Per tutti, l'imminente disastro cinese...

[avatar77]

ALCUNI ARTICOLI E REPORTS OVVIAMENTE IN LINGUA INGLESE SU CIO' CHE STA ACCADENDO IN QUELLA CHE SEMBRE CHE L'ECONOMIA INVINCIBILE E PROSSIMA N°1 AL MONDO IN UN VENTENNIO...UN PICCOLO ANTIPASTINO...





ZeroHedge | On a long enough timeline the survival rate for everyone drops to zero

defer-loan-payments


...Goldman's Jim O'Neill said in a recent interview that the world's future prosperity

depends on China's growth. If he's is right, then don't count on that much world

prosperity, at least in 2012...(Posted by : EconMatters Post date: 12/25/2011 - 16:31)

Posted by: rcwhalen
Post date: 12/25/2011 - 12:08
A new era of increasing instability is opening in East Asia.


China Insolvency Wave Begins As Nation's Biggest Provincal Borrowers "Defer" Loan Payments

Submitted by Tyler Durden on 12/26/2011 00:07 -0500

...Well, now we learn that as the global insolvency wave finally moves to China, a

bankruptcy is now called something even less scary: "deferred loan payments" (and also

explains why suddenly Japan is going to have to bail China out and buy its bonds, because

somehow when China fails, it is the turn of the country that started the whole deflationary

collapse to step to the plate...
"China's biggest provincial borrowers are deferring payment on their loans just two months

after the country's regulator said some local government companies would be allowed to do

so....Hunan Provincial Expressway Construction Group is delaying payment on 3.11 billion

yuan in interest, documents governing the securities show this month. Guangdong Provincial

Communications Group Co, the second-largest debtor, is following suit. So are two others

among the biggest 11 debtors, for a total of 30.16 billion yuan, according to bond

prospectuses from 55 local authorities that have raised money in capital markets since the

beginning of November." So not even two months in and companies are already becoming serial

defaulters, pardon, "loan payment deferrers?" And China is supposed to bail out the world?

Ironically, in a world in which can kicking is now an art form, China will show everyone

just how it is done, by effectively upturning the capital structure and saying that paying

interest is, well, optional. In the immortal words of the comrade from Georgia, "no coupon,

no problem."
As local governments delay payments for projects commissioned as part of the stimulus to

ward off recession in 2009, less money is available for bank lending even as China is

taking steps to inject more into the economy. The central bank has held interest rates at

6.56 percent since July to boost the economy, while the US Federal Reserve and the Bank of

Japan have kept benchmark rates near zero since 2008.



"When companies start to roll over debt they're not retiring debt, and banks aren't

retrieving their capital, so you're crowding out new lending," Patrick Chovanec, a

professor at Tsinghua University in Beijing, said in a Dec 13 interview. "This is a problem

that's going to start to bite next year."



Local governments had 10.7 trillion yuan in debt at the end of last year, 79 percent due to

banks, according to the country's first audit released in June. So-called local financing

vehicles that meet collateral requirements can have a one-time extension on their loans,

Zhou Mubing, vice-chairman of the China Banking Regulatory Commission, said at a conference

on Oct 24 organized by the Internet portal Sina.com.cn, according to a transcript of his

comments on the website.



Guangdong Provincial Communications Group, Hunan Provincial Expressway Construction Group,

Gansu Provincial Highway Aviation Tourism Investment Group Co and Sichuan Railway

Investment Group Co owe more than 200 billion yuan to banks, the data show. They plan to

defer 34.4 billion yuan in interest payments, according to their bond prospectuses.

Yes, that's a lot, and it's going to get much worse. But not if you listen to Beijing Bob:

yes, even communist countries have a department of propaganda:

Lei Wanming, Gansu Highway's deputy Communist Party secretary, said the company's interest

payment deferrals do not raise any concerns. "Our company can pay our interest and our

principal payments with no problem," he said in a Dec 5 interview. "You can't just consider

this issue by looking at a bond prospectus."

Said otherwise, all is good, and China's 'relatively fast' growth is still on the agenda:

National leaders set a goal of "relatively fast" economic growth for 2012 at a major

conference in Beijing that ended on Dec 14, according to the Xinhua News Agency. The global

outlook "remains very grim", Xinhua cited the leaders as saying.

What is most ironic is that Meredith Whitney will be right... just wrong about the country.

The extra yield required to hold Hunan Provincial Expressway's 900 million yuan in 2012

bonds has increased to 308 basis points from 151 basis points on June 21, when they were

issued. That compares with a current spread of 11 basis points on Shenzhen's five-year

direct municipal bonds.



Yields on local government financing company bonds will remain high next year as selling

debt becomes a main channel for raising funds, China International Capital Corp analysts

led by the fixed-income analyst Xu Xiaoqing wrote in a Dec 16 research note. Most of the

bonds are sold at yields of 8 percent, or 144 basis points more than the benchmark bank

lending rate, according to the report. Five-year top-rated corporate bonds yield 4.98

percent, according to Chinabond, the nation's bond clearing house.



