China announces trillion-dollar bailout as debt crisis looms
China announces trillion-dollar bailout as debt crisis looms
Burdened with huge debts, provincial authorities have been left struggling to provide basic services and pay civil servants.
Somehow, I really don't think this will be the time China will bankrupt.
Don't they have many trillions in reserves? Of course they won't be bankrupt
Don’t they have many trillions in reserves?
Right now China has about 3.2 trillion in ForEx of all kinds and currencies which means that this bailout represents nearly half of the total.
ForEx is an extremely complicated subject, way too much for a single post, but it is essentially the lubricant for trade. If you don't have enough of it in the right currency on an hourly (or less) basis to support your imports and exports then the machine will seize up.
So what China is doing here is risky as hell and if it doesn't work they will soon have the same kind of financial problems that Iran does and that is stupendously bad for an export based economy.
Bruh they can print the money for rich people just like USA does. It's the same capitalist system everywhere. The rich get richer and the poor continue to drown in inflation, etc.
Kinda weird that they're calling the "collapsing real-estate sector" an economic challenge when that's completely on purpose
What do you mean on purpose?
If the real estate market is doing good, that just means that housing is getting more expensive and investors get a lot of profit out of it. China did something (tbh I don't know what exactly they did) to make housing prices go down again. That means that investors lost money and the real estate market wasn't doing well. It was on purpose because the point was to make housing cheaper, which is a good thing, but if you only see housing as something to make profits from, then this means that that market isn't doing good.
I'm guessing they believe that the real estate collapse is a 4d chess move to entrap private equity. I'm also guessing they don't realize the largest real estate developers in China are already state owned entities...
SOE are owned by the state, but they are operated just like any other profit seeking organizations, and thus are not immune to the same problems with private equity we have in the west.
Won't this cause inflation for the Chinese or are their markets that controlled?
It does not sound like it. It seems more like the United States in 2008, where claims for money far exceeded money in existence. And therefore, when money is created, it does not actually cause inflation, but it causes less deflation than their otherwise would be.
happy printer noises
There's no such thing as a market so controlled that it's immune to inflation. The Russian Ruble is as controlled as a currency can be and Russia is teetering on the edge of hyper-inflation. It's core inflation rate is over 9% and their version of the "Prime Rate" for lending has now jumped from 19% to a historic 21%.
China has more breathing room than Russia but it's still not going to be pretty, especially if this "bailout" fails.
Aren’t they currently in deflation
1 yen is the equivalent of $.14. Their shit is already inflated to hell.
I thought it was pegged to the dollar somehow.