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Page added on March 5, 2015
China Has Announced Plans For A ‘World Currency’
The Chinese do not plan to live in a world dominated by the U.S. dollar for much longer. Chinese leaders have been calling for the U.S. dollar to be replaced as the primary global reserve currency for a long time, but up until now they have never been very specific about what they would put in place of it. Many have assumed that the Chinese simply wanted some new international currency to be created. But what if that is not what the Chinese had in mind? What if they have always wanted their own currency to become the single most dominant currency on the entire planet? What you are about to see is rather startling, but it shouldn’t be a surprise. When it comes to economics and finance, the Chinese have always been playing chess while the western world has been playing checkers. Sadly, we have gotten to the point where checkmate is on the horizon.
On Wednesday, I came across an excellent article by Simon Black. What he had to say in that article just about floored me…
When I arrived to Bangkok the other day, coming down the motorway from the airport I saw a huge billboard—and it floored me.
The billboard was from the Bank of China. It said: “RMB: New Choice; The World Currency”
Given that the Bank of China is more than 70% owned by the government of the People’s Republic of China, I find this very significant.
It means that China is literally advertising its currency overseas, and it’s making sure that everyone landing at one of the world’s busiest airports sees it. They know that the future belongs to them and they’re flaunting it.
This is the photograph of that billboard that he posted with his article…
Everyone knows that China is rising.
And most everyone has assumed that Chinese currency would soon play a larger role in international trade.
But things have moved so rapidly in recent years that now a very large chunk of the financial world actually expects the renminbi to replace the dollar as the primary reserve currency of the planet someday. The following comes from CNBC…
The tightly controlled Chinese yuan will eventually supersede the dollar as the top international reserve currency, according to a new poll of institutional investors.
The survey of 200 institutional investors – 100 headquartered in mainland China and 100 outside of it – published by State Street and the Economist Intelligence Unit on Thursday found 53 percent of investors think the renminbi will surpass the U.S. dollar as the world’s major reserve currency.
Optimism was higher within China, where 62 percent said they saw a redback world on the horizon, compared with 43 percent outside China.
And without a doubt we are starting to see the beginnings of a significant shift.
Just consider this excerpt from a recent Reuters report…
China’s yuan broke into the top five as a world payment currency in November, overtaking the Canadian dollar and the Australian dollar, global transaction services organization SWIFT said on Wednesday.
The U.S. dollar won’t be replaced overnight, but things are changing.
Of course the truth is that the Chinese have been preparing for this for a very long time. The Chinese refuse to tell the rest of the world exactly how much gold they have, but everyone knows that they have been accumulating enormous amounts of it. And even if they don’t explicitly back the renminbi with gold, the massive gold reserves that China is accumulating will still give the rest of the planet a great deal of confidence in Chinese currency.
But don’t just take my word for it. Consider what Alan Greenspan has had to say on the matter…
Alan Greenspan, who served at the helm of the Federal Reserve for nearly two decades, recently penned an op-ed for the Council on Foreign Relations discussing gold and its possible role in China, the world’s second-largest economy. He notes that if China converted only a “relatively modest part of its $4 trillion foreign exchange reserves into gold, the country’s currency could take on unexpected strength in today’s international financial system.”
Meanwhile, the Chinese have also been accumulating a tremendous amount of U.S. debt. At this point, the Chinese own approximately 1.3 trillion dollars worth of our debt, and that gives them a lot of power over our currency and over our financial system.
Someday if the Chinese wanted to undermine confidence in the U.S. dollar and in the U.S. financial system, they have a lot of ammunition at their disposal.
And it isn’t just all of that debt that gives China leverage. In recent years, the Chinese have been buying up real estate, businesses and energy assets all over the United States at a staggering pace. For a small taste of what has been taking place, check out the YouTube video posted below…
For much, much more on this trend, please see the following articles…
-“The Chinese Are Acquiring Large Chunks Of Land In Communities All Over America”
-“Meet Your New Boss: Buying Large Employers Will Enable China To Dominate 1000s Of U.S. Communities”
-“Not Just The Largest Economy – Here Are 26 Other Ways China Has Surpassed America”
-“The Chinese Want To Spend Billions Constructing A 600 Acre ‘China City’ In New York State”
-“45 Signs That China Is Colonizing America”
-“Will Detroit Be The First Major Chinese City In The United States?”
