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China to explode/implode....

REO 54

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Indeed, the comment section often times gives better insight to a article.


......then there is this which always makes me chuckle...


Mon, 07/27/2015 - 07:20 | 6358251thinkmoretalkless
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Ho Lee Fuk

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Mon, 07/27/2015 - 07:27 | 6358261B2u
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Yu Stin Ki Pu

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Mon, 07/27/2015 - 07:53 | 6358317Dead Man Walking
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Wee Tu Lo !



had to say it

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earplugs

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Of course, I was kidding about the windup part, but seriously, I didn't know China was any kind of major producers of automobiles
The chinese are smart. They know gas/diesel is not sustainable, so rather than invest in combustion engines that have a lot of parts, they decided that aimpler electric engines are what they want to invest in, by passing combustion altogether.

And as for china, she will never be seen as equal to the western world. China will always "just be china", to be dominated and controlled by the west just like japan. I dont even know why china bothers with crap such as joining the imf, which is a faux government come totalitarian system.
 

REO 54

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China shares slide as banks investigate their market exposure:

China shares fell again on Thursday after a report that banks were trying to get to grips with their financial exposure to the stock market slump in June, added to a pall of uncertainty for investors.

Concerns about the level of borrowing to fund market positions have been magnified by the grey market - a loosely regulated network of state-owned commercial banks, trust companies, fund managers, and grassroots finance firms.

If banks decide to rein in their exposure to the stock market, it could squeeze a line of credit for potential buyers and so undermine confidence in a price recovery.

The benchmark CSI300 index .CSI300 of the largest listed companies in Shanghai and Shenzhen closed down 2.9 percent, while the Shanghai Composite Index .SSEC closed down 2.2 percent.

Still, the performances were relatively calm compared with Monday, when stocks dropped more than 8 percent for their biggest one-day drop since 2007. Analysts have struggled to identify a single clear reason for the day's tumble.

Chinese authorities have scrambled to steady the rollercoaster stock markets this year. Share prices more than doubled in the six months to May, before crashing in June by more than a third.

Marshall Mays, director of Emerging Alpha Advisors, a fund management company in Hong Kong, said he expected Beijing to adopt a "whatever it takes" policy to underpin the stock markets. "The CCP cannot allow prices to collapse," he said, referring to the Communist Party.

POLITBURO VOWS ACTION

China's Politburo, a decision-making body of the Communist Party, promised to step up targeted adjustments of economic policy to foster stable growth in the world's second-largest economy, local media said on Thursday - adding to a series of statements lately that could point to more policy easing at any time.

In a rare acknowledgement of the growth challenges faced by China, state radio quoted the Politburo as saying the country had yet to find new drivers to power its economy at a time when old engines were flagging.

To ensure the Chinese economy can sustain a "reasonable" pace of growth, the Politburo reiterated the government's line that it would keep economic policies broadly stable, while increasing targeted adjustments.

Citing unidentified bank officials, the China Securities Journal said Chinese banks had been checking their exposure to the stock market via wealth management products and loans collateralised with shares.

Banks have been a major source of lending to the grey market for stock investors but the pace of the stock market fall in June may have put their money at risk, analysts said.

Monday's shock drop jolted markets, and traders said many investors are now waiting on the sidelines to see if prices stabilize before they will buy shares again. The exact reason for the fall remains a mystery.

One explanation may come from money markets. Authorities had pumped a net 85 billion yuan ($13.7 billion) into money markets at the end of June, just as they were trying to stop a free-fall in share prices.

Stocks stabilized, but then the central bank began cautiously draining funds and short-term borrowing costs crept higher. On cue, stocks tanked on Monday.

(Reporting by Donny Kwok in Hong Kong, Nathaniel Taplin and Pete Sweeney in Shanghai; Writing by Neil Fullick; Editing by Rachel Armstrong)

http://www.reuters.com/article/2015/07/30/us-china-markets-idUSKCN0Q412H20150730
 

REO 54

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Special Report: How smuggled workers power 'Made in China':



On a quiet river bend on the China-Vietnam border, a group of people clambered up a muddy bank. They had just glided across the river from the Vietnamese side in a longboat, guided by men on both banks signaling with flashlights.

The passengers scurried over to a group of men standing by their motorcycles, climbed aboard the bikes and disappeared into the night. Two Chinese police officers in uniform, stationed at a small post near the crossing point in the border town of Dongxing, watched impassively as they rode past.

"We come every night," said one young biker with spiky hair before he rode off. "Sometimes we carry (smuggled) goods into town. Sometimes we carry Vietnamese workers."

The bikers’ illicit cargo on that late summer night last year was illegal laborers. They were headed on a 700-kilometre (440 miles) journey to the economic powerhouse of Guangdong. The province, filled with factories making goods for export, has been dubbed “the workshop of the world.”

The smuggling of illegal workers from Vietnam across the 1,400-km (840-mile) border into China is growing. Labor brokers estimate that tens of thousands work at factories in the Pearl River Delta, which abuts Hong Kong. Workers from other Southeast Asian nations are joining them.

Visits by Reuters to a half-dozen factory towns in southern China revealed the employment of illegal workers from Vietnam is widespread, and authorities often turn a blind eye to their presence. Workers from Myanmar and Laos were also discovered to be working in these areas.

Reuters found that employers supply these illegal workers with fake identity cards and sometimes confine them to factory compounds to keep them out of sight of the authorities. Chinese human smuggling syndicates, known as “snakeheads", work with Vietnamese gangs to control the lucrative trade, workers and labor brokers in China said. The syndicates take a cut of the workers' monthly wages - up to 500 yuan ($80) a month in some cases, according to one broker - and charge factory owners a fee.

(For graphic on China's illegal workers, see: reut.rs/1M5YJjd)


INFLECTION POINT

Vietnamese officials express concern at the illegal flow of labor into China. The number of Vietnamese crossing a long border with “complex terrain" has increased in recent years, posing a challenge for both governments, said Pham Thu Hang, deputy spokesperson at the foreign ministry in Hanoi. She did not have figures on the illegal flow. "Taking advantage of this situation, some bad elements have brought Vietnamese to work illegally in China, making it hard for the labor administration in both countries," she said.

