20th+

Saturday, July 24, 2021

21-9-19 [comment, details not verified] ""Official debt for China is $7.18 trillion. Add to that the $25trillion that has already been bailed-in via Bank deposits = $32.18 trillion. GDP is acknowledged as overstated by anywhere from 40-70%. Conservatively that’s a Government debt of 400% of “real” GDP. Southeastern Asian interest rates of 5-10% would obviate that interest alone will cost more than half of GDP. Totally unsustainable. This is why foreign travel, purchases and money transfer is all but impossible. Exits are all closed.""

The Evergrande Group or the Evergrande Real Estate Group (previously Hengda Group) was founded by Xu Jiayin in the southern Chinese city of Guangzhou in 1996. In October 2009 the company raised $722 million in an initial public offering on the Hong Kong Stock Exchange. The holding company of the group is incorporated in the Cayman Islands. Its headquarters are in the Excellent Houhai Financial Center in Nanshan District, Shenzhen.

BlackRock, Inc. is an American multinational investment management corporation based in New York City. Founded in 1988, initially as a risk management and fixed income institutional asset manager, BlackRock is the world's largest asset manager, with just over $9 trillion in assets under management as of July 2021. BlackRock operates globally with 70 offices in 30 countries and clients in 100 countries.

Evergrande is China's second-largest property developer by sales, making it the 122nd largest group in the world by revenue, according to the 2021 Fortune Global 500 List. It is based in southern China's Guangdong Province, and sells apartments mostly to upper and middle-income dwellers. In 2017, Evergrande stocks, share price, profits and revenue, surged to almost three to four times in value, propelling founder Xu Jiayin to one of China's richest men, as well as one of the wealthiest people in Asia. In 2018, it became the world's most valuable real estate company.

In August 2020, BlackRock received approval from the China Securities Regulatory Commission to set up a mutual fund business in the country. This makes BlackRock the first global asset manager to get consent from China to start operations. In January 2020, PNC sold its stake in BlackRock.

On August 2021, the Financial Times reported that Evergrande Group is facing a record number of cases filed by contractors in Chinese courts as pressure mounts on the company's management to reduce its $300bn in liabilities, including around $100bn in debts.

In recent years Chinese property developers like Evergrande and Dalian Wanda have made forays into "alternative, income-generating businesses away from the property market". For example, Evergrande has expanded into solar panels, pig farming, agribusiness, and baby formula.

The firm has developed projects in over 170 cities in China. It is one of the 10 largest real estate developers in Mainland China, and one of the five largest real estate developers in Guangdong Province—the other four being Country Garden, Guangzhou R&F Properties, Hopson Development, and Agile Property.

Evergrande Group currently owns 45.8 million square metres of development land and real estate projects in 22 cities, including Guangzhou, Tianjin, Shenyang, Wuhan, Kunming, Chengdu, Chongqing, Nanjing, Zhengzhou, Luoyang, Changsha, Nanning, Xian, Taiyuan, and Guiyang. in Mainland China, which ranks second among the Mainland real estate developers, just after Country Garden.

Evergrande Crisis, XiXiP's Economic Strategy

23-9-24 $6.5T Problem: BRI, Unproductive, Decaying Infrastructure | EcEx > .

23-1-23 Xina’s Two-Year Tech Crackdown Winds Up | WSJ > .

23-1-20 Xi's Biggest Errors - Kevin Rudd | Update > .

22-10-27 Xina's Economy 60% Smaller Than Claimed - Macro > . skip > .

22-10-27 GDP Deflator - Macro > .

22-10-20 XiXiPee Congress Final Day - Hu Jintao "Removed" - Update > .

22-10-20 XiXiPee Congress Day 3 - Update > .

22-10-18 XiXiPee Congress Day 2 - Update > .

22-10-17 XiXiPee Congress Day 1 - Update > .

22-8-25 Xi vs Li: Xina’s dual-leadership after the 20th Party Congress? - Lei > .

22-8-3 Housing Crisis Pulls Down China’s Huge Steel Industry | Pelosi | Update > .
22-4-21 Fake data re Chinese economy: GDP, import-export, unemployment - Lei > .

22-3-28 China's Economic Rise—End of the Road - cfr > .

22-1-23 China’s Domestic Drivers | Kevin Rudd - geopop > .

GDP is Not a Perfect Measure of Economic Well-Being - Many Lessons > .

Impact of Mounting Sovereign Debts - "Autodidact" - Goodfellows > .

21-9-20 China is not a Modern Miracle | Anne Stevenson-Yang - geopop > . (full)

2021 Xi Presents his Own Ideology as Natural Next Path. Deng Despised | Digging > .

> Xitting the Wall - Xina's Economic Decline >>

China's Increasingly Totalitarian Economy - Weighs >> .

China's Secretive Economy - enDürer >> .

Recession, Depression, Crisis - anffyddiaeth >> .

CCP - 21stC Propaganda ..

CCP - Socioeconomic Inflexibility ..

CCP Amplifies Control-Freakery ⇻
CCP Crackdown on Business ..

CCP Expansionism ..

CCP's pragmatic preparations for global dominance ..

CCP Pressuring Chinese Students in Oz ⇻

CCP's Naval Ambitions - PLAN ..

CCP's Tech Seizure ..

China's Cracks ..

China’s Economic Reckoning ..

European Trade to Xi's Imperialism ..