On a purchasing power basis, the size of the Chinese economy has already surpassed the size of the U.S. economy.
And there are lots of signs of trouble ahead for the U.S. economy at this point. I like how Brandon Smith put it in one recent article…
We are only two months into 2015, and it has already proven to be the most volatile year for the economic environment since 2008-2009. We have seen oil markets collapsing by about 50 percent in the span of a few months (just as the Federal Reserve announced the end of QE3, indicating fiat money was used to hide falling demand), the Baltic Dry Index losing 30 percent since the beginning of the year, the Swiss currency surprise, the Greeks threatening EU exit (and now Greek citizens threatening violent protests with the new four-month can-kicking deal), and the effects of the nine-month-long West Coast port strike not yet quantified. This is not just a fleeting expression of a negative first quarter; it is a sign of things to come.
In addition, things continue to look quite bleak for Europe. Once upon a time, many expected the euro to overtake the U.S. dollar as the primary global reserve currency, but that didn’t happen. And in recent months the euro has been absolutely crashing. On Wednesday, it hit the lowest point that we have seen against the dollar in more than a decade…
The euro last stood at $1.1072, off 0.90 percent for the day and below a key support level, Sutton said. It fell to as little as $1.1066, which was the lowest level for the euro against the dollar since September 2003, according to Thomson Reuters data.
The euro also declined to one-month lows against the Japanese yen, which was flat against the dollar at 119.72 yen to the dollar.
As the U.S. and Europe continue to struggle, China is going to want a significantly larger role on the global stage.
And as the billboard in Thailand suggests, they are more than willing to step up to the plate.
So will the road to the future be paved with Chinese currency? Please feel free to share what you think by posting a comment below…
37 Comments on "China Has Announced Plans For A ‘World Currency’"
Rodster on Thu, 5th Mar 2015 11:37 am
Every gold backed currency has always converted to Fiat currency and every Fiat currency has always hit zero in value. The world doesn’t need a reserve currency. Nations can trade and pay in their own currency. The problem’s lies with the western banking cabal who want to control the flow of money.
The Chinese have modeled their banking system after the Western banking model. So I sure as hell have ZERO hope they’ll save the day.
J-Gav on Thu, 5th Mar 2015 11:54 am
The renminbi has overtaken the Australian dollar and we’re supposed to be bowled over?
Not saying that nothing’s happening. Lot’s of things are happening: currency manipulation on a massive scale, for example. The days of the U.S. dollar as the overwhelming reserve currency it’s been for decades are numbered – no arugment from me there. But exactly what does ‘numbered’ mean? Nobody knows …
Speculawyer on Thu, 5th Mar 2015 12:31 pm
LOL. No one trusts a heavily manipulated currency.
penury on Thu, 5th Mar 2015 1:26 pm
As I see it the dollar is not the problem. Unless by the dollar you also mean the U.S. insisting that the use of the dollar in any form means that the entire banking, tax system, and trading rights then are under the control of the U.S. the IRS and the State Dept. In other words if you utilize the dollar you have surrendered you nations independence to the U.S. If that is what one means by a “reserve” currency then maybe we also have another name for it.
Perk Earl on Thu, 5th Mar 2015 1:50 pm
It won’t fly now, but as China continues to stockpile gold and if there is another Lehman moment of lost confidence, it could happen some day. China is smart enough to know you have to advertise something to start to get it into people’s consciousness, to lay the groundwork for the future. Already the dollar has been losing market share as the go to currency for exchange.
I’m surprised with the 17+ trillion US debt, the dollar has any perceived value at all. There’s nothing underpinning it except 2% growth.
Davy on Thu, 5th Mar 2015 2:27 pm
China and the west are in an economic relationship that if changed would disrupt both economies. China is an exporter of goods and the US an importer of goods in this relationship. China cannot allow its currency to appreciate too much or its ability to export is threatened. The key element in play is all players are aware the old system is breaking down. The US is no longer the unipolar economic and military power. China is looking longer term. I see no way in the short term this relationship can be altered. You just don’t restructure economies in a short time.
