2017-12-07

Emerging Signs of Chinese Credit Growth Slowdown

Markets are starting to price in slower Chinese growth. Or another view, the hope that an exit from post-2008 stagnation was underway is starting to fade.

ZH: China Commodity Carnage Continued Overnight As Brexit Fears & Bitcoin Cheers Dominate
Energy markets have been relatively quiet amid a lack of drivers, although WTI crude futures are off worst levels and just about reclaimed the USD 56/bbl level to provide some mild reprieve from this week’s product inventory-triggered pressure. Gold and copper were also uneventful overnight with the former stuck near 4-month lows as participants await this Friday’s key-risk NFP data. The main mover in metals markets was Dalian Iron ore which crashed by 7.5% amid ongoing demand concerns from China.

But Chinese stock weakness spread to the commodity markets - which had promised so much growth previously - as Reuters reports, China’s commodity exchanges have hiked transaction fees and margin requirements for a range of futures this year in their latest effort to curb speculative trading that Beijing says has spurred recent price surges in markets from sugar to ferro-silicon.

As Bloomberg's Mark Cranfield notes, China's iron ore future is doing it's best to shock global markets in the way copper did earlier this week. Partially thanks to top miner Vale SA, the metal is having a high volume swoon on the Dalian exchange, which could be the tipping point for another commodity complex slide as Europe gets going.

2017-12-06

The West Is Being Carved Up, Occupied and Sold to Highest Bidder

Australia is the front-line for the West's engagement with China. And things are not going well, if one wants there to be an independent West (or even Western civilization given demographic trends) in 100 years:

At Macro Business: Beijing knows exactly what it’s doing Downunder.
It starts with opinion from a strategic analyst:
Third, we need to push for greater reciprocity in our relations with China. This is easier said than done because our two systems mean Chinese are permitted freedoms here that are denied to Australians in China, including in business and commerce. For example­, foreign companies can only invest in Chinese cloud businesses with local partners while Chinese competitors are not subjec­t to the same restrictions.

Fourth, foreign, trade and defence­ policy must be recalibrated and fully joined up if the strategy is to be efficacious, which is one reason why the idea of a quadripartite dialogue with Japan, India and the US has renewed ­appeal. Contrary to its critics, this is not a mutual defence pact or an Asian NATO designed to contain China. China is not containable and none of the dialogue partners has any desire to sign on to such a futile endeavour.
The right and left in the West have two strategies for dealing with China right now. The left's plan is colonization. They are using subversion through foreign students and NGOs to push American progressive ideology into China. The Chinese have clamped down on Western NGOs, cultural influence in movies and TV, ideological threats in textbooks. The problem for China is, it Cannot Fight Cultural Marxism With Marxism. China is "open territory" for anyone pitching a religion because the communists wiped out tradition, but didn't replace it. The result is China doesn't fight fire with fire, it uses state power. It gets in trouble for jailing feminists. It is headed down the same path as Russia, except Russia has Orthodox Christianity. That might not avert a kinetic war with the West once progressives have power again, but it opens the door to rapprochement with the West if there is a religious revival. China lacks such a link. It is on a path to war with the progressive West. (A recent headline along these lines: Chinese Researchers Experiment With Anti-Gay Spray)

The establishment right in the West is globalist, and therefore cannot confront China's soft power. Back to the Macro Business article:
Sensible enough but way too many motherhood statements. It’s too top down when China’s soft power push into Australia is also bottom up. For instance, if Australian property prices become dependent upon Chinese capital inflows then the risk is that personal wealth allegiances shift towards it no matter what a few spooks want. Likewise in universities and other services sectors that use cheap foreign student labour.

There is also the crazily high immigration intake which is importing a larger Chinese community and expanding its influence (which is nothing against them as individuals or ethnic Chinese).

But if we want to bulwark the nation’s democracy then these grass-roots influences must each also be addressed directly:

cut immigration to more manageable levels (at least half);
police foreign buying of property properly and implement global anti-money laundering rules pertaining to real estate;
promote new codes of practice for academic freedom;
revisit foreign student working hour provisions.

