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The Asia Thread

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July 24 (Bloomberg) -- Chinese banks may struggle to recoup about 23 percent of the 7.7 trillion yuan ($1.1 trillion) they’ve lent to finance local government infrastructure projects, according to a person with knowledge of data collected by the nation’s regulator.

About half of all loans need to be serviced by secondary sources including guarantors because the ventures can’t generate sufficient revenue, the person said, declining to be identified because the information is confidential. The China Banking Regulatory Commission has told banks to write off non-performing project loans by the end of this year, the person said.

http://www.businessweek.com/news/2010-07-23/chinese-banks-see-risks-in-23-of-1-1-trillion-loans.html

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don't think they've got the mother of all bubble. china has massive potential improvement in productivity and to GDP growth, latest m2 money supply in china is 17.6% data of this week and hasn't been over 20 for over 6 months, it did peaked at 30% last year after the stimulus but was only for few months. Now you get also 10% of GDP growth, 5% of PPI inflation and 3.5% of CPI inflation, these are not bubble numbers. The tricky thing is weather China can grow the production with global demand sluggish and weather they can sustain 10% growth for long.

The chart about housing value against gdp is not that important (by the way australia is also at 4 times), country with high saving rate have higher number (like in europe) and only a high number followed by low saving rate is dangerous

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Woooo Hooooo

A few minutes ago the Dow Jones released the following: "The Bank of Japan will consider taking additional easing steps to cope with a rising yen and falling share prices, the Sankei Shimbun reported in its morning edition." The BOJ will hold an emergency meeting policy meeting at 5 am GMT at which point the specifics of the easing measures will be announced.

http://www.zerohedge.com/article/boj-hold-emergency-policy-meeting-5am-gmt-additional-easing-announcement-expected-nikkei-sp-

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Buy AUD/JPY?

If the carry unwinds in panic? It'll go the other way. I'll stay out - its unchartered territory.

They are cactus lost decade two decades half century.

I'm amazed that the Americans are following their early 90s lead.

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I'm amazed that the Americans are following their early 90s lead.

If you were in charge and had caused the problem you might be feeling a little like you can't trust your own ideas as they caused the mess.

Perhaps you might be feeling like if you do anything you'll make it worse. Copying Japan at least means you have a chance of having a lost decade rather than a return to mud huts.

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If you were in charge and had caused the problem you might be feeling a little like you can't trust your own ideas as they caused the mess.

Perhaps you might be feeling like if you do anything you'll make it worse. Copying Japan at least means you have a chance of having a lost decade rather than a return to mud huts.

late reply.

True mate BUT Japan is a manufacturing juggernaut. The Americans do make some great stuff but for the last 2 decades have become more akin to consuming. Not totally but drifting away.

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This has probably been posted somewhere else, but here it is again- China is releasing CPI/PPI et al data on a Saturday as a special treat:

http://www.marketwatch.com/story/china-to-release-august-economic-data-on-weekend-2010-09-10

Saturday surprise- what's in the goody box?

Results out:

http://news.xinhuanet.com/english2010/china/2010-09/11/c_13490137.htm

CPI 3.5% annual (target 3%) and PPI @ 4.3% annual, a little slower in the latter part of the year. Potentially no IR rise on these results, analysts say.

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More China Doomsday fodder...

full story on bloomberg - makes for an interesting read.

Money, money everywhere. At least that’s what it feels like at the moment in China. Awash in luxury cars, condos and expensive jewelry, the Chinese are enjoying what looks to be an unstoppable boom.

But inflation figures due to be released tomorrow should give pause to those who assume China’s economy is on sound footing. To an extent few fully appreciate, China’s astonishing growth rates these past two years have been fueled by an even more astonishing expansion of its money supply, by more than 50 percent. Until now, the inflationary consequences have been largely camouflaged in the form of rising asset prices.

The focus (for me) has been on the prospect of US inflation... but China is looking like more and more like a house of cards. I wonder how many scapegoats will be executed when it collapses? It could have dire consequences for the political stability of the whole region if the Chinese economy implodes...

edit: This bit seems particularly relevant to Oz-world:

Asset Bubble

In reality, there is rampant inflation in China. It’s just showing up in asset prices. The new money that was created entered the economy as loans, mainly to fund investment in fixed assets. When it finally reached consumers, they bought tangibles, like property, instead of spending on consumer goods.

Asset-price inflation is tricky because it doesn’t feel like inflation. When the price of bread doubles, it feels like it’s getting harder to make ends meet. When condo prices double, it looks like smart investors are getting rich. But it’s only a matter of time before asset inflation starts working its way through the rest of the economy as broader price inflation -- and puts China’s policy makers in a serious bind.

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A new cold war, US vs China. CNBC. 19th Nov 2010

Just got back from the UK, plenty of China bashing in the media, something I don't see here at all. It's as if China is the new Russia - the enemy.

I'll expect the next James Bond film to include a Chinese economic warfare type of character.

Edited by Chimerica

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A new cold war, US vs China. CNBC. 19th Nov 2010

Just got back from the UK, plenty of China bashing in the media, something I don't see here at all. It's as if China is the new Russia - the enemy.