The problem with the long term is there probably is no longer term for BAU but that is another story. I am sure China is positioning itself for a new role at some point. I ask all those who are enamored with China to read these next two paragraphs from David Stockman who pulls no punches. If you call him a flag waiver you are wrong because he is just as highly critical of the US. He is my kind of man without the agenda’s like some here who want a winner and loser. Please read:
http://davidstockmanscontracorner.com/kick-the-can-has-morphed-into-a-blatant-farce/
In China the scene is even more tortured. As McKinsey’s charts so dramatically document, the overseers of red capitalism in Beijing have driven China into a monumental debt trap. Its massive spree of construction and fixed asset investment has created an utterly deformed economy that will literally implode unless its keeps building empty luxury apartments, phantom cities, silent shopping malls and hideously redundant roads, bridges, subways and airports. Yet whenever the short-term indicators stumble, the government finds some new, convoluted way to release more credit into the system.
This too is reaching the farcical stage. During the six-short years since the financial crisis, China has boosted it credit market debt outstanding by the staggering sum of $20 trillion or by 4X the growth of GDP during the same period. How in the world could anyway believe that China’s tottering house of cards can be rescued by piling on even more debt financed construction and fixed asset acquisition?
Makati1 on Thu, 5th Mar 2015 5:59 pm
The more I read about China, the more I see the future and it isn’t Western dominated. Yes, they have their problems, but they are small compared to Western problems. The UFSA is trying very hard to start WW3 so they have a cover for their failures.
China is working from a surplus base of $4,000,000,000,000.00+.
The UFSA is working from a debt base of $18,000,000,000,000.00+.
China has a growing economy.
The West has a shrinking economy.
China is buying resources all over the world and making partnerships.
The UFSA is trying to control resources by force, and is making enemies all over the world.
And on and on. If you live in Asia as I do, you get a different perspective on the real world. Eurasia is the new world order in the making. The empire is dying. And, yes, some of my ‘reserves’ are in yuan/renminbi.
What an exciting world we live in.
Davy on Thu, 5th Mar 2015 6:08 pm
MAK, you can’t have your cake and eat it. Not only is Asia in population overshoot it is in consumption overshoot thanks especially to China. You talk out of one side of the mouth how Asia is excelling at BAU and taking on empire status but out of the other side of your mouth you talk about how bad BAU is and how bad empire is. You are in a trap Mak, you can’t have it both ways. Which one is it Mak?
Perk Earl on Thu, 5th Mar 2015 6:24 pm
My money is on gold. The country that can put itself in the position to accumulate the most gold will probably have the next new exchange currency, because a loss of confidence is bound to occur.
At the same time though, if Short’s prognosis for oil price is correct, i.e. it keeps going down, then sometime between now and 2020 things will come unglued. In that case the last best currency standing loses it relevancy?
GregT on Thu, 5th Mar 2015 6:53 pm
“My money is on gold. The country that can put itself in the position to accumulate the most gold will probably have the next new exchange currency, because a loss of confidence is bound to occur.”
So are you saying that your money is on the BRICS Perk? Because China, Russia, and India have all been amassing gold for the past few years.
Davy on Thu, 5th Mar 2015 7:18 pm
Well people seem to believe there is no gold in the US. I am from the Sho-me state. Last I read there are sizable gold holdings in the US. Lots of conspiracy theories but no proof yet.
That said my money is on soil, water, and low population density. That rules out two of the Brics.
Let’s face it when BAU unravels life goes back to the basics gold and oil’s value will fundamentally change and we have no real idea fully how.
You all can talk up Asia all you want but overshoot of population (4BIL) and consumption (everything about China) is a underlying issue that cannot be explained away with gold or economic so called growth. In Asia the reality is mal-investment a form of faux growth.
JuanP on Thu, 5th Mar 2015 7:43 pm
That billboard really is upfront!
