The ongoing property crisis in China is taking an epic turn, with the nation’s real estate index plummeting back to 2009 levels, marking an approximate 80% drop from its peak. This alarming situation prompted Chinese President Xi to make his first-ever visit to the central bank, signaling a shift towards a much-needed fiscal stimulus.
China is now embracing a larger fiscal deficit, a move that holds promise for the commodity market, given the strong connection between Chinese imports and commodity demand. The fiscal deficit ratio was raised from 3.0% to 3.8%, and a significant 1 trillion Yuan sovereign bond issuance was approved.
Epic property meltdown continues.
The Chinese fiscal Tsunami will be enormous pic.twitter.com/hBA8DrldsM
— The Macro Guy (@SagarSinghSetia) October 25, 2023
It seems as though China is preparing for significant economic stimulus.
Interestingly, the US is in the exact opposite situation.
With that said, if China does enter a recession, all economies will feel pain.
Follow us @KobeissiLetter for real time analysis as this develops.
— The Kobeissi Letter (@KobeissiLetter) October 24, 2023
FINALLY FISCAL STIMULUS FROM CHINA
China now accepts a bigger fiscal deficit, which is probably good news for the commodity bet since Chinese imports and broad commodities go hand in hand
1/n pic.twitter.com/c365dcO6E8
— Andreas Steno Larsen (@AndreasSteno) October 25, 2023
🛑 China is experiencing a USD funding crisis 🛑 (similar to the rest of the emerging world). Xi was forced to visit the PBOC and SAFE for the FIRST TIME EVER yesterday. China’s banking system is in free fall and Xi 1/9 https://t.co/1yIpHJjQTa
— 🇺🇸 Kyle Bass 🇹🇼 (@Jkylebass) October 25, 2023
China Developer Country Garden Deemed in Default on Dollar Bond for First Time