"Although the China Banking Regulatory Commission has recently eased loan restrictions to

help liquidity, recent supply has been increasing, causing the secondary market to pay

attention to systemic risks," they wrote. "The credit quality of recent financing vehicle

bonds continues to get weaker."

For those who refuse to swallow China's lies, there is one way around it:

Five-year credit-default swaps insuring against default on China's sovereign debt rose 3.2

basis points recently to 149.66 basis points, according to data provider CMA...

As more and more scratch their heads, the math is clearly not your friend:

Even after the reduction in interest payments, Gansu Provincial Highway said that interest

and principal payments in 2011 will amount to 3.33 billion yuan, more than its 2010 cash

flow of 3.04 billion yuan, according to bond-marketing materials.



"This prospectus is telling us that banks can expect to only receive roughly half of what

would have been expected in interest payments," Charlene Chu, a Beijing-based banking

analyst with Fitch Ratings, said of the Gansu disclosure.

And as for what happens when an entire continent is stuck fighting simple math and failing,

we refer you all to the case study that is Europe.

-------------------------------------------------------------------------------------------


China plans further cut to railway spending
China announces another cut in railway spending amid concerns about debt, bullet train

costs

By Joe Mcdonald, AP Business Writer | AP – 1 hour 36 minutes agoShare0EmailPrint

BEIJING (AP) -- China's government announced another cut in railway construction spending

Friday amid concern about the debts of the world's biggest rail network and the safety of

its showcase bullet trains.

Beijing will spend about 400 billion yuan ($65 billion) next year on railway construction,

Railways Minister Sheng Guangzu said at an industry conference, the state Xinhua News

Agency reported. That is down from what Xinhua said is expected spending of 469 billion

yuan ($75 billion) this year and a sharp drop from 2010's 700 billion yuan ($112 billion).

Beijing is rapidly expanding China's 56,000-mile (91,000-kilometer) rail network, which is

overloaded with passengers and cargo. But it has scaled back plans amid concern about

whether Sheng's ministry can repay its mounting debts.

Critics complain authorities have spent too much on high-speed lines, a prestige project

for the ruling Communist Party, while failing to invest enough in expanding cheaper, slower

routes to serve China's poor majority.

A failure to expand rail capacity could choke economic growth because exporters away from

China's coast rely on rail to get goods to ports.

The Xinhua report Friday gave no details of spending plans or where the government intends

to expand service.

The rail ministry's mounting debts have prompted concern about whether it will have to be

bailed out by Chinese taxpayers. Private sector analysts say revenues from ticket sales and

freight charges probably are insufficient to pay its publicly reported 2 trillion yuan

($300 billion) in debt.

Beijing reined in the rapid expansion of its bullet train network after a July 23 crash

that killed 40 people triggered a public outcry about a system that critics say is

dangerous and too costly for a poor country. The speed of the fastest lines also was

reduced.

Xinhua described Friday's announcement as the first time the communist government has

announced a "clear goal for future railway development." It said construction "has been

almost halted" since the bullet train crash.

Sheng, the railway minister, announced a moratorium in August on new rail projects while

the government carried out a nationwide safety inspection.

Government plans announced earlier call for expanding the rail network to 75,000 miles

(120,000 kilometers) by 2020.

In a report this week, the World Bank called China's system "by far the most densely

trafficked railway network in the world." It recommended that Beijing overhaul its system

of state-set prices and allow rail managers more flexibility in setting ticket and cargo

prices to make trains more efficient and affordable.

------------------------------------------------------------------------------------------
by Ambrose Evans-Pritchard, International business editor
10:20PM GMT 14 Dec 2011
Comments
It is hard to obtain good data in China, but something is wrong when the country's Homelink

property website can report that new home prices in Beijing fell 35pc in November from the

month before. If this is remotely true, the calibrated soft-landing intended by Chinese

authorities has gone badly wrong and risks spinning out of control.

The growth of the M2 money supply slumped to 12.7pc in November, the lowest in 10 years.

New lending fell 5pc on a month-to-month basis. The central bank has begun to reverse its

tightening policy as inflation subsides, cutting the reserve requirement for lenders for

the first time since 2008 to ease liquidity strains.

The question is whether the People's Bank can do any better than the US Federal Reserve or

Bank of Japan at deflating a credit bubble.

Chinese stocks are flashing warning signs. The Shanghai index has fallen 30pc since May. It

is off 60pc from its peak in 2008, almost as much in real terms as Wall Street from 1929 to

1933.

"Investors are massively underestimating the risk of a hard-landing in China, and indeed

other BRICS (Brazil, Russia, India, China)... a 'Bloody Ridiculous Investment Concept' in

my view," said Albert Edwards at Societe Generale.



"The BRICs are falling like bricks and the crises are home-blown, caused by their own

boom-bust credit cycles. Industrial production is already falling in India, and Brazil will

soon follow."