Like I’ve said before, IMHO, this whole dollar thing has been going on for over a decade and it will likely continue to play out like that with bumps and falls along the way. In the long run, I expect the dollar to become basically worthless, just like most currencies in the world.
And, people, life will go on after that, even in the USA. 😉
Chop wood, cook food, carry water!
GregT on Thu, 5th Mar 2015 8:36 pm
Davy,
What I find revealing is, the very reason that Nixon slammed shut the gold window, was because the gold was going overseas. The last time that the gold in Fort Knox was audited was back in the fifties. Why would that be? I’m sure that somebody somewhere knows, but they certainly do not want the rest of us to figure it out. That much should be obvious. I am also from the Sho-me-state. Sho-me-the gold, or it doesn’t exist. Germany recently asked for her gold back. The US has promised to deliver starting in the 20s. WTF? US gold reserves? Not looking so promising.
My money is also on soil, water, and low population density. Over 80% of the people in the US reportedly live in the cities Davy. In Asia the numbers are just over 50%. 80% of 320 million people works out to a population in the US of 256 million, which leaves 64 million people living in areas that are sustainable. ( if drought is not taken into consideration)
China has a population of 1.355 billion. 50% live in the cities, which leaves 677 million people living rurally already. ( China also faces water problems, just like the US)
“Let’s face it when BAU unravels life goes back to the basics gold and oil’s value will fundamentally change and we have no real idea fully how.”
Let’s face it. When BAU unravels life goes back to the basics for everyone that doesn’t hold large amounts of items of tangible value. Oil will always have value. Gold has maintained value for at least 6000 years. Will that change? Perhaps, but the central banks and sovereign nations hoarding gold tell me that it won’t.
No country anywhere will be unscathed in the coming unravelling of modern industrial society. You guys constantly bickering over which country will come out on top, is totally irrelevant. More people will survive in Asia, than will survive in the US. More people in Asia are already better positioned.
Everywhere is going to suck. Places that suck already, aren’t going to change as much.
Davy on Thu, 5th Mar 2015 9:14 pm
Greg, I would love to see that crystal ball you are gazing into “More people will survive in Asia than the U.S.” I also find it interesting how you think Asians are better positioned. Comparing Asian cities to North American cities is apples and oranges. I may remind you who is the leading importer of US soy and corn routinely. Pretty generalized and opinionated tonight with the U.S. IMA you are a party to the bickering. You are also liberal with your own areas of bickering with your buddy Planter.
Your Gold explanation is still unproven. I would venture to agree the Feds gold stocks are depleted and Ft Knox less than reported. I find it a stretch to say there is no gold. How about asking your Chinese friends to show the Gold. I know the Chinese have 10,000 tons Because Mak said so. Fact is the tungsten gold bars are found in China on occasion. The Chinese are experts at rehypothecating assets of all kinds. The scandals are well documented. Why not gold.
Oil has only as much value as an economy that can function with oil. Gold is of value in many instances but gold’s value will very on an economies ability to transform golds value from a physical metal to a form of exchange or representation of wealth. Who knows in a collpased world how either will hold up.
GregT on Thu, 5th Mar 2015 10:27 pm
Davy,
I am only presenting my point of view. What I find to be reasonable. Obviously I don’t have a crystal ball, and neither does anyone else. From my perspective living in the West, we are in a whole heap of trouble if or when MIS comes crashing down. People here do not have a clue how to take care of themselves anymore. We have become accustomed to a system where most people know a lot about very little, and almost nothing about a lot. Especially nothing that matters when it comes to personal survival.
I have no explanation about US gold. Only questions that have been routinely sidestepped and unanswered for over 60 years.
Over half of the population of Vancouver may be Chinese, and they own pretty much everything of value, but they are not my close personal friends. There is no doubt that tungsten gold bars exist, but I doubt very much that sovereign nations hold many of them.
Like you Davy, I have also invested in gold bullion. I have no idea as to whether or not that investment will pan out, but 6000 years of history tells me that it more than likely will. If not, I would rather play with a heavy, shiny, and malleable natural element, than pieces of paper with pictures of dead people printed on them.