A Chinese foreign ministry spokeswoman declined to comment, directing Reuters to other government departments she did not name. The Ministry of Public Security in Beijing did not respond to a faxed request for comment, nor did the Guangdong province Public Security Department.

The growing influx of illegal labor into China is evidence of an economy that has reached an inflection point. Chinese factories have long depended on an abundant supply of cheap domestic labor to power the country’s $2.3 trillion-a-year export sector. But the number of people joining the workforce is declining as China's society ages and wages are rising.

Factory owners are struggling to retain their edge. They face a choice. They can move production from the coast where wages are higher, either to inland provinces or across the border to places like Vietnam and Cambodia. Or they can pay the snakeheads and labor brokers to smuggle in foreign workers who cost less, have no protections and can be easily laid off.

The rest of the world will begin to feel the effects as China transitions away from its cheap labor-intensive export model, says Jianguang Shen, the chief Asia economist for Mizuho Securities Asia Ltd. who wrote a research report in June on China’s slowing supply of internal migrant workers. “China has been subsidizing other parts of the global economy, not only by cheap labor but also (through) very low welfare protection of the workers … In the global sense, if everything else is equal, global manufactured costs may become a little more expensive.”

Across Asia, the search for new sources of cheap workers to power the continent’s low-margin, labor-intensive industries is boosting migration - and along with it, the business of people smuggling and human trafficking. Vietnam, a nation of 92.5 million people, sent 107,000 workers abroad legally last year – a 20 percent increase from the year before.

China does not release any official data on illegal foreign workers. One Chinese labor broker estimated "at least 30,000" illegal workers were employed just in Dongguan, an industrial city of 8 million and home to tens of thousands of export-oriented factories. An April report in the official China Daily newspaper said authorities in Guangdong province had investigated at least 5,000 cases last year of illegal foreign workers.

Blue-collar wages in China have nearly doubled in the past five years to roughly 2,800 yuan (about $450) a month for production-line workers, according to China’s National Bureau of Statistics. Some Vietnamese are paid about half of that, labor brokers and workers said. Others make as much as Chinese workers. But even then, manufacturers are saving because they don’t pay medical insurance or pension contributions for these workers.

For factory workers in Vietnam earning $250 a month, the opportunity of better pay across the border is irresistible. One Vietnamese factory worker, who came from a town near the border in Phu Tho province, said by phone half the people between the ages of 30 and 45 in her town had left for China, where wages were "double, or even triple" what they are at home.


JUNGLE PROCESSION

On the Vietnamese side of the border, the city of Lang Son is one of the two main smuggling points into China. A Vietnamese worker in China's Fujian province interviewed by phone said a guide led him and about 1,000 workers in a snaking procession from Lang Son along a barely discernible jungle path across the land border into China last year. They kept out of sight of Vietnamese border officials, he said. But on the other side of the border, Chinese customs officers ignored them, the worker said.

A motor bike rider in Dongxing drove a Reuters reporter along a route used by smugglers to show how minivans and large tourist coaches filled with Vietnamese evaded police and military checkpoints on main roads. At times, the vehicles wind through small villages to their final destination in Dongguan and other Pearl River Delta factory towns. Scouts are stationed along the way to raise the alarm if police are spotted. Local residents provide rest stops where smuggled workers can stay until the coast is clear, labor brokers and workers told Reuters.

If factories place an order for foreign workers, “we can bring in hundreds at a time," said a broker surnamed Zhang. He said he deals directly with the smuggling gangs. Sitting in his office in Dongguan, furnished with a coffee table and black leather sofa, Zhang said “the snakeheads can bring the workers across within a week.”

Many illegal foreign workers are housed on factory premises to avoid detection by local authorities. But in some places that Reuters visited in southern China, the workers seemed to move around unimpeded.

In the Pearl River Delta factory town of Dalingshan, a company called Jia Hao produces wooden picture frames for export to the United States and Europe. There, hundreds of workers, some wearing Jia Hao’s gray polo shirt uniforms, strolled in the streets after work hours. They played pool and ate at noodle stalls along the road. They did not seem to understand Chinese when spoken to. A manager at the plant told Reuters the workers were illegally brought into China from Myanmar.

Local law enforcement officials called "Chengguan” patrolled the area on foot and on mopeds. They showed no interest in the workers.

Jia Hao's factory manager denied the workers were illegal, saying they were ethnic Wa people, originally from Myanmar's northern Shan state but now living in the Ximeng region of China’s southwestern Yunnan province.

“The Public Security Bureau gave us access to a website to check. For every worker, we need to check if their ID is real, and only then can we hire them,” said Zheng Lunshun, the factory manager at Jia Hao. “If their identity cards were fake, we wouldn't be able to find them on the online system.”

A duty officer at the local police branch in Dalingshan said police had inspected the factory and found no illegal workers. Days after contacting the police and the factory, Reuters observed far fewer workers leaving the factory gates after work or milling around the streets than before.


more at link:

http://www.reuters.com/article/2015...-illegal-special-report-idUSKCN0QB00H20150806
 

REO 54

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China Enters Currency War - Devalues Yuan By Most On Record:


"Finally, putting aside speculative trader P&L losses, many of which are said to be of Japanese origin and thus will hardly enjoy much or any PBOC sympathies, here is CLSA's Russel Napier on what the long-term fate of the Renminbi will be:

“Mercantilist alchemy transmutes China’s external surpluses into foreign exchange reserves and renminbi. But with capital outflows from China at record highs, those surpluses are only maintained due to its citizens’ foreign-currency borrowing. Bank-reserve and M2 growth are already near historical lows and are driving tighter monetary policy. This will lead to severe credit-quality issues and force the authorities to accept a credit crunch or opt for a major devaluation of the renminbi. They will do the latter; and despite five years of QE, the world will get deflation anyway.”
One now wonders how the Bank of Japan and The Bank of Korea will respond.. especially as protectionism rears it ugly head also..."


http://www.zerohedge.com/news/2015-...t-record-plunges-28-month-lows-against-dollar
 

REO 54

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Huge explosion rocks Tianjin in northern China:

A huge explosion hit an industrial area in the northeastern Chinese city of Tianjin late on Wednesday evening, triggering a blast wave felt several kilometers away and injuring at least 50 people, domestic media reported.

State broadcaster China Central Television reported that the blast had erupted in a shipment of explosives at around 11.30 pm local time and that an unknown number of people had been injured, the South China Morning Post said on its website.

