debts don't appear too large consider some western company debt levels. Unless of course the debt figure is inaccurate.

[interestrateripoff]

http://www.bloomberg.com/news/2014-01-19/china-s-2013-new-home-sales-to-exceed-1-trillion-record-high.html

China’s new home sales last year exceeded $1 trillion for the first time as property prices in cities the government considers first tier surged in the absence of more nationwide property curbs.

The value of new homes sold in 2013 rose 27 percent from 2012 to 6.8 trillion yuan ($1.1 trillion), National Bureau of Statistics said in a statement today. New-home prices in December climbed 20 percent in Guangzhou and Shenzhen from a year earlier, and jumped 18 percent in Shanghai and 16 percent in Beijing, the bureau of statistics said Jan. 18.

“Clearly, the real estate market in China remains hot,” Dariusz Kowalczyk, a senior economist and strategist at Credit Agricole CIB, said in an e-mailed reply today. “Urbanization and investment demand are leading to rising sales volumes, while prices continue to gain. China’s growth remains heavily dependent on the real estate market.”

Premier Li Keqiang hasn’t imposed additional nationwide measures to cool the market since his predecessor Wen Jiabao stepped up a three-year campaign in March, ordering higher down payments and interest rates for second-home loans in cities with “excessive fast” price gains. Instead, Li has left it up to individual cities to impose their own curbs, with at least 10, many of them provincial capitals, tightening local property policies since November.

Property is the only way to get rich..... I wonder how many of these homes will still be standing in 20 or 30 years time.

[zugzwang]

http://www.bloomberg...ecord-high.html

Property is the only way to get rich..... I wonder how many of these homes will still be standing in 20 or 30 years time.

So much for the PBoC getting a handle on credit creation over the past 12 months! The Chinese Ponzi is running faster than ever.

[Ash4781]

The Telegraph has a nice chart of China's gdp. They have managed to achieve a plateau of stabilised gdp growth. Other commentators just say the numbers are fictional.

[Will!]

Good analysis by Robert Peston here.

Also this

But some observers are sceptical about the latest figures.

Euan Stirling, investment director of UK equities at Standard Life Investments, told the BBC: "There's a broad belief that the growth rate is below that of the 7.7% published this morning - it's probably nearer 4% or 5%."

Underlying economic activity levels, such as industrial production and power demand figures, suggest lower growth rates, he said.

[interestrateripoff]

http://www.bbc.co.uk/news/business-25822544

China's central bank has injected fresh liquidity into the country's large commercial banks ahead of the Lunar New Year holiday later this month.

The bank did not say how much cash it injected, but said the move was aimed at ensuring the "stability" of the monetary market ahead of the holidays.

The Lunar New Year is China's most important festival and sees increased demand for cash among consumers.

The move also comes as China's key interbank lending rate rose on Monday.

The seven-day repurchase rate, a key gauge of liquidity among banks, rose to nearly 6.5% on Monday, up from 4% earlier this month.

The People's Bank of China (PBOC) said it had injected the funds via short-term liquidity operations on Monday.

These operations are generally conducted by the central bank with individual lenders behind closed doors.

No liquidity crisis in China!

[interestrateripoff]

China's princelings storing riches in Caribbean offshore haven

More than a dozen family members of China's top political and military leaders are making use of offshore companies based in the British Virgin Islands, leaked financial documents reveal.

The brother-in-law of China's current president, Xi Jinping, as well as the son and son-in-law of former premier Wen Jiabao are among the political relations making use of the offshore havens, financial records show.

All communists together....

[interestrateripoff]

http://www.zerohedge.com/news/2014-01-23/china-bank-run-beginning-farmers-co-op-unable-pay-depositors

While most of the attention in the Chinese shadow banking system is focused on the Credit Equals Gold #1 Trust's default, as we first brought to investors' attention here, and the PBOC has thrown nearly CNY 400 billion at the market in the last few days, there appears to be a bigger problem brewing. As China's CNR reports, depositors in some of Yancheng City's largest farmers' co-operative mutual fund societies ("banks") have been unable to withdraw "hundreds of millions" in deposits in the last few weeks. "Everyone wants to borrow and no one wants to save," warned one 'salesperson', "and loan repayments are difficult to recover." There is "no money" and the doors are locked.

The locked doors of one farmers' co-op...

The liquidity crisis just got worse?

[interestrateripoff]

http://www.zerohedge.com/news/2014-01-23/china-1-1-77-gdp-growth-and-dont-argue

With China's shadow-banking system turmoiling and data not at all supportive of the same kind of growth investors are hoping for, some were surprised when China's GDP magically turned out at the 7.7% expectations deemed acceptable by the government. As Xinhua reports, not all is as it seems.