And on it goes.
Chinese immigration increases GDP and therefore is good according to the establishment right. It has no plan, but since the American right it is willing to confront China militarily, that's where it will find common ground with progressives (as they have with Russia). The risk of military confrontation will only increase over time...until there are enough Chinese in the country, or it is inextricably linked economically, such that confronting China becomes too difficult. And if a confrontation with China is necessary at that point, the costs will be far higher because it will risk economic devastation and probably some form of domestic ethnic conflict.

Those who cannot learn from history are doomed to repeat it. And those who cannot see emerging trends underway right now that show this history already repeating, are in charge of most Western governments. The Chinese don't call them Baizuo for nothing.

2017-12-05

人人币 China's Population Cryptocurrency

Some coin called 人人币 kept popping up in Weibo, along with Bitcion and Ethereum. Someone created a cryptocurrency that is based on China's population. The number of coins will increase and decrease with the population.

At the end of each month, Renminbi officials will destroy the previous year's death toll / 12-month Renminbi by means of wallet mutual transfers, and when major disasters and disasters occur in China, the development team will destroy the same number of victims in real time And record the time and reason for the disaster.
A list of some examples is on the website.

Caijing: 人人币:中国人的加密数字货币
Ren Ren Ren, English RenrenCoin, referred to as RRC, was born in May 1, 2014, and in June 1, 2015 by the quark algorithm for the second generation pos currency. The total amount of new pos coins is the current total population of 1.36782 trillion in China. The annual interest rate of POS interest is 1.236% (the average birth rate in China in the recent 10 years).

Renminbi is an encrypted digital currency that simulates the ecological conditions of China's population and is based on the actual population data of China. It is also the first digital currency in the world to integrate population ecological data into an encryption algorithm and give it a humanistic notion. Through the use of currency, users can get a general understanding of China's population, birth rate and mortality rate, remind people to cherish their life, care for those around them, and raise awareness of all kinds of unexpected disasters and disasters in China so as to encourage everyone to Chinese compatriots in need of assistance should be provided with assistance in the spirit and material resources. Each currency obtained through the interest of pos represents the birth of a new life in China, and every single currency destroyed represents a life in China that has passed away.

According to reports, Renminbi in the early design will be able to contribute to the community charity into one. In the event of a catastrophic catastrophe in China, when Chinese citizens die, Renminbi will destroy the currency in real time and record all destruction records by destroying the log. Therefore, at the same time of recording, the Renminbi can be applied to the charity system of Chinese society through the transparency and impartiality of the blockchain, so that those who need help can get real and effective assistance.
This makes sense as a way of controlling money supply, but not destruction of individual coins.

Imagine a currency worked this way: every person had 1000 coins gifted at birth and those coins are numbered 1-1000 based on their government ID number. Upon their death all the coins are destroyed. Immediately there would be a market opportunity in identifying people with low-risk lifestyles because their coins would likely last much longer. And the coins of people likely to die at a young age would immediately devalue. There would be an incentive to improve your lifestyle/conditions because the value of your own money would rise, assuming you held on to it. That's not how 人人币 operates, but I believe China will eventually cook up a digital currency that could include many such "enhancements."

2017-12-04

Enough Restrictions? Hot Cities Housing Markets "Frozen"

China's housing market could be in the doldrums for 5 to 10 years...and that's the optimistic scenario if prices hold up or continue rising.
iFeng: 热门城市成交急冻 未来5-10年楼市临两大利空
As for the real ultimate move, long-acting mechanism of combination therapy have 5-10 years. Why is this so long? The reason is also involved in all parties. How to balance is really troublesome. What is even more crucial is whether the long-term mechanism will continue to maintain a consistent upward trend after its entry into force. This is the key issue. Otherwise, the long-term mechanism will fail and make no sense.

Around the local revenue, the long-term mechanism will carry out detailed argumentation in terms of taxation, land transfer, finance and market players. Therefore, Gu Changyun optimistic estimate is 5-10 years.
Is this time finally for real? We'll find out in about 12 to 18 months.

2017-11-24

Chinese Logistics

Marc Cuban linked to a tweet that goes to a blog post about China. It's negative on Alibaba (BABA).


