Yuan loses core support as firms leave China

S

serendipity

Verified User
Looks like a profound change is in the offing, not before time I might add.

Analysis: Yuan loses core support as firms leave China

SHANGHAI/SYDNEY, Aug 7 (Reuters) - Since China opened to foreign investment in 1978 under Deng Xiaoping, global firms have ploughed in hundreds of billions of dollars to buy and build factories for market access and cheap labour, bolstering the Chinese currency.

A gentle downtrend in foreign direct investment gave way to a steep drop last quarter and inflows to China slammed to their lowest since records began 25 years ago, raising the prospect that the long-term trend is turning.

Corporate leaders and their advisers say a shift is under way and the political concerns behind investment decisions are long term, which leaves the yuan facing pressure from what was long one of its staunchest supports.

"FDI has historically not been a huge swing factor in the exchange rate's value, because you typically had surpluses of $50 to $100 billion a year," said Logan Wright, director of China Markets Research at analytics firm Rhodium Group.

"But when that swings to a deficit, which is where it is right now ... that's a pretty big adjustment."

Foreign direct investment (FDI) inflow slowed to less than $4.9 billion for the second quarter, while Chinese companies' investments abroad sent net direct investment to a record deficit of $34.1 billion, figures published last week by China's State Administration of Foreign Exchange (SAFE) showed.

https://www.reuters.com/markets/currencies/yuan-loses-core-support-firms-leave-china-2023-08-07/
 
The so called experts dont understand China any better than they understand Russia.

Even if they did they would not tell the truth, America is in collapse, they will deploy any narrative they can find to prop up the Regime, the WOKE dont believe in telling the truth.
 
Hawkeye10 said:
The so called experts dont understand China any better than they understand Russia.

Even if they did they would not tell the truth, America is in collapse, they will deploy any narrative they can find to prop up the Regime, the WOKE dont believe in telling the truth.
Click to expand...

I know every other country is doing super except when they aren't, then it is America's fault. This story is not about Russian American relations.
 
Hawkeye10 said:
No.

Winning Matters.
Click to expand...

You are being wilfully ignorant, Xi is in serious trouble.

China's property meltdown is gathering pace — and it's bad news for Australia.

It is crunch time for Xi Jinping.

While most of the West is quivering over the fate of Taiwan and aggressive military expansion plans from the world's second-biggest economy, China's now permanent leader is facing a more immediate battle on a different front.

China's economy is in serious trouble. The country's property sector, once a powerhouse of national economic growth, is in meltdown with predictions of worse to come.

That's precipitated a slowdown that has begun to infect the broader economy, threatens to derail growth plans and exposed fundamental structural deficiencies that no longer can be rectified by simply pumping in ever-increasing amounts of stimulus.

The contrast couldn't be more stark.

As China's economy struggles to recover from the pandemic, consumer confidence in the country is weak and people are turning to social media to share tips on how to consume less and save money.

While the rest of the world has spent the past year battling a resurgent inflation problem, China is on the cusp of tipping into deflation. Its most recent reading, for June, was a doughnut. Inflation came in at zero, dashing hopes that it might be able to avoid a crushing recession.

Economic growth, if the official numbers can be believed, is declining rapidly, and on some measures has turned negative.

Much of the pain is being borne in second-tier cities where the National Audit Office has found some local governments, which relied heavily on land sales to generate income, inflating revenue and diverting funds.

Meanwhile, local media reports of civil servants enduring pay cuts and salary delays point to more challenging conditions than that implied by the official statistics.

That's providing a budgetary headache for the politburo. Investment bank UBS estimates that between January and May, budget revenue has fallen short of expectations to the tune of $US110 billion (about $163 billion).

China may have saved capitalism from its own excesses in the aftermath of the global financial crisis with its massive stimulus programs that propelled the Middle Kingdom towards an economic miracle, dragging Australia along with it.

Now, it is paying the price for its own largesse.

For most of the past year, it's barely rated a mention. The teetering edifice of China Evergrande — once one of the world's biggest property developers — became a symbol of China's sudden economic about turn in 2021 as what appeared to be an imminent collapse grabbed global headlines.

It somehow survived the maelstrom, shutting down communications as it "restructured" and continued lopping off arms.