China's GDP amounted to 56.9 trillion yuan (9.3 trillion U.S. dollars) in 2013. However, the aggregate of the provincial GDP figures, which were independently calculated and released, was about 2 trillion yuan more than the 56.9-trillion-yuan figure arrived at by the NBS, even though three of the 31 localities that were yet to release the figures were not included.

This has aroused suspicion (just as we saw with the PMI data in the past) that some growth-obsessed local officials have cooked the books.

Via Xinhua,

...

For 2011, the aggregate GDP figure of all localities was 4.6 trillion yuan more than the NBS tally of 47.1 trillion yuan. In 2012, the aggregate figure was 5.76 trillion yuan higher than the total of 51.93 trillion.

...

"This is an old problem which recurs every time the data is released. The gap is mainly caused by duplicating calculation," Zhang Liqun, researcher at the Development Research Center of the State Council, told Xinhua.

Overlapping calculation often occurs when a big company has many subsidiaries, Zhang explained. In this case, the added value of the subsidiaries tend to be double calculated.

...

"In this case, overlapping calculation is unavoidable," he added.

If I just keep adding up my bank accounts together multiple times I'll be a millionaire!

[interestrateripoff]

http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/10611931/The-15-trillion-shadow-over-Chinese-banks.html

Drawing attention to the problems at an individual bank is never likely to make you popular, but calling time on an entire financial system is another thing entirely.

For eight years, until her resignation last month, Fitch banks analyst Charlene Chu has done just that, warning of the impending collapse of China’s debt-fuelled bubble.

Born and raised in America and a graduate of Yale, she has claimed in painful detail that China has embarked on an unprecedented experiment in credit expansion that far exceeds anything seen before the financial crisis that rocked Western markets six years ago.

China's looming banking crisis explained.

[interestrateripoff]

http://www.zerohedge.com/news/2014-02-02/chinas-epic-skyscraper-construction-spree-harbinger-crash

If the Barclays Skyscraper Index, which posits bursts of skyscraper construction are a harbinger of great economic collapse and market crashes, is accurate, then the world is in for a, well, world of pain. And nowhere more so than in China.

While for nearly a century the undisputed leader in the constuction of massive, phallic-looking, mega-buildings that reach for the skies was the US, over the past decade the baton has undpisutedly shifted to the middle east, and specifically the Arab Emirates and Saudi Arabia, which currently house the top and second tallest skyscrapers in the world. The visual progression of the title holder for world's tallest building is shown on the chart below.

[Eddie_George]

Hoarding of commodities that would make an investment bank proud:

More than half of the world's cotton is stored by the state-owned China National Cotton Reserve Corp.

When China started buying up cotton in 2011, the idea was to put the brakes on plunging prices. It also set a floor on prices for raw cotton. Flash forward three years: Prices are way below what they were when China’s mass buying began. And now China is sitting on a mountain of cotton for which it paid way too much.

Meanwhile, China’s economic growth has continued to slow, and the domestic clamor for cotton has quieted, so China would like to to unload a good portion of its reserve. The problem is, it’s asking for prices that are way higher than what’s being offered on world markets. So even China’s domestic mills are forced to import raw cotton from abroad, instead of from the strategic reserve (or, as much as they can, given China’s import quotas.)

http://modernfarmer.com/2014/02/china-hoards-half-worlds-cotton-supply/

[happy_renting]

Hoarding of commodities that would make an investment bank proud:

http://modernfarmer.com/2014/02/china-hoards-half-worlds-cotton-supply/

The Chinese thought they had the market stitched up. The markets will cotton on to what is happening. Perhaps you should start a new thread.

[Eddie_George]

The Chinese thought they had the market stitched up. The markets will cotton on to what is happening. Perhaps you should start a new thread.

Very good!

[buyerbeware]

The one thing I notice is the price of tee shirts and jeans haven't risen much over the years.

[interestrateripoff]

China Services PMI Slides To Lowest Since Aug 2011; 2nd Lowest On Record

China's Liquidity Crisis Is Not Over: 1-Day Repo Jumps 127bps

[R K]

http://english.caixin.com/2014-02-25/100643057.html

(Beijing) – Analysts have been abuzz over recent signs that some say bode ill for the property market, especially in small cities.

Units in at least two residential complexes in Hangzhou, the capital of the eastern province of Zhejiang, have been put on sale at steep discounts. Haitong Securities says the discounts were up to 20 percent.

Homebuyers who bought units before the promotion swamped sales offices over the weekend, demanding the developers refund the difference.

Ads at one of the communities, called Beihai Park, show the homes on sale for an average price of 15,800 yuan per square meter, compared with 19,000 yuan per square meter before the promotion. That means a 100 square meter apartment cost nearly one third of a million yuan more before the sale.