Videos of the explosion showed flames lighting up the night sky and state-run news agency Xinhua quoted residents in nearby districts as saying the blast had shattered windows. Citing a local hospital, Xinhua said more than 50 people had been injured.

http://www.reuters.com/article/2015/08/12/us-china-blast-idUSKCN0QH2B220150812
 

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Huge explosion rocks Tianjin in northern China:

A huge explosion hit an industrial area in the northeastern Chinese city of Tianjin late on Wednesday evening, triggering a blast wave felt several kilometers away and injuring at least 50 people, domestic media reported.

State broadcaster China Central Television reported that the blast had erupted in a shipment of explosives at around 11.30 pm local time and that an unknown number of people had been injured, the South China Morning Post said on its website.

Videos of the explosion showed flames lighting up the night sky and state-run news agency Xinhua quoted residents in nearby districts as saying the blast had shattered windows. Citing a local hospital, Xinhua said more than 50 people had been injured.

http://www.reuters.com/article/2015/08/12/us-china-blast-idUSKCN0QH2B220150812
Weeeeeeeeee!!!! :36_2_36:
 

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FWIW....



Jim Chanos' Dire Prediction On China: "Whatever You Might Think, It's Worse"
Submitted by Tyler Durden on 08/22/2015 17:00 -0400


"In fact, like many of us, sometimes they don't have a clue."
That’s from Jim Chanos, who sat down on Friday with CNBC’s Fast Money A-Team which, like the rest of the mainstream financial media punditry, can’t seem to figure why things unravelled so quickly last week.

Chanos was referring to the Chinese government and more specifically to their efforts to simultaneously manage a decelerating economy, a currency devaluation, and a bursting stock market bubble.

As we’ve said on too many occasions to count, the task is quite simply impossible, a reality which often manifests itself in contradictory policy initiatives and directives emanating from Beijing. Despite the plunge protection national team’s best efforts to channel some CNY900 billion into SHCOMP large caps, China’s stock market looks to be on the verge of an outright meltdown, and the effort to support the yuan after the devaluation is draining liquidity and tightening money markets, rendering policy rate cuts less effective even as further easing becomes more necessary with every FX intervention.

In short, the situation is, as Chanos puts it, "worse than you think," and because it’s sometimes hard to get through to CNBC’s Halftime crew, Chanos reiterated the sentiment: "Whatever you might think, it's worse."

See the interview below.

http://www.zerohedge.com/news/2015-...tion-china-whatever-you-might-think-its-worse
 

REO 54

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Chinese Stocks Are Crashing; Yuan Devalues, Deposit Rate Spikes To Record High, Japan Denies "G7 Response" Planned:

Following yesterday's bloodbath (and the continued carnage around the world), AsiaPac stocks are lower with Japan unable to mount any sustained bounce despite every effort to lift JPY. The propaganda-fest is in full swing as Amari claims JPY is safe-haven asset and Aso denies any coordinated G7 response is being planned (which means they are all feverishly trying to figure out how to 'save' the world again from a 4-day stock drop). China is ugly with stocks down hard in the pre-open (CSI-300 -4.3%) as offshore Yuan depo rates spike to 22.9% - a record high - as liquidity outflows must be accelerating (as PBOC adds another CBNY150bn liquidity). China devalues Yuan 0.2% - most in 11 days.

Carnage -

*CHINA SHANGHAI COMPOSITE SET TO OPEN DOWN 6.4% TO 3,004.13
*CHINA'S CSI 300 INDEX SET TO OPEN DOWN 6.3% TO 3,070.01

More at link...

http://www.zerohedge.com/news/2015-...eposit-rates-spike-record-high-china-devalues
 

REO 54

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Official: China Confirms It Has Begun Liquidating Treasuries, Warns Washington:

( question? Who the Ef is buying US T's? What's a Belgium?)

Article:

On Tuesday evening, we asked what would happen if emerging markets joined China in dumping US Treasurys. For months we’ve documented the PBoC’s liquidation of its vast stack of US paper. Back in July for instance, we noted that China had dumped a record $143 billion in US Treasurys in three months via Belgium, leaving Goldman speechless for once.

We followed all of this up this week by noting that thanks to the new FX regime (which, in theory anyway, should have required less intervention), China has likely sold somewhere on the order of $100 billion in US Treasurys in the past two weeks alone in open FX ops to steady the yuan. Put simply, as part of China's devaluation and subsequent attempts to contain said devaluation, China has been purging an epic amount of Treasurys.

But even as the cat was out of the bag for Zero Hedge readers and even as, to mix colorful escape metaphors, the genie has been out of the bottle since mid-August for China which, thanks to a steadfast refusal to just float the yuan and be done with it, will have to continue selling USTs by the hundreds of billions, the world at large was slow to wake up to what China’s FX interventions actually implied until Wednesday when two things happened: i) Bloomberg, citing fixed income desks in New York, noted "substantial selling pressure" in long-term USTs emanating from somebody in the "Far East", and ii) Bill Gross asked, in a tweet, if China was selling Treasurys.

Sure enough, on Thursday we got confirmation of what we’ve been detailing exhaustively for months. Here’s Bloomberg:

China has cut its holdings of U.S. Treasuries this month to raise dollars needed to support the yuan in the wake of a shock devaluation two weeks ago, according to people familiar with the matter.

Channels for such transactions include China selling directly, as well as through agents in Belgium and Switzerland, said one of the people, who declined to be identified as the information isn’t public. China has communicated with U.S. authorities about the sales, said another person. They didn’t reveal the size of the disposals.

The latest available Treasury data and estimates by strategists suggest that China controls $1.48 trillion of U.S. government debt, according to data compiled by Bloomberg. That includes about $200 billion held through Belgium, which Nomura Holdings Inc. says is home to Chinese custodial accounts.



The PBOC has sold at least $106 billion of reserve assets in the last two weeks, including Treasuries, according to an estimate from Societe Generale SA. The figure was based on the bank’s calculation of how much liquidity will be added to China’s financial system through Tuesday’s reduction of interest rates and lenders’ reserve-requirement ratios. The assumption is that the central bank aims to replenish the funds it drained when it bought yuan to stabilize the currency.