Oil will always have value, as long as it can be pumped out of the ground. Whether it has value to our economies or not, is an entirely different matter. I highly suspect that the common man will be working for a pittance in the future, to supply their owners with oil to run their private jets, yachts, and personal armoured vehicles.
Of course this would only be a best guess on my part, but a best guess backed by thousands of years of human history.
GregT on Thu, 5th Mar 2015 10:45 pm
Also Davy,
You and your evil nemesis Mak, have much more in common than you realize. You have both opted out of systems that others question, and you have both opted for a more sustainable lifestyle. The big difference Davy? Mak is not questioning your decision to opt out of yours, but you are questioning his. In reality, you are both opting out of the same system, in different ways.
Makati1 on Fri, 6th Mar 2015 12:15 am
GregT, thank you for seeing that fact. I opted out of the system over eight years ago. I made my decision to live here in the Ps as it seems to be the best pace for me to finish my life, whether I have 30 seconds or 30 years left. No regrets.
I just joined the thousands of Americans leaving for better countries every year. There are over 200,000 Americans living in the Ps today and the number is growing.
Davy on Fri, 6th Mar 2015 5:22 am
Greg, You and I have much in common and we have good debates from a spectrum of difference and a nationality difference yet on the same continent. I respect your balanced and fair views of America that generally deal with the bad side of America. You are right to say you are pro-American and against the DC thugs who are the anti-American. I am too but from a different perspective because they are my people.
I firmly believe we have made a paradigm shift and right is wrong and wrong is right in an abstract way. I am not of course saying murder is right in this example. I am saying basic values and modern myths have change and many proved wrong. I am saying if we are in a macro economic and cultural descent old myths and values are null and void based on growth. This is like moving from the cold climate to the warm.
We do differ Greg and as you accuse me of flag waiving I accuse you of agandas. Same thing really but the important point is we are both tempering each other’s agendas and learning from each other. If there is one thing that does not impress me is someone wanting to agree with me completely and followers. I want a challenge and I want originality. I am not a leader I am a preacher with a message however small and insignificant I am giving of myself for the betterment of others. I was brought up in a Jesuit setting of being a “man for others”. It stuck with me at a critical maturation period of my youth. Many of my thought are not my own. I am a product of 50 years of learning. I have synthesized some ideas but whether these ideas are rational is another story.
Davy on Fri, 6th Mar 2015 5:25 am
Greg, you are right and wrong about Mak and Planter. I have tried on several occasions to befriend Mak because that is my nature. He routinely comes on here giving inflammatory agenda driven comments. He does question everything about me, my nation, my local and my people. He constantly is promoting the P’s and diminishing my country and my local. You just choose not to hear that. Many of Mak’s ideas fit your agenda and Greg we all have agendas. It is agendas that are honest, balanced, and fair that have merit. Mak’s agendas are about a personal message. There is nothing good about America Mak will acknowledge and everything is diminished.
As for Planter. He can be annoying but he is not as bad as you and other paint. I do not normally get in the middle of fight because that is a no win situation. I am in a fight with Mak. I don’t want to criticize bickering when I am bickering. That is hypocritical. I have no problem with others agreeing and supporting Mak. This is personal between Mak and me. I want to be his friend because we have much in common but friendship involves respect and borders. If he wants to be my friend then he should temper his diminishment of me, my local, and my nation. He should moderate is “Asia a superpower rising” message.
Unfortunately I have had to take an excessively negative Asia tone to temper the “Asia superpower rising” message Mak preaches and many others including you Greg. This is as bad as the message of support for the American empire message. I will not sit back and listen to my country be diminished unfairly and Asia be glorified. That is what Mak does and you dabble in to. That is my point of view Greg. I do not claim to be right and Mak wrong it is about tone and respect. We both have our facts it is the manner of delivery of those facts that matter.
Revi on Fri, 6th Mar 2015 7:16 am
We owe about 18 trillion, of which only 1.3 is to the Chinese. Most of the rest of it is due to our own pensions, government pensions and to all sorts of other retirement investments. In other words, we have already cashed in our pensions, and any future income to continue to live in the manner to which we have become accustomed. It’s no surprise that the next power is going to take the reserve currency. It happened to the British, the Spanish and the Dutch before them.
