Is China the next big crisis?

[marmar]

More warnings on China’s debt
Commentary: Shadow banking sparks new worries

By Craig Stephen


HONG KONG (MarketWatch) — Three years ago, China’s banks were widely applauded as they lent their way out of the last financial crisis, hauling much of the world with them. But now with these loans coming due and interest rates on the rise, officials and analysts are increasingly sounding the alarm.

Throw into the mix new revelations about the escalation of shadow banking, and it’s little surprise “China” and “subprime” are increasingly talked about in the same breath.

So far, the loans causing most unease are with local-government investment vehicles, estimated at up to $1.7 trillion. Cheng Siwei, a former vice-chairman of the standing committee of the National People’s Congress told the World Economic Forum last week in Dalian: “Our version of the U.S. subprime crisis is the lending to local governments, which is causing defaults.”

But this is by no means the only lending worry on the horizon. ............(more)

The complete piece is at: http://www.marketwatch.com/story/more-warnings-on-chinas-debt-2011-09-18

[RandySF]

1. The more I look "under the hood" in China.

The more I dislike what I see.

[jaxx]

2. List of assets owned by News Corporation

International

Dow Jones & Company

Consumer Media Group

The Wall Street Journal - the leading US financial newspaper.
Wall Street Journal Europe
Wall Street Journal Asia
Barron's - weekly financial markets magazine.
Marketwatch - Financial news and information website.
Far Eastern Economic Review
Financial News

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

There is a constant use of Rupert's media here. Why?

[Ikonoklast]

3. China has a real estate bubble, and it's about to go pop.

And when it does, oh, boy.

[white_wolf]

4. That's impossible! China is a bastion of pure capitalism and that can never fail.

If only we had that here. :sarcasm:

[madrchsod]

5. yes it is....

[Odin2005]

6. China is one giant unsustainable bubble right now.

And when it pops it is going to be very, very ugly.

[AverageJoe90]

7. what do you mean, exactly?

[Odin2005]

8. Rapid economic growth is the only thing holding off rebellion.

If growth slackens even a little bit for too long there will be trouble. If it goes negative the ruling government is screwed.

[white_wolf]

9. I wonder what form that rebellion will take?

I've posted a couple of times that I question the wisdom of China keeping the image and name of Mao so prominent in their society, because it's possible if the people to rise up, Mao may be their banner. I personally find him little better than Stalin, but the average Chinese peasant or worker may feel otherwise, especially if an actual Maoist party were to start agitating the people. China turned red once, and it seems the current ruling class is trying to bring about the conditions for it to happen again.

[Odin2005]

10. The Chinese have a long historical tradition of overthrowing dynasties.

China is ruled by a party oligarchy and not an Emperor anymore, but the average Chinese person, I think, still believes in the whole Mandate of Heaven thing, and if they think that the party has lost the Mandate then the Oligarchy is screwed.

[girl gone mad]

11. Michael Pettis is one of the best sources for insight into the Chinese economy.

Here are a couple of his recent articles:

http://econintersect.com/wordpress/?p=11599

http://online.wsj.com/article/SB10001424053111904140604576498353661884930.html

They can avoid an all-out crisis if they focus on redistributing wealth from capital owners to labor:

http://www.creditwritedowns.com/2011/09/monetary-policy-and-the-future-of-china.html

[Prometheus Bound]

13. Some good links there. Thank you.

[JCMach1]

12. That's Crisis 3.0

We are not due for an upgrade for 24-49mnths yet...