Moar here:

http://www.zerohedge.com/news/2015-...begun-liquidating-treasuries-warns-washington
 

REO 54

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Asian shares slip as downbeat China PMIs revive growth fears:

Asian shares fell on Tuesday and the dollar struggled after twin surveys showed China's manufacturing sector in the grip of its worst slump in several years, raising fresh fears about the health of its economy.

China's official Purchasing Managers' Index (PMI) fell to 49.7 in August from the previous month's reading of 50.0, the weakest showing in three years.

Separately, the private Caixin/Markit China Manufacturing Purchasing Managers' Index (PMI) showed a final reading of 47.3 in August, the lowest since March 2009.

MSCI's broadest index of Asia-Pacific shares outside Japan slipped 0.3 percent, erasing its early gains. The index shed more than 10 percent in the month of August, its worst monthly performance since 2012, on fears of global fallout from slowing momentum in China.

"The broad based decline in almost all components of the PMI hints the central bank was right in introducing further easing measures on 25 August," said Chester Liaw, an economist at Forecast Pte Ltd in Singapore.

"It is clear that the interest rates and RRR cuts were not only aimed at containing further falls in the SSEC, but to boost activity in the real economy."

China's cooling demand is already taking a toll on the economies of its trade-reliant Asian neighbors. South Korea reported on Tuesday its exports fell 14.7 percent in August from a year earlier, worse than expected and the biggest drop in six years.

Losses on Wall Street also soured Asian sentiment after comments from Federal Reserve Vice Chairman Stanley Fischer heightened fears among investors of a potential U.S. interest hike in September. U.S. stock futures in Asia were down 1.5 percent.

Japan's Nikkei stock index was down 1.6 percent in early trade. The Nikkei lost 8.2 percent in August, its biggest monthly decline since January 2014.

Chinese shares opened lower, with the Shanghai Composite Index down 1.8 percent and the CSI300 index down 2.2 percent. Both indexes skidded around 12 percent in August, their third straight monthly decline. China's stock markets have now lost nearly 40 percent of their value since mid-June despite unprecedented government support steps.

The Australian dollar edged up against its U.S. counterpart, adding about 0.2 percent to $0.7125 ahead of the Reserve Bank of Australia's latest policy decision at 0430 GMT.

The RBA is considered almost certain to hold interest rates steady and some are expecting a more dovish statement from the central bank amid worries about China, which is Australia's biggest export market.

The U.S. dollar remained under pressure as investors shunned risk and remained wary ahead of U.S. employment data later in the week that could offer clues about the timing of the Fed's long-awaited hike to interest rates.

The greenback was down about 0.2 percent at 120.92 yen, while the euro rose about 0.4 percent to $1.1252.

In commodities trading, crude oil futures gave back some of their biggest three-day price surge in 25 years that saw prices soar more than $10 a barrel.

On Monday, oil jumped more than 8 percent on downward revision of U.S. crude production data and OPEC's expressed willingness to discuss curbs on output. [O/R]

U.S. crude slipped 3.5 percent to $47.48 a barrel, while Brent lost 3.3 percent to $52.37 a barrel,

(Additional reporting by Kevin Yao and Winni Zhou in Beijing; Editing by Kim Coghill & Shri

http://www.reuters.com/article/2015/09/01/us-markets-global-idUSKCN0R12AH20150901
 

REO 54

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REO, congrats on your forward thinking! You were ahead all
of us, on this website!

I was one year late after your pronouncement!

To be honest, it was more of a gut feeling than anything. Putting together all the aggregate info on how China's economy was unfolding then seeing how on they really showed up, ie " ghosts cities" buying USt's and on & on just didn't seem right. I attribute that gut feeling buy hanging out here at GIM and trying to learn

Still feel like a mushroom though in regards to knowing real information..... in the dark and fed $hit!
 

blueice

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To be honest, it was more of a gut feeling than anything. Putting together all the aggregate info on how China's economy was unfolding then seeing how on they really showed up, ie " ghosts cities" buying USt's and on & on just didn't seem right. I attribute that gut feeling buy hanging out here at GIM and trying to learn

Still feel like a mushroom though in regards to real information..... in the dark and fed $hit!
Some times it is as simple as a gut feeling, rather than the use of
a bank of computers and their paper models.

Your feelings were contrarian to what was being said here and elsewhere..Remember, Red China,
the world's economic SUPER power they were all saying!..:signs8:

This group, also eagerly proclaim the death of the US Dollar; replacing the world currency
with the Mao! :466:

I was following Mr Chanos and another Red China expert and what they were stating was quite
alarming...One of numbers that stuck out, was 46% of their GNP was construction, four times the
typical rate for a nation.
 

REO 54

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Numbers Are In: China Dumps A Record $94 Billion In US Treasurys In One Month:

Shortly after the PBoC’s move to devalue the yuan, we noted with some alarm that it looked as though China may have drawn down its reserves by more than $100 billion in the space of just two weeks. That, we went on the point out, would represent a stunning increase over the previous pace of the country’s reserve draw down, which we’ve began documenting months ahead of the devaluation (see here, for instance). We went on to estimate, based on the estimated size of the RMB carry trade unwind, how large the FX reserve liquidation might need to be to offset capital outflows and finally, late last week, we suggested that China’s official FX reserve data was set to become the new risk-on/off trigger for nervous, erratic markets. In short, the pace at which Beijing is burning through its USD assets in defense of the yuan has serious implications not only for investors’ collective perception of market stability, but for yields on core paper, for global liquidity, and for US monetary policy.

On Monday we got the official data from China and sure enough, we find out that the PBoC liquidated around $94 billion in reserves during the month of August and as Goldman argues (see below), the "real" figure might have been closer to $115 billion. Whatever the case, it’s a staggering burn rate and needless to say, were the PBoC to continue to liquidate its assets at this pace, it would necessitate a raft of RRR cuts and hundreds of billions in short-term liquidity ops to ensure that money market don’t seize up in the face of the liquidity drain.