"There is so much spare capacity that they will start dumping goods, risking a deflation

shock for the rest of the world. It no surpise that China has just imposed tariffs on

imports of GM cars. I think it is highly likely that China will devalue the yuan next year,

risking a trade war," he said.

China's $3.2 trillion foreign reserves have been falling for three months despite the trade

surplus. Hot money is flowing out of the country. "One-way capital inflow or one-way bets

on a yuan rise have become history. Our foreign reserves are basically falling every day,"

said Li Yang, a former central bank rate-setter.

The reserve loss acts as a form of monetary tightening, exactly the opposite of the effect

during the boom. The reserves cannot be tapped to prop up China's internal banking system.

To do so would mean repatriating the money – now in US Treasuries and European bonds –

pushing up the yuan at the worst moment.

The economy is badly out of kilter. Consumption has fallen from 48pc to 36pc of GDP since

the late 1990s. Investment has risen to 50pc of GDP. This is off the charts, even by the

standards of Japan, Korea or Tawian during their catch-up spurts. Nothing like it has been

seen before in modern times.

Fitch Ratings said China is hooked on credit, but deriving ever less punch from each dose.

An extra dollar in loans increased GDP by $0.77 in 2007. It is $0.44 in 2011. "The reality

is that China's economy today requires significantly more financing to achieve the same

level of growth as in the past," said China analyst Charlene Chu.

Ms Chu warned that there had been a "massive build-up in leverage" and fears a

"fundamental, structural erosion" in the banking system that differs from past downturns.

"For the first time, a large number of Chinese banks are beginning to face cash pressures.

The forthcoming wave of asset quality issues has the potential to become uglier than in

previous episodes".

Investors had thought China was immune to a property crash because mortgage finance is just

19pc of GDP. Wealthy Chinese often buy two, three or more flats with cash to park money

because they cannot invest overseas and bank deposit rates have been minus 3pc in real

terms this year.

But with price to income levels reaching nosebleed levels of 18 in East coast cities, it is

clear that appartments – often left empty – have themselves become a momentum trade.

Professor Patrick Chovanec from Beijing's Tsinghua School of Economics said China's

property downturn began in earnest in August when construction firms reported that unsold

inventories had reached $50bn. It has now turned into "a spiral of downward expectations".

A fire-sale is under way in coastal cities, with Shanghai developers slashing prices 25pc

in November – much to the fury of earlier buyers, who expect refunds. This is spreading.

Property sales have fallen 70pc in the inland city of Changsa. Prices have reportedly

dropped 70pc in the "ghost city" of Ordos in Inner Mongolia. China Real Estate Index

reports that prices dropped by just 0.3pc in the top 100 cities last month, but this looks

like a lagging indicator. Meanwhile, the slowdown is creeping into core industries. Steel

output has buckled.

Beijing was able to counter the global crunch in 2008-2009 by unleashing credit, acting as

a shock absorber for the whole world. It is doubtful that Beijing can pull off this trick a

second time.

"If investors go for growth at all costs again they are likely to find that it works even

less than before and inflation returns quickly with a vengeance," said Diana Choyleva from

Lombard Streeet Research.

The International Monetary Fund's Zhu Min says loans have doubled to almost 200pc of GDP

over the last five years, including off-books lending.

This is roughly twice the intensity of credit growth in the five years preceeding Japan's

Nikkei bubble in the late 1980s or the US housing bubble from 2002 to 2007. Each of these

booms saw loan growth of near 50 percentage points of GDP.

The IMF said in November that lenders face a "steady build-up of financial sector

vulnerabilities", warning if hit with multiple shocks, "the banking system could be

severely impacted".

Mark Williams from Capital Economics said the great hope was that China would use is credit

spree after 2008 to buy time, switching from chronic over-investment to consumer-led

growth. "It hasn't work out as planned. The next few weeks are likely to reveal how little

progress has been made. China may ride out the storm over the next few months, but the

dangers of over-capacity and bad debt will only intensify".

In truth, China faces an epic deleveraging hangover, like the rest of us.
------------------------------------------------------------------------------------------
China exporters face "very severe" Q1 2012: Commerce Ministry

Reuters –

BEIJING (Reuters) - China's exporters will face "very severe" conditions in the first

quarter of 2012, the Commerce Ministry said on Thursday, with Europe's debt crisis dragging

on and dampening demand.

"The overall trade environment next year for China will be complicated, partly due to the

economic uncertainties in the European countries, and I should say that the export

situation in the first quarter of next year will be very severe," Commerce Ministry

spokesman Shen Danyang told a news conference.

Growth in Chinese exports and imports slowed in November, fresh evidence of faltering

demand abroad and at home that is pushing Beijing towards a more explicit pro-growth policy

stance, according to data published on December 10.

Customs data showed exports at their most sluggish in two years -- stripping out the

volatile month of February.

(Reporting by Aileen Wang and Nick Edwards; Editing by Ken Wills)