Dredd on Fri, 6th Mar 2015 10:39 am
So, they are not satisfied with becoming the number one already?
Gotta have the world currency seat too?
GregT on Fri, 6th Mar 2015 10:56 am
Davy,
” I will not sit back and listen to my country be diminished unfairly and Asia be glorified. ”
You have a voice Davy. If you do not want your country to be diminished unfairly, vote the bastards out. What is occurring in both of our countries isn’t my fault or Maks fault, it is the fault of our policy makers. I don’t like it any more than you do, but I am not ignoring reality. I am telling it like it is.
GregT on Fri, 6th Mar 2015 11:10 am
Dredd,
The USD was chosen as the worlds reserve currency because it was stable, and it was pegged to a physical asset, gold. When Nixon slammed shut the gold window, the USD was free floated and ever since then it’s value has been inflated away. Inflation is a hidden tax, and everyone around the world that holds US dollars is being taxed for the benefit of the American government, and the American banking system.
The world needs a new reserve currency that is more stable, one that benefits all nations, not just the USA.
Davy on Fri, 6th Mar 2015 12:10 pm
Greg, you are missing the point and turning the argument back on me which is a clever game. Let’s just drop it and not get caught up in the endless back and forth gaming.
Mak is not my friend until he shows respect. Asia is a shit hole no better than North America. Anyone trying to sell Asia on me is wasting their time. Mak is constantly selling his wonderful life which makes me think it is not so wonderful. I rarely try to sell my local. I talk about the good and the bad. That’s what I call fair and balanced as opposed to a Mak agenda. Defend Mak all you want Greg, you guys are obviously friends and I respect that. I find your nemesis Planter my friend but I don’t try to sell Planter on you so why try to sell the Makster on me?
Perk Earl on Fri, 6th Mar 2015 1:50 pm
“So are you saying that your money is on the BRICS Perk? Because China, Russia, and India have all been amassing gold for the past few years.”
GregT, indirectly, yes, but more specifically, China because of their growing economy. Even at 7% it’s still a much greater growth than the US. Here in the US we rely on borrowing, printing and ZIRP. In China they are accumulating huge masses of gold.
It hasn’t happened yet, however some day (if collapse doesn’t occur first) the Chinese currency will have greater value as an exchange currency than the dollar because things are trending in that direction. The US acts like gold no longer matters, and it won’t until confidence in the currency wanes, then it will matter more than anything else. That’s when all eyes will turn to the next currency in line to replace the dollar and that will be China’s.
Davy on Fri, 6th Mar 2015 2:21 pm
Here you go Perk explain this:
http://davidstockmanscontracorner.com/kick-the-can-has-morphed-into-a-blatant-farce/ In China the scene is even more tortured. As McKinsey’s charts so dramatically document, the overseers of red capitalism in Beijing have driven China into a monumental debt trap. Its massive spree of construction and fixed asset investment has created an utterly deformed economy that will literally implode unless its keeps building empty luxury apartments, phantom cities, silent shopping malls and hideously redundant roads, bridges, subways and airports. Yet whenever the short-term indicators stumble, the government finds some new, convoluted way to release more credit into the system. This too is reaching the farcical stage. During the six-short years since the financial crisis, China has boosted it credit market debt outstanding by the staggering sum of $20 trillion or by 4X the growth of GDP during the same period. How in the world could anyway believe that China’s tottering house of cards can be rescued by piling on even more debt financed construction and fixed asset acquisition? Needless to say, as China veers ever closer to a crash landing, the China-dependent EM economies are rapidly faltering. It now appears that Brazil will suffer back-to-back years of GDP decline for the first time since 1930-1931. Indeed, the China- led global commodities and industrial production boom is cooling so fast that global CapEx in mining and energy, materials processing, manufacturing and shipping is on the verge of a huge downward correction. And that will hit the high end machinery and engineering exporters like Germany and the US, creating a further negative loop in the gathering deflationary crisis.
Kind a hard to explain away that stink. My bet is China will flush the rest of us down the toilet when all is said and done.