Several other developments in the city reportedly have also started promoting sales through discounts.

In Changzhou, 200 kilometers to the north of Hangzhou, one complex whose units went on sale on February 21 is available for 7,000 yuan per square meter, down 40 percent from the average price in its neighborhood.

Opinions diverge over whether other developers will follow suit and trigger a collapse in home prices.

Crossing the river by feeling the stones or

Give me my f*cking money back you b*stards!!

[wonderpup]

Homebuyers who bought units before the promotion swamped sales offices over the weekend, demanding the developers refund the difference

To me this kind of reaction is symptomatic of a rather dangerous mindset. If this happened in the UK people would grumble about it but the idea that they would demand or expect to get a refund would not occur to them- (unless they had only completed very very recently.)

If, as seems the case, property in china is seen not only as a speculative investment but also as a store of value ( Which seems, of course a complete contradiction- until you remember that In China- as in the west before 2008- property only ever goes up) then any drop in property prices would be viewed the same way by them as a bank account 'reset' might be seen in the UK.

People would be outraged if the UK banks decided to slice 20% off their deposit accounts- no matter how much trouble those banks might be in. So if three generations of a chinese family had placed their savings in the store of value they seem to imagine property represents, and those property values fall there will be outrage there too.

And in a state where political legitimacy is derived completely from the ability to guarantee ever growing prosperity a property crash in china could be really dangerous to the ruling elites.

[interestrateripoff]

http://www.bloomberg.com/news/2014-02-26/crisis-gauge-rises-to-record-high-as-swaps-avoided.html

China’s credit-market gauges are triggering alarm bells, as banks grow cautious in lending to each other while investors prefer the safest government bonds.

The spread between the two-year sovereign yield and the similar-maturity interest-rate swap, a gauge of financial stress, reached 121 basis points on Feb. 19, the widest in Bloomberg data going back to 2007. Two days later, the cost to lock in the three-month Shanghai interbank offered rate for one year reached an eight-month high of 94 basis points over similar contracts based on repurchase agreements, which are considered safer because they involve government securities as collateral.

Billionaire investors George Soros and Bill Gross have drawn parallels between the situation in China now and that in the U.S. before the 2008 financial crisis, when traders gauged lending appetite by monitoring the difference between the London Interbank Borrowing Rate and the overnight indexed swap. Premier Li Keqiang’sefforts to curb leverage in the world’s second-largest economy by driving up borrowing costs need to be handled carefully to avoid wrecking confidence in the financial system, according to Nomura Holdings Inc.

I'm sure it's all contained....

[interestrateripoff]

http://www.bloomberg.com/news/2014-02-25/china-faces-lost-decade-as-stocks-echo-japan-chart-of-the-day.html

China’s stock market is turning Japanese.

The CHART OF THE DAY shows the Shanghai Composite Index is repeating a pattern in the Nikkei 225 Stock Average during the 1980s and 1990s. The Japanese gauge tumbled as much as 80 percent from its 1989 peak as a collapse in home prices hobbled the nation’s financial system and led to a decade of tepid economic growth. The Shanghai index has dropped 60 percent since the end of 2007, erasing almost $2 trillion of market value.

China’s lending surge over the past five years has evoked comparisons to the debt growth in Japan before its lost decade. Credit in the biggest emerging economy rose to 187 percent of gross domestic product in 2012 from 105 percent in 2000, compared with Japan’s increase to 176 percent in 1990 from 127 percent in 1980, according to JPMorgan Chase & Co.

Is everyone turning Japanese? I'm sure the Chinese will love that analogy!

[fluffy666]

Hoarding of commodities that would make an investment bank proud:

http://modernfarmer.com/2014/02/china-hoards-half-worlds-cotton-supply/

Quoth the Catch-22:

In typical Catch-22 satirical fashion, Minderbinder's business is incredibly profitable, with the single exception of his decision to buy all Egyptian cotton in existence, which he cannot unload afterwards (except to other entrepreneurs, who sell the cotton back to him because he simply ordered all Egyptian cotton) and tries to dispose of by coating it with chocolate and serving it in the mess hall. Later Yossarian gives Minderbinder the idea of selling the cotton to the government, since "the business of government is 'business'."

http://en.wikipedia.org/wiki/Milo_Minderbinder

[TheCountOfNowhere]

http://www.bloomberg...ps-avoided.html

I'm sure it's all contained....

At least we know where it started this time.

The gold price chart is interesting....golds been on the rise in the last month or so since people got jittery about china.

As i've said before, when the london bubble burst the UK house price bubble bursts. If the London bubble is based on easy Chinese debt, this could be the final trigger point that forces the English to face reality about their debt based housing pyramid.

I do love a good credit crunch, me.

Edited February 26, 2014 by TheCountOfNowhere