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How Susceptible is China to the Global Crisis?

Kelaido, if you can figure out a way to profit from my travel schedule I am happy to form a hedge fund with you. I'll tell you my schedule several days in advance and you trade.

Amd yes, the melatonin seems to work. My trip back was a lot easier.

How Susceptible is China to the Global Crisis?

Chinawatcher, the comparison was between Chinese exposure to stocks versus real estate, and given that the real estate market is many times the size of the stock market (and banks are, in theory, not supposed to lend for stock purchases), their exposure to real estate is much larger.

On the comparison with the US, real estate development and investment is at least as important to the Chinese economy (and probably more) than it is to the US economy. Since the US was driven into crisis by problems in the real estate market, I don't think we should be comfortable that Chinese banks, even if their exposre were lower, are safe. At any rate given that nearly all financing comes from the banking sysytem, it suggests to me that directly and indirectly a decline in real estate may be far more damaging for Chinese banks. By the way bankers often tell me in confidence that real estate expositre in the banks is much gretaer than simply the loans listed as real estate loans. A lot of borrowers are little more than real-estate shells.

China Still Needs Revaluation, but How Much?

The problem with a gradual appreciation is not that speculators will profit. The problem is that the financial system will be swamped by speculative inflows. This has already happened and it is clear that it cannot continue much longer.

China: Post Olympic Slowdown

JTB, many of the investment banks regularly publish data on vacancy rates, although these are not always reliable. There was a bank bailout in the late 1990s and early 2000s that, according to the World Bank, cost China about 55% of GDP. My guess is that in case of a economic slowdown we will again see NPLs rise. As HT points out the bankruptcy law here is still complex and poorly understood. No one knows how it will be enforced in the case of a sharp rise in bankrupticies.

China: Olympic Fever and the Market

Kelaido, actually restrictions on what China can buy in the US and Europe are far less than restrictions on what foreigners can buy in China, although I suspect that there will be a hardening of attitudes in all countries over the next few years. Still, what Chinese companies can buy far exceeds what they cannot. The more important question is whether they have the management capability to digest major acquisitions. There is a long history of companies making big mistakes when they first embark on foreign acquisition sprees.

China: Real Estate Loan Growth May Be Slowing

Kelaido, my sister-in-law and niece are Brazilian and so I have a family connection to Brazil. I have travelled to and have friends in both countries, however, so I wasn't terribly upset by Brazil's defeat.

I don't really have specific recommendations on stocks. I usually try to get a diversified portfolio of B-shares when I invest, but right now I am in cash and will remain for a while longer.

China: Olympic Fever and the Market

It's a mistake to think of reserves as wealth. PBoC reserves are required to protect China from an interruption in external financing, and from that point of view China has far more than it needs. On the other hand if China needs to acquire an asset abroad, it has far more than $2 trillion available to it. As the world's second or third largest econony, China's wealth and buying capacity far exceeds its reserves.

China: Real Estate Loan Growth May Be Slowing

RLIRPH and Longshort, I agree that there may be more problems in the stock market, but over the medium term I think there is definitely value in the B-shares. This is why I recommend defensive plays -- including companies with little leverage, and so little exposure to a banking contraction. China still has a good growth story behind it.

China: PPI Inflation and Trade Surplus Higher Than Expected

PLD, of course we always need to avoid reading too much into one month's numbers, but i would argue that given the world slowdown and the huge base, export growth has been strong all year.

Olympic Excitement Doesn't Impress China's Market

The stock market took another beating today -- down 5%. Obviously no one is happy with the PPI number, although its effect will depend on what commodity prices do in the next few months. At any rate it doesn't cause me to change my guess that inflation will rise again by the end of the year.

People's Bank of China Relaxes Lending Caps

Surprisingly enough, several of my Peking University students have asked me about my use of chopsticks. I was taught long ago by a Taiwanese lady and, according to my students, I have a better form than most of them. Perhaps Peking University students are smart enough to get learning from wherever they can find it.

Sorry JtB, but I don't post my stuff directly here and I don't know how the affect the font.

Underground Lending in China Exceeds RMB 10 Trillion

JtB, China is likley to grow substantially over the next twenty to thirty years but no one should think it will be a smooth ride. These things never are.

Will China Development Bank Buy Dresdner?

Th government is planning to privatize CDB and allow it to become a "normal" commercial bank. It is a policy bank in the process of becoming a commercial bank.

People's Bank of China Falls in Line

PLD, that article has been making the rounds. It does provide some food for thought but goes a tad overboard, I think. I suspect much of the Olympic-related stupidities have more to do with overzealous and frightened petty officials than with any grand plan. I could give you so many examples of annoyances being promulgated in the name of security that simply have no point.

China: American-style vs Latin-American-style Crises

Itsjustal, bank information is usually pretty timely, so I would guess we can get the information on a monthly basis. I am not sure if I want to use a word as alarmist as "precipice", but we clearly need a lot more than the current tinkering to get us back onto a good path. I sense an increasing frustration in the policy-making debate.