Perk Earl on Fri, 6th Mar 2015 3:07 pm
I don’t buy it, Davy. There have been articles proclaiming China being on the brink of some form of economic disaster or another for years now. I remember posters suggesting imminent economic disaster for China way back on The Oil Drum (TOD).
Meanwhile China manufactures stuff the West cannot make for a similar price and continues to accumulate gold.
Just as a side note to this; I’m not pro-China or anti-American, just simply going by the trend with the US treading water and China making headway. Hopefully for their sakes that rendition of Paris will some day be a big tourist attraction – lol!
Perk Earl on Fri, 6th Mar 2015 3:15 pm
https://www.google.com/search?hl=en&site=imghp&tbm=isch&source=hp&biw=960&bih=426&q=china%27s+version+of+Paris%2C+France&oq=china%27s+version+of+Paris%2C+France&gs_l=img.3…663.9702.0.9924.40.15.3.22.24.0.323.1481.0j8j0j1.9.0.msedr…0…1ac.1.62.img..23.17.1410.i-2Zb7jLQtU
I googled ‘China’s version of Paris, France’ and those photos are on the link above. Rather vacant now, but you know what they say, “Build it and they will come.”
ghung on Fri, 6th Mar 2015 3:35 pm
Not so sure, Earl:
“And finally from Another Dark Day For The CRaBs
Chinese govt has acknowledged growth is slowing, and is now forecasting 7% real GDP growth for 2015, the slowest pace in 25 years. We still believe underlying economic activity is growing closer to 2% – 3%……
….What does this mean? Well, in a world in which the US is now very rapidly recoupling with what until recently was an ex-US global contraction (as Goldman confirmed), a China which is growing at a well below stall-speed pace, and in fact is at what even Deutsche Bank said is on pace for a mini hard landing, to think that the ECB’s monetization (of bonds which nobody really knows who will sell) will make up for China’s furious pace of credit creation (which is really what in a Keynesian world is what “growth” really is) is beyond naive.
If and when the reality of China’s predicament (recall that it was China’s creation of over $3 trillion in credit during the post-Lehman depression that was instrumental in the global rebound) spills over to the entire world, then all bets are off.
And just so readers have a sense of the Chinese credit/asset creation juggernaut, here is the chart of the day from our November 2013 post (update for the latest data below) showing “How China’s Stunning $15 Trillion In New Liquidity Blew Bernanke’s QE Out Of The Water.”
http://www.zerohedge.com/news/2015-03-05/chinese-economic-activity-has-probably-slowed-less-3
old dog on Fri, 6th Mar 2015 3:37 pm
I am not convinced about China rising over the long run. Economics and politics don’t provide a deep enough analysis. It’s about the ecology. Pollution, water issues, depleted soil and on and on. A recipe for collapsee.
Davy on Fri, 6th Mar 2015 3:50 pm
Perk, I have been reading about China for years. I have a folder dedicated to Chinese issues on my computer. China is a mess and getting worse by the day. I would say no worse than the U.S. and others but it is China that people mistakenly think is the new economic and military superpower and that is just not true.
Superpowers are a thing of the past. They will continue to be a power while BAU survives but forget the Asian supremacy cat piss. “Taint gonna happen”. And ya I am anti-Chinese in this respect. There are allot of amazing things about China but their current leadership and economy is not one.
Perk Earl on Fri, 6th Mar 2015 5:37 pm
“Chinese govt has acknowledged growth is slowing, and is now forecasting 7% real GDP growth for 2015, the slowest pace in 25 years. We still believe underlying economic activity is growing closer to 2% – 3%……”
I don’t buy that either, Ghung. The 2nd sentence starts off “We still believe…” Huh? I’ve stopped accepting any information about China because of the continuous articles coming out for years now about China’s eminent catastrophe about to happen, haven’t happened? I saw those latest outside estimates in the 2-3% range and I don’t accept that information either.
About the only thing we can be certain of is oil price and it’s influence on production. If shortonoil is right about the price of oil needing to continue to drop in the years to come, then that will be the axe that stops the oil age. And that is something to watch because we don’t have to wonder if it’s right, we will know.
