As we close in on the month of September, a global wildcard is acting like a giant wrecking ball.
CHINA’S WOES SPREADING ACROSS THE ECONOMY
August 24 (King World News) – Gerald Celente: Zhongrong International Trust may be the canary in China’s financial coal mine.
The trust manages a variety of what The Wall Street Journal called “esoteric financial products” and had the equivalent of $1.08 billion under its control at the end of last year.
Now four of the trust’s investment products have together missed $14 million in principal and interest payments to three publicly traded Chinese companies.
The trust, like many other Chinese financial institutions, made loans to property developers while the real estate market was soaring. That market now has crashed, as we report in “Evergrande Files For Bankruptcy” and “China’s Housing Crisis Continues” in this issue.
The trust is a part of Zhongzhi Enterprise Group, the owner of a range of asset management services and products. If the trust’s problems spread more widely through the larger organization, the difficulties could ripple out across the country’s financial sector. That, in turn, could imperil other industries.
However, “Zhongzhi is a black box,” Gavekal Research analyst Xiaoxi Zhang explained in a WSJ interview. “It’s a private company, they don’t have public disclosures, and some investors don’t know what kinds of assets they’re investing in.”
China’s economic woes are making U.S. officials nervous. U.S. treasury Secretary Janet Yellen called China’s mess a “risk factor” for the American economy.
In a recent note, Zhang wrote that “the worry is that a ‘Lehman moment’ beckons, threatening the solvency of China’s financial system.” She was referring to the collapse of investment bank Lehman Brothers that tipped the world into the Great Recession.
Beijing’s “regulatory vigilance” makes that unlikely, she added…
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U.S. IMPORTS SHIFT FROM CHINA TO CANADA AND MEXICO
As the rift between China and the U.S. deepens and companies seek to “reshore” their supply lines, manufacturers and retailers are shifting their purchases from China to Canada and Mexico and other parts of Asia, according to trade data released by the U.S. census bureau.
During the first half of this year, Chinese goods accounted for 13.3 percent of U.S. imports, the lowest for any such period since 2003, The Wall Street Journal reported. Mexican goods made up 15.7 percent and Canada’s totaled 15.4 percent.
For the 12 months ending 30 June, China made up 14.9 percent of all U.S. imports, while India, Thailand, and Vietnam totaled 24.6 percent.
In June this year, Mexico’s shipments into the U.S. equaled those from China. In dollar terms, Mexico is now the U.S.’s top trading partner, the WSJ said. Canada is second, knocking China into third place.
In the year ending 30 June, China’s shipments of machinery to the U.S. fell by $16.6 billion. American imports of Chinese electronics shrank $13.4 billion during the period.
“It’s now become clear to companies that the conflict on trade and technology is not going to go away,” Chad Bown, a senior fellow at the Peterson Institute for International Economics, told the WSJ. “They have begun to figure out ways to de-risk.”
The U.S. transition to other suppliers began in 2018 when the Trump administration imposed a wide slate of tariffs on Chinese imports. In 2019, China’s share of America’s imports from Asia slipped below the total from 25 other Asian countries.
PUBLISHER’S NOTE:
We have repeatedly provided Trends Journal subscribers with details and facts of China’s economic rise and fall. For over a decade we had forecast that while the 20th century was the American century, the 21st century would be the Chinese century… because the business of China is business while the business of America has been war.
But unexpectedly, in January 2020, on its Lunar New Year, “The Year of the Rat,” China joined the war club by launching the COVID War… and imposing three years of zero-COVID policy that destroyed the lives and livelihoods of hundreds of millions across its nation.
We have reported on China’s youth unemployment which is over 21 percent and how Beijing will not release new numbers that will show it is getting worse; the mass amount of apartment vacancies across the nation; its sinking stock market; contracting manufacturing activity; declining export and import trade.
We also noted that the nation’s economy began its big boom when it joined the World Trade Organization in 2001, and as with all booms—and China’s was unprecedented—there would be a bust.
The bust is seen in the housing market which accounted for some 25 percent of China’s GDP… and now seeing major property developers going under. Country Garden, one of its largest ones left, is on the brink of default.
And as we detail in this and previous Trends Journals, not only are the United States and its allies ramping up war confrontations with China, the trade and investment restrictions they keep putting on Beijing is making a bad situation worse.
To illustrate just how bad the debt level of the nation is, according to the Bank for International Settlements, total government debt in China is nearly 300 percent.
And as we note in this Spotlight, a bad Chinese economic situation is getting much worse.
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To listen to Alasdair Macleod discuss the plunge in gold and silver prices, the historic BRICS meeting that will take place next week and so much more CLICK HERE OR ON THE IMAGE BELOW.
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