{"id":38724,"date":"2018-10-04T16:54:39","date_gmt":"2018-10-04T21:54:39","guid":{"rendered":"http:\/\/olduvai.ca\/?p=38724"},"modified":"2018-10-04T16:54:53","modified_gmt":"2018-10-04T21:54:53","slug":"something-has-to-break-as-chinas-onshore-defaults-hit-a-new-record","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=38724","title":{"rendered":"\u201cSomething Has to Break\u201d as China\u2019s Onshore Defaults Hit a New Record"},"content":{"rendered":"
\"\"<\/div>\n

\u201cSomething Has to Break\u201d as China\u2019s Onshore Defaults Hit a New Record<\/a><\/h3>\n

Recent news from China has been really\u00a0<\/em>ugly.<\/p>\n

But what can you expect? They\u2019re trying to fight a trade war against the U.S. \u2013 deal with slowing growth \u2013 and survive against a stronger U.S. dollar.<\/p>\n

And because of these problems \u2013 China\u2019s major stock exchanges have really suffered this year.<\/p>\n

But \u2013 contrary to what the mainstream says \u2013 I think things are going to get much worse. . .<\/p>\n

For starters \u2013 the latest Chinese Manufacturing PMI (purchasing manager index) showed a continued downturn. Both in the NBS and Caixin Indexes.<\/p>\n

\"\"<\/p>\n

Clearly the trade-war with the U.S. is being felt. And with little progress in negotiations between the U.S. and China \u2013 expect the near-and-midterm<\/em> to continue being weak.<\/p>\n

Now \u2013 Unfortunately \u2013 this slow down in the Chinese economy and the loss of sales and income are coming at a bad time. . .<\/p>\n

Especially for their corporations.<\/p>\n

The combination of a slowing economy, a stronger dollar, and a tightening Federal Reserve is putting pressure on indebted Chinese firms.<\/p>\n

This is putting China\u2019s elites between a rock and a hard place. . .<\/p>\n

That\u2019s because with the trade-war raging on and a tightening Fed \u2013 the Communist Party of China will want to ease<\/em> and help their economy.<\/p>\n

The Peoples Bank of China (the Chinese central bank) can cheapen<\/em> the yuan to try and boost exports. And as I wrote before<\/a> \u2013 the weaker yuan will offset Trump\u2019s tariffs.<\/p>\n

For example \u2013 if the U.S. places 20% tariffs on\u00a0all<\/em>\u00a0Chinese goods \u2013 China simply must devalue the Yuan by 20%. This would offset the increased costs from the tariffs \u2013 keeping the price for U.S. consumers unchanged. Basically rendering the imposed tariff worthless<\/em>.<\/p>\n

But the problem with this is Chinese firms have significant<\/em> dollar-denominated debts. So a stronger dollar makes their debt-burden much harder to service.<\/p>\n

\u2026click on the above link to read the rest of the article\u2026<\/p>\n","protected":false},"excerpt":{"rendered":"

\u201cSomething Has to Break\u201d as China\u2019s Onshore Defaults Hit a New Record Recent news from China has been really\u00a0ugly. But what can you expect? They\u2019re trying to fight a trade war against the U.S. \u2013 deal with slowing growth \u2013 and survive against a stronger U.S. dollar. And because of these problems \u2013 China\u2019s major […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[19913,122,130,200,19915,2615,1031],"class_list":["post-38724","post","type-post","status-publish","format-standard","hentry","category-economics","tag-adem-tumerkan","tag-central-bank","tag-china","tag-default","tag-palisade-research","tag-peoples-bank-of-china","tag-yuan"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/38724","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=38724"}],"version-history":[{"count":3,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/38724\/revisions"}],"predecessor-version":[{"id":38727,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/38724\/revisions\/38727"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=38724"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=38724"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=38724"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}