It’s just a personal decision not to accept these ZH articles anymore because they have been predicting economic mayhem for so long now without anything happening to support those assertions, it’s lost credibility. How anyone can accept a ZH article as truth about China’s GDP in the 2-3% range, is hard for me to understand.
Davy on Fri, 6th Mar 2015 6:48 pm
Beijing, We Have A Problem
The slave labor manufacturer for the world’s mal-investments since 2008 make Japan look like pikers.
The BLS should take lessons from the Chinese government in data falsification. But, the American MSM dutifully reports the Chinese data as if it was real. Faux journalism at its finest.
Real numbers from the real economy and real companies reveal the truth about the Chinese economy. If revenues are falling, why is the Chinese stock market up 48% in the last six months? The same reason the U.S. stock market is up.
Rampant speculation created by blind faith in central bankers and central banks buying stocks.
The Chinese are learning the same thing as Americans. Stimulus does nothing for the average person or the real economy. It benefits crony capitalists and crony communists. It results in mal-investment, booming stock markets and ultimately a bust – that will negatively impact the average person.
The diminishing effectiveness of Keynesian claptrap projects is evident for all to see.
Nothing like 50 million unoccupied housing units to create the greatest housing bust in world history. Maybe Blackstone can work its buy to rent strategy in China. It’s worked so well here in the U.S.
China should rename themselves Bad Debts R Us. I’m sure they can keep the bad debt balls in the air for another decade. Right?
China is still an evil communist nation that disregards human rights, murders its citizens, crushes dissent, and suppresses free speech. Other than that, they are a great bunch of guys.
https://www.theburningplatform.com/2014/12/09/beijing-weve-got-a-problem/
GregT on Fri, 6th Mar 2015 11:55 pm
“S&P Affirms Ratings on China; Sees Increased Resiliency on New Reforms”
“We estimate that annual growth in real GDP will average roughly 6% over the next decade from 10% in the previous decade. Such growth is still faster than that of countries with similar income levels.”
“China is a large external creditor. By the broadest measure, we estimate the country’s external assets exceeded its external liabilities by 73% of its current account receipts (CAR) at end-2014. China’s external liquidity position is equally robust: We project its gross external financing needs in 2015 will be only 52% of CAR plus usable reserves.”
“The stable outlook is based on our assessment that the central government’s policy agenda will make China’s economy more resilient to shocks, meaning less-extreme changes in GDP. This assessment includes our assumption that China should be able to curb credit growth and gradually shift its growth model away from investment towards private consumption.”
http://www.streetinsider.com/Credit+Ratings/S%26P+Affirms+Ratings+on+China%3B+Sees+Increased+Resiliency+on+New+Reforms+(FXI)/10316344.html
Perk Earl on Sat, 7th Mar 2015 1:24 am
Growth 6-10%
External liabilities +73%
External liquidity, robust
Stable outlook for GDP
China’s Yuan definitely a contender for future primary reserve currency.
Good link, GregT.
Davy on Sat, 7th Mar 2015 8:01 am
The China lovers are out in Force this morning. I will be the first to agree the US is a military and financial empire in decline. BAU is dying. Yet, I read the China lovers come on the forum and say China is breaking out and decoupling from a dying BAU to assume new economic and military superpower status. A BAU they routinely claim is dying and full of problems and predicaments. I guess these problems and predicaments are just not in Asia and in particular China.
This is precisely the anti-American and “pro-any-alternative to US” that I find so agenda seek. I have at least 50 articles on what is really happening in China. China is a huge cancerous mal-investment killing the earth from population overshoot combining with consumption overshoot. What destruction the west left out over a century China is now completing in as little as two decades.
For people so down on BAU why do they promote China like they do? China is the epitome of the new BAU globalism spreading its evil economic fingers across the world. I will agree the US evil fingers are there with its military but China’s is there with its army of engineers and technocrats destroying what is left of our global ecosystem. This is truly evil just as the globalist centered in the US are.
GregT on Sat, 7th Mar 2015 10:23 am
Davy,
Do you receive any Canadian television news stations?