A week ago, however, after two years of radio silence, it reported losses of $US81 billion in the past two years. But it hasn't turned the corner. It is still carrying $US334 billion worth of debt, equivalent to about 2 per cent of China's economy.

And it's not alone.

According to a report from ANZ, Chinese developers have to stump up $US12.8 billion in debt repayments in the next few months to international investors. That's on top of the scheduled $US26.8 billion owed to local investors in coming months.

ANZ's senior China economist Betty Wang reckons this is the longest downtrend ever in China's property sector and it persists despite significant government support rolled out in the aftermath of the Evergrande crisis.

"Historically, it took six to 12 months to revive the sector," she says.

"In the current cycle, the government has announced several rounds of support measures for the sector since November 2021 following Evergrande's debt crisis, and it's been nearly two years since then."

https://www.abc.net.au/news/2023-07-25/chinas-property-meltdown-gathers-pace/102641990
 
Last edited:
serendipity said:
You are being wilfully ignorant, Xi is in serious trouble.


China's property meltdown is gathering pace — and it's bad news for Australia




It is crunch time for Xi Jinping.

While most of the West is quivering over the fate of Taiwan and aggressive military expansion plans from the world's second-biggest economy, China's now permanent leader is facing a more immediate battle on a different front.

China's economy is in serious trouble. The country's property sector, once a powerhouse of national economic growth, is in meltdown with predictions of worse to come.

That's precipitated a slowdown that has begun to infect the broader economy, threatens to derail growth plans and exposed fundamental structural deficiencies that no longer can be rectified by simply pumping in ever-increasing amounts of stimulus.

The contrast couldn't be more stark.

Consumers in China cut spending
As China's economy struggles to recover from the pandemic, consumer confidence in the country is weak and people are turning to social media to share tips on how to consume less and save money.

A woman standing in front of Louvre Museum
Read more
While the rest of the world has spent the past year battling a resurgent inflation problem, China is on the cusp of tipping into deflation. Its most recent reading, for June, was a doughnut. Inflation came in at zero, dashing hopes that it might be able to avoid a crushing recession.

Economic growth, if the official numbers can be believed, is declining rapidly, and on some measures has turned negative.

Much of the pain is being borne in second-tier cities where the National Audit Office has found some local governments, which relied heavily on land sales to generate income, inflating revenue and diverting funds.

Meanwhile, local media reports of civil servants enduring pay cuts and salary delays point to more challenging conditions than that implied by the official statistics.

That's providing a budgetary headache for the politburo. Investment bank UBS estimates that between January and May, budget revenue has fallen short of expectations to the tune of $US110 billion (about $163 billion).

China may have saved capitalism from its own excesses in the aftermath of the global financial crisis with its massive stimulus programs that propelled the Middle Kingdom towards an economic miracle, dragging Australia along with it.

Now, it is paying the price for its own largesse.

Chinese flags near the logo Evergrande Centre in Shanghai, China, on September 24, 2021.
Evergrande re-run to haunt debt markets
For most of the past year, it's barely rated a mention. The teetering edifice of China Evergrande — once one of the world's biggest property developers — became a symbol of China's sudden economic about turn in 2021 as what appeared to be an imminent collapse grabbed global headlines.

It somehow survived the maelstrom, shutting down communications as it "restructured" and continued lopping off arms.

A week ago, however, after two years of radio silence, it reported losses of $US81 billion in the past two years. But it hasn't turned the corner. It is still carrying $US334 billion worth of debt, equivalent to about 2 per cent of China's economy.

And it's not alone.

According to a report from ANZ, Chinese developers have to stump up $US12.8 billion in debt repayments in the next few months to international investors. That's on top of the scheduled $US26.8 billion owed to local investors in coming months.

ANZ's senior China economist Betty Wang reckons this is the longest downtrend ever in China's property sector and it persists despite significant government support rolled out in the aftermath of the Evergrande crisis.

"Historically, it took six to 12 months to revive the sector," she says.

"In the current cycle, the government has announced several rounds of support measures for the sector since November 2021 following Evergrande's debt crisis, and it's been nearly two years since then."
Click to expand...

It is America and the West that are dying....the Han are the new masters of the Universe.
 
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