China’s dodgy-debt double act

Chinese citizen living in US, posting anonymously for obvious reason.<p>Huarong and evergrande are just the tip of the iceberg. If you wish to know what all the things fester below for CCP, here&#x27;s a very timely summary video from laowhy86, one of the YouTube expert on China <a href="https:&#x2F;&#x2F;www.youtube.com&#x2F;watch?v=RpwtZLzDM_o" rel="nofollow">https:&#x2F;&#x2F;www.youtube.com&#x2F;watch?v=RpwtZLzDM_o</a><p>Unfortunately you will not find many outspoken Chinese native citizen on YouTube, for they all fear CCP retribution, even living abroad.<p>恒大暴雷 市值两万亿的中国第一房企 居然对付不出400亿 如同一个万元户 被400块给逼死了 房企都要塌了 房价还没跌 建筑商的商票拖欠 银行的债务拖欠 私人借贷也拖欠 房子卖出去还收的是全款 不知道这些钱都到哪去了 魔幻的时代 魔幻的故事啊

Perspectives :<p>&quot;The level of debt is jaw-dropping. The private non-financial sector owed the equivalent of 222% of GDP at the end of 2020. Most of that sits with companies. By comparison, private non-financial debt in America is 164% of GDP.&quot;<p>GDP per capita China :<p><a href="https:&#x2F;&#x2F;data.worldbank.org&#x2F;indicator&#x2F;NY.GDP.PCAP.CD?locations=CN" rel="nofollow">https:&#x2F;&#x2F;data.worldbank.org&#x2F;indicator&#x2F;NY.GDP.PCAP.CD?location...</a><p><pre><code> 2010 4550 USD (current) 2020 10500 USD (current) </code></pre> USA GDP per capita<p><a href="https:&#x2F;&#x2F;data.worldbank.org&#x2F;indicator&#x2F;NY.GDP.PCAP.CD?locations=US" rel="nofollow">https:&#x2F;&#x2F;data.worldbank.org&#x2F;indicator&#x2F;NY.GDP.PCAP.CD?location...</a><p><pre><code> 2010 48466 USD (current) 2020 63543 USD (current)</code></pre>

<a href="https:&#x2F;&#x2F;archive.is&#x2F;XyoLF" rel="nofollow">https:&#x2F;&#x2F;archive.is&#x2F;XyoLF</a>

It seems like the Chinese authorities are trying to deleverage by explicit policy (very evident in the stock market), here when the leverage in the western economies is at its highest.<p>We in the west have a tendency to overestimate China&#x27;s debt problems by comparing the numbers and ratios to that of the west. Forgetting that 1) China is very big and has a lot of people 2) most people in China are poor and live essentially in a third-world economy that can grow very fast by basic investment in infrastructure such as transportation, housing, energy, education.

Is there any way to short evergrande, buy puts, etc.? I didn&#x27;t find them listed in my brokerage.<p>Is smart money already doing so?<p>Any other dominos that will fall because of this, and similar plays to take advantage of them?

This was covered on yesterday&#x27;s Real Vision Daily Briefing[0]. It does feel like it could be China&#x27;s Lehman moment. We&#x27;ll have to wait and see.<p>There seem to be a lot of cracks and fraying in China&#x27;s economy at the moment, and it feels like the sort of thing that could bring on a global economic crisis, if not handled with care.<p>[0] <a href="https:&#x2F;&#x2F;www.youtube.com&#x2F;watch?v=_w8twoGZR_Q" rel="nofollow">https:&#x2F;&#x2F;www.youtube.com&#x2F;watch?v=_w8twoGZR_Q</a>

We live in very exciting times. The question isn&#x27;t &quot;Is China&#x27;s economy good?&quot; or &quot;Is China&#x27;s economy bad?&quot;. The question is &quot;How will it perform relative to Europe and America?&quot;.<p>The US&#x27;s economic fundementals aren&#x27;t great. I&#x27;m expecting to see US government spending be the majority of GDP in my lifetime. That sort of centralised planning doesn&#x27;t bode well for the West.

&gt;Both episodes show that the hierarchy of creditors in China is based on politics and the priorities of the state<p>The 2008 financial crisis showed that the same is true of Western nations. US and European central banks absorbed trillions in bad debt, and a few banks that officials didn&#x27;t like walked the plank while the majority came out ahead in the end. The same dynamic is of course &#x27;bold decisive action&#x27; when free market capitalists do it, and &#x27;dodgy&#x27; when &quot;communists&quot; are engaging in it, at least in the pages of The Economist.

Wondering if this and the everglade situation could be the undoing of tether. Tho Tether seems to be completely disconnected from any sort of reality.<p>Tether is speculated to be backed by a lot of Everglade ‘commercial paper’ debt.<p><a href="https:&#x2F;&#x2F;news.ycombinator.com&#x2F;item?id=27959852" rel="nofollow">https:&#x2F;&#x2F;news.ycombinator.com&#x2F;item?id=27959852</a>

The surreally large &quot;shadow debt&quot; that modern China has accumulated was my undergrad essay topic 10 years ago.<p>Since then, it seem to have grown from &quot;surreally large&quot; to &quot;absurdreally large&quot;<p>Go to any big Chinese city. Look around. Every skyscraper around is a mountain of secret debt few times its value.<p>China is really very close to Sri Lanka in how GDP numbers were financially engineered from massive, but well disguised debts on a nation-state scale<p>It is been very, very hard to take money out of China for a few months now. A sign of things soon to come, I believe.