I'll expect the next James Bond film to include a Chinese economic warfare type of character.

Bernanke serves...

http://www.marketwatch.com/story/bernanke-turns-up-heat-on-china-currency-policy-2010-11-18?siteid=rss&rss=1

China returns with a passing shot. Love 15.

http://globaleconomicanalysis.blogspot.com/2010/11/china-renews-attack-on-bernanke-for.html

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Here is a good chart on China (I'll bet AK will broadcast it soon)

post-268-089358200 1295477877_thumb.jpg

still, I don't think that line is heading down jet

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John Garnaut subscribes to the theory that China is a big bubble of liquidity, which is flowing into lots of places - including commodities.

Runaway train on a collision course.

Runaway train on a collision course

JOHN GARNAUT

January 25, 2011

In the few weeks since the worst of the Queensland deluge the price of Australian fine wool has risen about 20 per cent.

There's no obvious reason except that China's liquidity-fuelled economy has stretched commodity markets as tight as a drum.

"There's been a lot of panic buying on reports of the floods," says Barry White, a wool industry consultant. "The impact won't be anything like they're expecting, but rumour is a big thing in China."

China, as with most commodities other than oil, now dominates the world wool market. It buys 70 per cent of Australia's clip. And Chinese buyers are keen and cashed up to beat any supply shock, real or imagined.

Wool used to be Australia's biggest export but last year's $2 billion in receipts look like small change. Last year Australia sold $43 billion of coal to the world, according to preliminary estimates by Kieran Davies at Royal Bank of Scotland.

And top spot on the export podium now belongs to iron ore. Our miners shipped $49 billion in iron ore last year, $19 billion more than in 2009, up 63 per cent.

The sheer force of Chinese urbanisation has caused prices for Australian commodities to roughly triple since the 1990s.

Australia's terms of trade - the country's international purchasing power - has doubled in that time. This roughly means we can buy twice as many imported cars and plasma TVs for each boatload of rocks that we sell.

By itself, this China price effect means Australia is 20 per cent richer than it was in the 1990s, without working any harder. And China's income gift to Australia is compounded by a tidal wave of investment, such as $35 billion in LNG plants at Gladstone.

The latest round of export price rises has not shown up yet in the data and investors and economists are yet to factor them in. But there is much more to come.

Chinese demand is so strong and Australia is such a dominant player in the world coal trade that the income lost through slashed Queensland production will be more than offset by rising prices.

And earnings from the new export champion, iron ore, are likely to smash even last year's record high.

Yesterday's Chinese spot market price for iron ore was just shy of $US186 per tonne, up 32 per cent since early October.

"You should see the amount of email queries I've had asking how much iron ore has been lost because of the floods in Queensland," says Ian Roper, commodities analyst at CLSA in Shanghai. Australia's iron ore mines are unaffected by Queensland's floods, being on the other side of the country.

The stratospheric iron ore prices will flow directly through to the profits of Rio Tinto, BHP Billiton and Fortescue over the first half.

"It's a liquidity-fuelled bubble," says Roper, noting that speculators have pushed Chinese port stockpiles from 69 million to 77 million tonnes (a record) in two months.

With copper, gold and wool prices all hitting multi-decade highs in recent weeks it seems that only a collapse in the Chinese economy could stop overall Australian export prices from smashing new records.

And this brings us to the question that should be keeping the world's policy makers up at night: how long can China's ultra-loose monetary policy settings continue?

There's really only two scenarios. In the first, inflation and/or asset price pressure will continue to build until they break a political threshold level, causing Beijing to smash it. Alternatively, China could regain control of monetary policy by appreciating or floating its currency.

Meantime, the unsustainable pattern of attempting to hold down the currency and inflation by "sterilising" the resulting surge in liquidity can continue for a while yet.

"You're trying to make water flow uphill, which you can do for a while but at some cost," says the World Bank's chief economist in China, Ardo Hansson.

For this year, rising export profits will continue to cascade through an Australian economy that was fully stretched even before the reconstruction program brought about by the Queensland floods. Interest rates will inevitably be dragged in the same direction, starting much sooner than people think.

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A new cold war, US vs China. CNBC. 19th Nov 2010

Just got back from the UK, plenty of China bashing in the media, something I don't see here at all. It's as if China is the new Russia - the enemy.

I'll expect the next James Bond film to include a Chinese economic warfare type of character.

5 strategic commodities, we want control.

Gold, Oil, Uranium, Grain, Rare Earths.

Very interesting.

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5 strategic commodities, we want control.

Gold, Oil, Uranium, Grain, Rare Earths.

Very interesting.

Not to mention european debt. They're not subtle.

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5 strategic commodities, we want control.

Gold, Oil, Uranium, Grain, Rare Earths.

Very interesting.

Interesting given that we are in Australia... and we've got all five (well, almost all five but we have heaps of coal and gas).

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Interesting given that we are in Australia... and we've got all five (well, almost all five but we have heaps of coal and gas).

whats Canada got :naughty:

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