Some of the article I can't take a view on because I'm not up to date on all of Alibaba's business moves. However, it seems like the analysis is resting a bit on this photo:
Anyway, while I was traveling, I had a chance to peruse the Alibaba September Quarter figures, Press Release, 6K, Investor Presentation and of course, took some time to listen to the always entertaining Investor Call. Shortly thereafter, Alibaba had reported their amazing "Singles Day" sales figure of $25.3 Billion of fake GMV.

To put this figure in perspective, this year, "Singles Day" GMV came in at just a few billion more than the annual revenue of Sears/K-Mart (140,000 employees and 1,500 locations world-wide)..... again, I'll repeat that..... Alibaba sold, shipped and delivered the annual, global, sales volume of Sears/K-Mart in just one day! ....800 Million orders to deliver! Incredible! Bravo!.....all those guys on the tuk-tuks, scooters and bicycles must be exhausted......

The Alibaba business model has triumphed once again. It's now obvious that UPS, FedEx, DHL, et al, have it all wrong. Why in the world would anyone invest in all of that expensive GPS, scanning, package tracking automation and logistics hardware when you can just dump your packages on the sidewalk and let homeless people figure out how to get them where they are supposed to go? Again, the wizardry of Alibaba's ecosystem has rewritten the global-logistics playbook. Absolute genius....
I don't know if the logistics have improved over the past few years, but the Chinese post office was not a bastion of efficiency. The worst I'd ever seen was a guy standing in a sea of mailbags, packages everywhere, total chaos. It looked like a bomb went off. I gave him my claim ticket and he went back to find my package, and emerged with it after several minutes. The "private" delivery services are more efficient. I've seen scenes like the above, but in every case I can remember, it was outside of a main delivery area, such as outside the gates of a university or office building. Often, the students or office workers came out to pick up their package.

I'm positive Chinese delivery companies and the Post Office could increase efficiency. But what looks like total mayhem from the outside somehow manages to get packages where they're going.
1. Sell 800 million packages
2. ???
3. Customers receive their packages

The ??? is incredible amounts of human labor.

Amazon sold nearly $3 billion during its PrimeDay sale in July. Amazon is about as large as Alibaba (similar share of online sales). Unlike in the U.S., however, Single's Day is more like Black Friday and PrimeDay rolled into one. One firm estimated $4.7 billion in Amazon sales from Black Friday through Cyber Monday last year. Alibaba's claim of $23.5 billion in sales looks inflated even if those sales are all rolled into one, assuming some big ticket items aren't in the mix. (Did they offer deals on foreclosed properties and bad debt?)

China Cuts Tariffs on Consumer Goods

BBC: China cuts import tariffs on almost 200 consumer goods
China is cutting import tariffs on 187 consumer goods from whisky to cashmere clothing to help spur spending and economic growth.

The Finance Ministry said tariffs will drop from an average 17.3% to 7.7% on products, including pharmaceuticals, food, health supplements and clothing.

2017-11-21

New Home Prices Rise 0.3pc in October

Home prices fell or were flat in most of the first-tier and "hot" second-tier cities, but the number of cities with rising prices ticked up in October as developers cashed in on seasonal buying interest.

Prices increases were muted though. The largest rise was 1.7 percent in Harbin, next largest was 0.9 percent in Hohot and Nanchong.
NBS: 2017年10月份70个大中城市住宅销售价格变动情况

2017-11-20

Merkel Can't Form a Government

After Merkel's election "win" in September, I posted: Good Political News Peaks In Europe

I expected Merkel would be weakened, but it turns out she may be finished. She was unable to form a government thanks to rejecting to populist AfD and being rejected by the SPD. She was left with the smaller FDP and Greens, and they are to far apart on major issues. If you have been reading this blog for a few years you will not be surprised by the issue that torpedoed an agreement: immigration.

AFP: German coalition talks trip over immigration stumbling block
Merkel's CDU and especially their more conservative CSU allies from Bavaria, where tens of thousands of refugees crossed over the border from Austria, are pushing to limit Germany's annual intake to a benchmark figure of 200,000.

The Greens, who have long promoted migrant rights and a multicultural society, finally appear ready to accept the figure.

But they will not budge on their demand for a resumption of family reunions for those who have been granted temporary refuge in Germany, something opposed by both the CSU and FDP.