Here’s some commentary from across sellside desks on the official numbers:

From RBC’s Sue Trinh:
China FX reserves suggest about $140b used to defend yuan in April once valuation is accounted for
Believes PBOC has been intervening to maintain the yuan’s stability since the devaluation, but this kind of intervention can’t continue indefinitely
It’s unsustainable in the long run; yuan is overvalued by around 15% by RBC’s latest estimate; still targeting USD/CNY at 6.56 by year-end and 6.95 by the end of 2016
From Commerzbank’s Zhou Hao:
Decline in foreign reserves clearly suggests China’s central bank intervened intensively in the FX market to stabilize CNY exchange rate
“One-off devaluation” in mid-Aug. triggered market expectations of further CNY deprecation, which has not only endangered the financial stability, but also posts a downside risk to the economy due to capital outflows
It’s costly because frequent intervention will burn foreign reserves rapidly and tighten the onshore market liquidity; that said, further tightening of regulations is expected near term
Expects spread between CNY and CNH is likely to persist as PBOC has become an active player in onshore market
From Goldman:
The People’s Bank of China (PBOC) reported that its foreign exchange reserves dropped by US$94bn in August, to US$3.557tn at the end of the month. However, it is not straightforward to derive the actual scale of FX reserves sales from the headline FX reserves data, given uncertain valuation effects and possible balance sheet management by the PBOC.
It is possible to get an approximate sense about valuation effects stemming from currency movement: e.g., assuming the currency composition of the PBOC’s FX reserves broadly follows that of the average country’s (using the IMF COFER weights, which suggest roughly 70% in USD for EM countries), the currency valuation effect would probably be positive to the tune of roughly US$20bn (i.e., if we only look at the change in headline FX reserves as a gauge of sales of FX reserves, sales of FX reserves might have been underestimated by around US$20bn, given the currency valuation effect). However, besides currency movements, there could also be significant valuation effects from changes to the market prices of the PBOC’s investment portfolios, and the direction and size of those effects is hard to measure given the uncertainty of the asset composition. Moreover, there could also be possible short-term transactions and agreements between the PBOC and banks that may complicate the interpretation of the change in FX reserves as an underlying measure of RMB demand.
Of course the huge draw down was widely anticipated and indeed, we've explored and detailed virtually every angle of this story in the lead up to the data. The key takeaway here is that we now have official confirmation that August saw $94 billion in reverse QE (and more likely $115 billion) or, quantitative tightening as Deutsche Bank puts it.

We can, as we explained on Saturday, argue about what the ultimate effect on safe haven assets will be, but what's not up for debate is that conceptually speaking, China's massive UST dumping is the opposite of Western central bank QE and as such should be expected to pressure yields. More specifically, Citi has suggested that for every $500 billion in EM FX reserve liquidation, there's an attendant 108 bps or so of upward pressure on 10Y yields. Similarly, Deutsche Bank, citing the extant literature, flags 50-60bps of upward pressure on 5Y yields for every $100 billion in monthly EM FX reserve liquidations.

The takeaway, as we put it last week, is that if the Fed hikes this month, it will be tightening into a tightening.

But it's not that simple. It's also possible that, if China's FX reserve draw downs do indeed end up serving as a trigger for risk-off behavior (i.e. a selloff in risk assets), the subsequent flight to safety could end up driving yields on long bonds lower, not higher. We discussed this in detail over the weekend.

Still, China isn't the only country liquidating its USD assets. When you consider that global EM FX reserves amount to more than $7 trillion, it seems reasonable to ask whether the flight to safety that would invariably accompany a worldwide selloff in risk assets would be sufficient to replace the lost bid from massive reserve draw downs. Or, as we put it on Saturday, "the real question is what would everyone else do. If the other EMs join China in liquidating the combined $7.5 trillion in FX reserves (i.e., mostly US Trasurys but also those of Europe and Japan) shown below into an illiquid Treasury bond market where central banks already hold 30% or more of all 10 Year equivalents (the BOJ will own 60% by 2018), then it is debatable whether the mere outflow from stocks into bonds will offset the rate carnage."

And that consideration, in turn, puts the Fed in a very, very difficult spot. A rate hike cycle will put further pressure on already beleaguered EM currencies which raises the possibility that the FX reserve liquidation will be larger than the eventual safe haven flows and besides, there's bound to be a lag between the liquidation of USD assets and the flight to safety and given the potential for extraordinary bouts of volatility in UST, JGB, and German Bund markets, it's anyone's guess what happens in between.

Whatever the case, something will have to give here. That is, all of these dynamics (i.e. a Fed hike, China's massive UST dumping, an EM meltdown precipitating FX reserve drawdowns, illiquid markets for the same assets everyone is dumping, hemorrhaging petrostate budgets, etc.) simply cannot coexist for long without something snapping because, as we put it last week, in this very unstable arrangement, the smallest policy error will reverberate exponentially, and those reverberations can lead to only one thing: the Fed's admission of policy failure by adopting a tightening bias, and ultimately launching another phase of monetary easing, be it QE4 or perhaps even the long-overdue and much anticipated Friedmanesque "helicopter money" episode.

http://www.zerohedge.com/news/2015-...umps-record-94-billion-us-treasurys-one-month
 

REO 54

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They are changing thier way to calculate there GDP to be more accurate or what? Hmmmm


China changes GDP calculation method:

China is tweaking the way it reports quarterly GDP data, paving the way for the nation to adopt an International Monetary Fund (IMF) standard as it pursues its goal of gaining reserve currency status for the yuan.

The new reporting method will allow China to adopt the IMF’s Special Data Dissemination Standard and will better reflect short-term fluctuations in the economy, the National Bureau of Statistics said yesterday. Previously, China’s quarterly GDP data, in terms of value and growth rates, was derived from cumulative figures rather than economic activity of that particular quarter.

The bureau, which this week also revised lower its GDP growth number for 2014 to 7.3 per cent from 7.4 per cent, said it will publish third-quarter GDP data, due out on Oct 19, based on the new methodology. Agencies

http://www.todayonline.com/business/china-changes-gdp-calculation-method
 

Cigarlover

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ahh the imf standard. Just lie.
 

REO 54

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Meanwhile back at the boat launch ........



China starts operating 2 lighthouses on disputed South China Sea reefs:

China has started to operate two lighthouses on a reef on a disputed island chain in the South China Sea, a state news agency reported, amid rising concerns among the U.S. and China’s neighbors about Beijing’s maritime intentions.

The Ministry of Transport held a completion ceremony Friday for the 164-foot-high Huayang and Chigua lighthouses on Huayang Reef in the Spratly Islands, according to the Xinhua News Agency.

