Explainer-How much worse can China’s economic slowdown get?
HONG KONG (Reuters) – China’s economic activity data for July, including retail sales, industrial output and investment failed to match expectations, fuelling concern over a deeper, longer-lasting slowdown in growth.
THE DEMISE OF CHINA’S GROWTH HAS BEEN MISTAKENLY FORECAST BEFORE. IS THIS TIME DIFFERENT?
Activity data has been missing forecasts since the beginning of the second quarter, with the weakness raising worries that China’s economy is coming closer to a crunch point.
It would not be for the first time.
Alarm bells over growth rang during the global financial crisis in 2008-09 and during a capital outflow scare in 2015. China came out of those with a shock boost to infrastructure investment and by encouraging property market speculation, among other measures.
But infrastructure upgrades have created too much debt, and the property bubble has already burst, posing risks to financial stability.
China’s second-largest developer Country Garden with annual revenues of more than $70 billion, is on the verge of collapse.
The company’s 8% bonds due in 2024 are trading at a paltry 9 cents, signalling massive losses for the bondholders. The yield is skyrocketing, meaning… pic.twitter.com/sRLfb6K5xm
— Wall Street Mav (@WallStreetMav) August 14, 2023
China has 60 million vacant apartments & dozens of uninhabited ghost cities.
Gotta love the term "Duplitecture." This article was from 2016.
H/t @stacksusan7 for sharing!https://t.co/bO7ylvZGd2
— Michael Kao (@UrbanKaoboy) August 13, 2023
China’s $138 Billion Shadow Bank Spirals at Terrible Time for Xi
(Bloomberg) — Founded in 1995 as a lumber business, Zhongzhi Enterprise Group Co. grew to become a financial conglomerate with more than 1 trillion yuan ($138 billion) under management. Now it risks becoming the latest Chinese financial giant to fail.
The under-the-radar group, often dubbed China’s Blackstone by local media, operates at the heart of China’s once high-flying shadow banking market, which regulators have sought to corral since 2017. The firm has now raised alarm bells across Chinese markets after affiliated firms missed payments on some investment products.
Investors aren’t the only ones spooked by the implications of its possible demise. Chinese authorities have already set up a task force to study any possible contagion, with the banking regulator examining risks at Zhongzhi, according to people familiar with the matter.