Evergrande Bubble Blowout ..

Evergrande Crisis, CCP's Economic Strategy ..

Repressive Authoritarianism - China ..

Wumaos - 50 Cent Party ..

Xi-Stan Indoctrination ..

χ Xinsanity ..

In economics, moral hazard occurs when an entity has an incentive to increase its exposure to risk because it does not bear the full costs of that risk. For example, when a corporation is insured, it may take on higher risk knowing that its insurance will pay the associated costs. A moral hazard may occur where the actions of the risk-taking party change to the detriment of the cost-bearing party after a financial transaction has taken place.

Moral hazard can occur under a type of information asymmetry where the risk-taking party to a transaction knows more about its intentions than the party paying the consequences of the risk and has a tendency or incentive to take on too much risk from the perspective of the party with less information. One example is a principal–agent problem, where one party, called an agent, acts on behalf of another party, called the principal. If the agent has more information about his or her actions or intentions than the principal then the agent may have an incentive to act too riskily (from the viewpoint of the principal) if the interests of the agent and the principal are not aligned.

In the case of Chinese lending markets moral hazard underpinned everything. Chinese regulators have quite deliberately decided not to bail out Evergrande with the goal of transforming (and improving) the financial system. There is a real goal in China to move away from unproductive growth and focus on real growth. This can even be seen in the recent crackdown on Chinese tech companies.

In economics, a country's current account (balance of payments) records the value of exports and imports of both goods and services and international transfers of capital. It is one of the three components of its balance of payments, the others being the capital account and the financial account. Current account measures the nation's earnings and spendings abroad and it consists of:

the balance of trade,
net primary income or factor income (earnings on foreign investments minus payments made to foreign investors), and,
net unilateral transfers, that have taken place over a given period of time.

The current account balance is one of two major measures of a country's foreign trade (the other being the net capital outflow). A current account surplus indicates that the value of a country's net foreign assets (i.e. assets less liabilities) grew over the period in question, and a current account deficit indicates that it shrank. Both government and private payments are included in the calculation. It is called the current account because goods and services are generally consumed in the current period.

If you are a rapidly-growing developing country and you are significantly under-invested and have insufficient domestic savings to meet those investment needs (which is the typical definition of a developing country) then a high domestic savings rate is optimal. That was what China had in the 80s and 90s = very low levels of investment so that high savings rate poured savings into investment, which which caused growth to rise very rapidly, which caused household income to rise very rapidly.

The current problem is that China is now over-invested. So the CCP is trying to reduce the investment rate. But the current account surplus is simply savings minus investment. So, if you try to reduce investment without reducing savings, your current account surplus goes up. In the case of China, clearly the world cannot absorb a rising Chinese trade surplus and China recognizes that they're trying to bring the surplus down. So they celebrate every time imports rise faster than exports. However, the problem is that in order to do that you've got to bring the savings rate down, and there are three methods:

1) you can allow unemployment to soar, which they don't want,

2) you can allow debt to soar, which is what they've had to deal with, or

3) you can raise the consumption share of GDP by increasing household income, but that's the hard part because increasing household income requires transfers of income from the government sector, mostly local governments, to the household sector.

Politically, such a transfer is very, very hard to accomplish. So it's all different facets of the same problem.

Comment 1: "Just like Evergrande, Huarong Asset Management “was” placed number 102 in World's Largest Banks by assets ($250 billion USD). Huarong’s income dropped 90+% from 2017-2020. Chinese Auditors are still bamboozled by the problems uncovered with SOE’s loans which are endemic In Chinese Banks. While it will be imperative for China to keep these defaulting loans out of the spotlight, it clearly demonstrates how bail-ins have taken place via SOE’s (state owned enterprises). Fitch ratings shows the disturbing trajectory of Bond defaults of Chinese SOE’s. Very conservatively speaking Bailed-in bank deposits = Half of all $50+ trillion (equivalent USD) of all Chinese Banks. Global traders have rejected RMB as a trading currency and with the property collapse Chinese depositors will reject domestic property, businesses and shares. It is well-known that CCP have stopped all OVERSEAS invest/spending including personal consumption holidays or physically taking Hard currency, precious stones & metals overseas. IE :-COVID-19 stopped the Annual 140 million Chinese overseas trips taken up to 2019. So, $50+ trillion Chinese Bank “deposits” will now stay in Banks-which appears to be CCP’s end game. Factual and accurate BOP and FX statistics will determine China’s financial future which is now dire. Tread with caution."

Comment 2: "Chinese Consumption is repressed by the choices on offer in the “market” ie- Very limited innovation in Housing, Food, Automotive, textiles and health. This Contrasts starkly with successful innovations in mass transit, gaming and highly repressed but cutting edge information technologies. China’s restrictions of consumer society is perfectly represented by the CCP ending the evolution of payment systems - Ant financial Ali-pay. Chinese with money will not spend big or take on a lot of debt unless presented with a genuine value and perfectly evolved & honest product. This means money will seek an exit offshore, or bounce around banks & property or anything else which will offer the “least worst” security and income. Obviously domestic savings are being subverted by CCP to property & banks by only satisfying consumers basic needs whilst CCP retains controls over other every aspect of people’s lives. One child policy has compounded an already “soul destroying oppressive culture “."

Comment 3 "... Obviously domestic savings are being retained by CCP Banks by only satisfying basic domestic needs and hyper-inflated land rent."