The Ministry of Transport held a completion ceremony Friday for the 164-foot-high Huayang and Chigua lighthouses on Huayang Reef in the Spratly Islands, according to the Xinhua News Agency.

The Spratlys, mostly barren islands, reefs and atolls that are believed to be atop oil and natural gas deposits, straddle one of the world's busiest sea lanes. They are also claimed by Taiwan, Malaysia, the Philippines, Vietnam and Brunei.

Tensions have been brewing between Washington and Beijing about China’s claim to virtually all of the South China Sea. The U.S. and the Philippines have expressed concerns over China’s land reclamation projects around reefs and atolls, saying they could be used to base military planes and navy ships to intimidate other claimants and threaten freedom of navigation, and have called for a freeze on such activity.

China has bristled at what it sees as U.S. interference in the region and says it is within its sovereign rights in developing islands made from sand piled on top of reefs and atolls.

Reuters reports China said it wouldn’t stand for violations of its territorial waters in the name of navigational freedom, as the U.S. considers sending a Navy vessel within its 12-nautical-mile zones around the chain.

The U.S. has mulled sending a ship to the artificial islands, signaling it doesn’t recognize Beijing’s sovereignty over the islands China has built. The U.S. has asserted it will continue to operate wherever international law permits.

Xinhua said the lighthouses were meant to address a severe shortage in navigational aids, as well as shortages in maritime emergency and oil-spill response forces, that "has immensely hindered the navigational safety and economic and social development" in the South China Sea. It said China's transport ministry would continue to construct facilities to provide passing vessels and countries in the region with navigational services.


http://www.foxnews.com/world/2015/1...-disputed-south-china-sea-reefs/?intcmp=hpbt1
 

REO 54

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Oh great. The Halfican in Chief thinks he's Shaft or something. Gets his ass handed to him by Putin, now he's thinks he can be a bad ass in the Pacific. Sheesh.


Obama Won't Back Down After Chinese Threat, Sends U.S. Warships To Contested Islands In "Matter Of Days":

On Friday, we reported the latest provocation in what has truly become a very dangerous, if largely pointless, staring contest between Beijing and Washington over China’s reclamation of land in The South China Sea.

Responding to suggestions that the US was set to sail warships around the islands Beijing has constructed atop reefs in the Spratlys, China served noticed that it would “never allow any country to violate China's territorial waters and airspace in the Spratly Islands, in the name of protecting freedom of navigation and overflight.” This was simply a formalized version of the more concise phrasing the PLA navy used when they instructed the pilots flying a US spy plane to “Go now!” when it ventured too close to Fiery Cross earlier this year.

It’s not immediately clear what China intends to do with the islands and further, it’s not entirely clear why anyone should necessarily care if Beijing wants to build “sand castles” in the middle of the ocean, but then again, for America’s regional allies the land reclamation efforts look a lot an attempt to build a series of military outposts by creating sovereign territory where there was none thereby effectively redrawing maritime boundaries and so, big brother in Washington is set to step in in order to protect vital shipping lanes.

Of course having already said that the navy plans to sail ships into the waters around the islands, the US can ill-afford to allow China’s “we won’t tolerate that” pronouncement to deter the Pentagon because the optics around that would be terrible at a time when the world is already questioning the strength and resolve of the US military. So the ships will indeed sail. Here’s WSJ:

More at link :

http://www.zerohedge.com/news/2015-...reat-sends-warships-china-islands-matter-days
 

Brio

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'Halfican" :haha: :haha: good one.
Was just reading that, wtf does he think he's doing? What could he possibly be thinking to gain except another loss?
 

REO 54

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'Halfican" :haha: :haha: good one.
Was just reading that, wtf does he think he's doing? What could he possibly be thinking to gain except another loss?
I got that from member eyebone. Love it!
 

Brio

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One comment by grunk:

"Obama to draw line in the water" :haha:

edit. Another comment suggests all US companies in China can leave or be nationalized. Hmmm...
 

REO 54

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Concentrated elites of pretty paper...... oh I'm sure they diversified thier assets a bit.


Survey: China passes U.S. in number of billionaires:

BEIJING (AP) - China has passed the United States in the number of billionaires, driven by the rise of fortunes in technology and manufacturing, according to a survey released Thursday.

Despite a cooling economy, the number of Chinese billionaires rose by 242 this year to 596, according to The Hurun Report, which follows China's wealthy. It said that surpassed the 537 the company found in the United States.

The report reflected the success of online retailing, entertainment and other service businesses, while traditional industries such as steel and natural resources have declined.

No. 1 on this year's list is Wang Jianlin, chairman of Wanda Group, which operates hotels, shopping malls and cinemas, at $34.4 billion, up 52 percent from last year.

No. 2 is Jack Ma of e-commerce giant Alibaba Group at $22.7 billion, followed by Zeng Qinghou of the Wahaha soft drinks and mineral water empire with $21.2 billion.

Ma Huateng of Tencent Ltd., operator of the popular WeChat social media service, is in fourth place and Jun Lei of smartphone maker Xiaomi is No. 5.

New additions included Frank Wang, founder of DJI, the world's biggest maker of civilian drone aircraft, with a net worth of $3.7 billion, and Cheng Wei of taxi-hailing app Didi-Kuaidi, with $1 billion.

China's economy grew by 7 percent in the quarter ending in July over a year earlier, down from last year's 7.4 percent annual expansion and the lowest level since the 2008 global crisis.

Communist leaders are trying to steer the world's second-largest economy to more self-sustaining growth driven by domestic consumption and service businesses to reduce reliance on trade, investment and heavy industry.

"Despite the slowdown in the economy, China's richest have defied gravity, recording their best year ever, and creating more wealth than any country has ever done before in a year," Rupert Hoogwerf, chairman and chief researcher of The Hurun Report, said in a statement.

http://www.komonews.com/news/busine...lionaires-333088751.html?mobile=y&clmob=y&c=n
 

REO 54

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6.9% ? Wonder what the real numbers are......beats forecast slightly.... Pfffffft. BS!


China third-quarter economic growth cools to 6.9 percent year-on-year, but beats forecasts slightly:

China's economic growth eased to 6.9 percent in the third quarter from a year earlier, beating expectations but still the slowest since the global financial crisis, putting pressure on policymakers to roll out more support measures as fears of a sharper slowdown spook investors.

Analysts polled by Reuters had predicted gross domestic product (GDP) for the world's second-largest economy would come in at 6.8 percent, compared with 7 percent in the prior quarter.

Quarter-on-quarter growth was 1.8 percent, the National Bureau of Statistics said at a news conference on Monday.

The market had expected GDP growth to come in at 1.7 percent on a quarterly basis, compared to a revised reading of 1.8 percent the prior quarter.

Fixed-asset investment growth eased to 10.3 percent year-on-year in the Jan-September period, missing market expectations.

Analysts polled by Reuters predicted investment growth would come in at 10.8 percent, compared with 10.9 percent posted the prior month.

Industrial output growth also cooled more than expected to 5.7 percent, disappointing analysts who expected it to rise 6 percent on an annual basis after a rise of 6.1 percent the prior month.

Retail sales quickened to 10.9 percent.

Analysts forecast they would rise 10.8 percent on an annual basis after a rise of 10.8 percent the prior month.

http://www.reuters.com/article/2015/10/19/us-china-economy-idUSKCN0SD04B20151019
 

REO 54

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After 40 years it's having impact that will and is impacting their economy. Ah, Unintended


China to allow all couples two children to counter aging population:


China will ease family planning restrictions to allow all couples to have two children after decades of a strict one-child policy, the ruling Communist Party said on Thursday, a move aimed at alleviating demographic strains on the economy.

The policy is a major liberalization of the country's family planning restrictions, already eased in late 2013 when Beijing said it would allow more families to have two children when the parents met certain conditions.

A growing number of scholars had urged the government to reform the rules, introduced in the late 1970s to prevent population growth spiraling out of control, but now regarded as outdated and responsible for shrinking China's labor pool.

For the first time in decades the working age population fell in 2012, and China, the world's most populous nation, could be the first country in the world to get old before it gets rich.

By around the middle of this century, one in every three Chinese is forecast to be over 60, with a dwindling proportion of working adults to support them.

The announcement was made at the close of a key Party meeting focused on financial reforms and maintaining growth between 2016 and 2020 amid concerns over the country's slowing economy.

China will "fully implement a policy of allowing each couple to have two children as an active response to an ageing population", the party said in a statement carried by the official Xinhua news agency.

There were no immediate details on the new policy or a timeframe for implementation.

Wang Feng, a leading expert on demographic and social change in China, called the change an "historic event" that would change the world but said the challenges of China's aging society would remain.

"It's an event that we have been waiting for a generation, but it is one we have had to wait much too long for," Wang said.

"It won't have any impact on the issue of the aging society, but it will change the character of many young families," Wang said.


http://www.reuters.com/article/2015/10/29/us-china-politics-plenum-idUSKCN0SN16Y20151029
 

GOLDBRIX

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There is such a shortage of females it will take two generations just to start an uptick.
 

REO 54

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China's Manufacturing Misses; Nonmanufacturing Worst Since 2008 Despite Unprecedented $1 Trillion "Debt Injection":

The most anticipated economic release over the weekend was the early glimpse into China's manufacturing and non-manufacturing sectors via the two key PMI surveys released by China's National Bureau of Statistics, to get a sense if the slowdown across China is stabilizing or, as some have suggested, rebounding. It did not: overnight the NBS reported that the manufacturing PMI remained unchanged in October at 49.8 missing consensus estimates of a modest rebound to 50.0, its third consecutive month in contraction territory.

More at link:

http://www.zerohedge.com/news/2015-...ring-worst-2008-despite-unprecedented-1-trill

Who really knows what China's true numbers are, or anyone else for that matter...
 
Last edited:

FunnyMoney

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essay removed
 
Last edited:

REO 54

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REO 54

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Corzine is so lucky he isn't Chinese....


Partner Of "China's Carl Icahn" Executed By Local Police After Attempting Escape Following Insider Trading Charges:

Snip...
"And that's not all: moments ago Bloomberg also reported that Shanghai police just raided Zexi Investment's Shanghai office on Sunday, "taking away computers and other materials, according to a person familiar with the matter, in the latest attempt by Chinese authorities to crack down on strategies blamed for exacerbating a $5 trillion stock-market rout."

http://www.zerohedge.com/news/2015-...l-police-after-attempting-escape-following-in
 

REO 54

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World | Wed Nov 4, 2015 7:30am EST Related: WORLD
Rivals China, Taiwan to hold surprise meeting weeks before island's elections
TAIPEI/BEIJING | BY J.R. WU AND BEN Blanchard

Chinese President Xi Jinping will hold talks with the leader of neighboring Taiwan on Saturday, the first such meeting between the two political rivals since the Chinese civil war ended in 1949 and coming weeks ahead of elections on the island.

The meeting in Singapore coincides with rising anti-China sentiment in Taiwan ahead of the presidential and parliamentary polls in January which the pro-China Kuomintang (KMT) is likely to lose to the opposition Democratic Progressive Party (DPP), which traditionally favors independence from China.

Taiwan President Ma Ying-jeou, who steps down next year due to term limits, has made improving economic links with China a key policy since he took office in 2008. He has signed landmark business and tourism deals, though there has been no progress in resolving their political differences.

Andrew Hsia, head of the Mainland Affairs Council, Taiwan's ministry in charge of China policy, said the meeting underscored both sides' dedication to peace.

But DPP presidential candidate Tsai Ing-wen asked why the announcement had come out of the blue.

"I believe people across the country, like me, felt very surprised," she said in prepared remarks to reporters. "To let the people know in such a hasty and chaotic manner is damaging to Taiwan's democracy."

Political experts said China could be working to shape the result of the elections by trying to show that ties would continue to improve if Taiwan remains ruled by the KMT.

DPP spokesman Cheng Yun-peng said the timing of the meeting was suspect. "How can people not think of this as a political operation intended to affect the election?" he said.

Hsia said the push for the meeting, initiated by the head of China's Taiwan Affairs Office, was neither rushed nor opaque and that there would be no secret deals reached.

"We adhered to open and transparent principles and absolutely did not use a rushed, chaotic black-box manner," he told reporters.

But some analysts said it could backfire, given increasing anti-China protests, especially among the young. In what was seen as a backlash against creeping dependence on China, the KMT was trounced in local elections last year. Younger Taiwanese in particular worry about Beijing's influence.

"Any meeting between the leaders of China and Taiwan would be delicate, but the coming Taiwanese elections add to the political risks for both sides," said John Ciorciari, an assistant professor at the Gerald R. Ford School of Public Policy at the University of Michigan.

"Ma Ying-jeou and Xi Jinping are doubtlessly concerned that their summit will help Tsai Ing-wen expand her lead as the Taiwanese electorate drifts away from the mainland."

Small groups of protesters gathered outside Taiwan's parliament on Wednesday.

Communist China deems proudly democratic Taiwan a breakaway province to be taken back, by force if necessary, particularly if it makes moves towards formal independence.

China, which has repeatedly said it won't interfere in the elections, will nonetheless be sending a message that good ties with Taiwan can only continue if the island's leaders accept China's bottom line, which is that there is only "one China".

The Communists and KMT both agree there is "one China" but agree to disagree on the interpretation. Taiwan has been self-ruled since Chiang Kai-shek's KMT fled to the island following their defeat by Mao Zedong's Communists at the end of the Chinese civil war.

More at link..


Read more at Reutershttp://www.reuters.com/article/2015/11/04/us-taiwan-china-meeting-idUSKCN0SS2M220151104#XcZWvxWfK5KCXIFp.99
 

REO 54

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World | Sat Nov 7, 2015 1:33pm EST Related: WORLD, CHINA
Oppose Taiwan independence, China's Xi says at historic meeting
SINGAPORE | BY J.R. WU AND RUJUN SHEN


China and Taiwan must not let proponents of Taiwan's independence split them, China's President Xi Jinping told Taiwan's president on Saturday at the first meeting between leaders of the two sides since China's civil war ended in 1949.

Ma Ying-jeou, president of self-ruled, democratic Taiwan, where anti-Beijing sentiment has been rising ahead of elections, called for mutual respect for each other's systems and said Taiwan people were concerned about mainland missiles pointing their way.

The talks, at a luxury hotel in the neutral venue of Singapore, lasted less than an hour but were heavy with symbolism.

The two leaders shook hands and smiled in front of a mass of journalists when they met, with Xi wearing a red tie, the color of the Communist Party, and Ma a blue one, the color of his Nationalist Party.

Moving into a meeting room, Xi, speaking first and sitting opposite Ma, said Chinese people on the two sides of the Taiwan Strait had the ability and wisdom to solve their own problems.

"No force can pull us apart because we are brothers who are still connected by our flesh even if our bones are broken, we are a family in which blood is thicker than water," Xi said.

In response, Ma said he was determined to promote peace across the Taiwan Strait and that relations should be based on sincerity, wisdom and patience.

Ma also asked Xi indirectly to respect Taiwan's democracy.

"Both sides should respect each other's values and way of life to ensure mutual benefit and a win-win situation across the straits," he said.

The U.S. State Department said the meeting was part of an "historic improvement" in relations between Taiwan and China and called for further progress "toward building ties, reducing tensions and promoting stability."

China's Nationalists, also known as the Kuomintang (KMT), retreated to Taiwan after losing the civil war to the Communists, who are still in charge in Beijing.

The mainland has never renounced the use of force to bring what it considers a breakaway province under its control.

RELATED COVERAGE
› Taiwan's main opposition leader disappointed with Xi-Ma meeting
Speaking to reporters after the talks, Ma said he hoped Xi could pay attention to China's missile deployment - the island has long fretted about batteries pointed its way - to which Xi replied that was not an issue about Taiwan, he said.

"I at least raised the issue, and told him that the Taiwanese people have questions and concerns about it, and hope he will treat it with importance," Ma said.

Zhang Zhijun, the head of China's Taiwan Affairs Office, said Xi told Ma that the biggest threat to the peaceful development of relations was pro-independence forces.

"The compatriots on both sides should unite and firmly oppose it," Zhang said.


Read more at Reutershttp://www.reuters.com/article/2015/11/07/us-china-taiwan-idUSKCN0SV2PU20151107#d4McEGms5a0YPCeA.99
 

REO 54

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Explosion, Fire Reported At Chinese Chemical Factory (Again):

Here we go again.

Count us incredulous at this point (and we're sure we aren't the only ones), but it looks as though there has been yet another explosion at a Chinese chemical facility, this time in Liaoning.

The blast triggered what looks like a sizable fire and the cause is under investigation. Allow us to speculate: either some factory owners with Party connections were able to skirt safety restrictions again possibly leading to the catastrophic loss of life and the release of untold pollutants into the air and water or else someone had some excess inventory they needed to vaporize.

Images are below from CCTV:

Link:

http://www.zerohedge.com/news/2015-11-17/explosion-fire-reported-chinese-chemical-factory-again
 

REO 54

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Baltic Dry Crashes To New Record Low As China "Demand Is Collapsing"


Despite a brief dead-cat-bounce late November, which Jim Cramer heralded as evidence of stabilization in China, the world's best known freight index has collapsed to new all-time record lows this morning. Amid a persistent glut of ships and ongoing concerns about Chinese steel imports, The Baltic Dry has tumbled to 471 - the lowest level in at least 30 years.

Worst. Ever.

image.jpg




As Bloomberg adds, China, which makes about half the world’s steel, is on track for the biggest drop in output for more than two decades, according to data compiled by Bloomberg Intelligence...


Owners are reeling as China’s combined seaborne imports of iron ore and coal -- commodities that helped fuel a manufacturing boom -- record the first annual declines in at least a decade. While demand next year may be a little better, slower-than-anticipated growth in 2015 has led to almost perpetual disappointment for rates, after analysts’ predictions at the end of 2014 for a rebound proved wrong.

“It doesn’t help that Chinese steel production is about to see the most dramatic decline to the lowest in 20 years,” said Herman Hildan, a shipping-equity analyst at Clarksons Platou Securities in Oslo. “Demand growth is collapsing.”

http://www.zerohedge.com/news/2015-12-16/baltic-dry-crashes-new-record-low-china-demand-collapsing
 

southfork

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So its almost this threads 4th birthday, 4 years and china has done neither implode or explode, but that being said I have no doubt its going to be a world wide event and we are getting very close.
 

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Is it just me or does it seem like every time there is a new article on the Baltic Dry Index, that it smashes another record low? Without fail...