We already knew almost every piece of financial data out of China has been spun as to not show any cracks in the ever expanding Chinese economy, but now they are deliberately hiding data so as to not cause the 1.344 Billion populace to rebel and riot.
They are following the same trajectory as the Japanese bubble of 20 years ago: First manufacturing from all over the world and making products for the whole planet makes the country rich. Then with all this wealth there is a real-estate and stock market speculation binge. Then the bubble pops and it 20 years later the country is still in stagnation because everyone either lost everything in the bubble or are old grandmothers who keep their money in cash stuffed in their matreess.
Only there are a billion Chinese, instead of just 120 million Japanese. And their ageing society problems will be even worse than Japan’s because of the one-child policy.
China ‘Officially’ Moves From Made-Up Data To Hiding Data
When the official Chinese PMI printed a few days ago we noted the ‘odd’ fact that several of the key sub-indices were ‘missing’. While most put this down to some ‘hiccup’ or aberration, we wondered at the time what this might mean in a nation that has seemingly gone out of its way to baffle with Schrodinger bullshit for much of the last few ‘recovery’ years in the face of collapsing electricity production, copper/cement/steel prices, fake trade invoices, and a shadow-banking system so re-hypothecated that even the PBOC has decided enough is enough. Well, as Bloomberg reports, it turns out it wasn’t an aberration, but new policy from China’s Federation of Logistics and Purchasing which has now officially suspended the release of industry-specific data from the monthly survey of manufacturers. As one analyst put it, “the random absence of official data is disorienting,” which is likely exactly the plan.
China Suspends PMI Details in New Hurdle for Scrutiny of Economy
China suspended the release of industry-specific data from a monthly survey of manufacturing purchasing managers,
“We now have 3,000 samples in the survey, and from a technical point of view, time is very limited — there are many industries, you know,” Cai Jin, vice president of the China Federation of Logistics & Purchasing, which compiles the data with the National Bureau of Statistics, told reporters today in Beijing.
The disappearance of data on industries including steel adds to issues hampering analysis of the world’s second-biggest economy, after fake invoices inflated trade numbers this year. The manufacturing Purchasing Managers’ Index also omitted readings on export orders, imports and inventories without any explanation from the government.
“Suspension of the monthly data, without prior notice, makes the research work difficult for us,” Xu Xiangchun, a steel researcher and chief analyst at Mysteel.com, said by phone from Beijing. “The random absence of official data is disorienting.”
… the logistics federation told … that the figures would be “temporarily” suspended without giving a reason.
He didn’t elaborate on the reason for the decision beyond rejecting the idea that it was because the data showed too much weakness.
Yesterday, a person involved in producing a set of data on the country’s steel industry said that the release was suspended after the statistics bureau decided to change how the figures are compiled.
It isn’t yet clear what changes will be made and in what time frame, or if the data for July would be released next month, said the person, who asked not to be identified as he wasn’t authorized to speak publicly about the matter.
China’s Banks Stop Lending due to Liquidity Freeze – Giant Ponzi Scheme Wont End Well. Panic Sets In!
If one thought the schizophrenic lies out of Europe between 2010 and 2013 were bad enough (the bulk of which it now appears were orchestrated by Mario Draghi), here comes China, a country which already has a “credibility” issue so to say, which has no choice but to lie as blatantly as possible in order to preserve some semblance of stability.
Not unexpectedly following news that various retail and online banking services had been impaired in the early part of the week at China’s biggest banks, now Caixin reports that banks are simply shutting lending to both businesses and individuals.
“People are panicking” – senior executive at a large national bank in northern China
China Is FREAKING OUT About Interest Rates Spike, Tells Media To Stop Talking About The Cash Crunch, And To Say That Everything Is Just Fine. No Longer Making Up Numbers, Now Simply Deleting Them
On a related note, the FT reported China has ordered its news outlets to stop talking about the country’s cash crunch. Last month saw the Shanghai inter-bank offering rate (Shibor) unexpectedly spike as the People’s Bank of China sought to impose discipline on its financial sector by starving it of cash.
China Tells Media To Stop Talking About The Cash Crunch, And To Say That Everything Is Just Fine
This oughta do the trick.
Nothing instills confidence in the financial system like the government issuing a directive to media telling outlets to report that everything is just fine.
Alas, that’s exactly what China has done.
In a directive written last week and transmitted over the past few days to newspapers and television stations, local propaganda departments of the Communist party instructed reporters to stop “hyping the so-called cash crunch” and to spread the message that the country’s markets are well stocked with money.
The Chinese Central Bank Freaked Out Over A Bank Lending Spike Unlike Anything It Had Ever Seen Before In History
But at the same time, in China, there was a spike in SHIBOR (which is China’s equivalent of LIBOR) which screamed cash crunch for China’s banks.
That too freaked markets out, and now thanks to Lingling Wei and Bob Davis at WSJ we have a better idea of why SHIBOR (which has since calmed down) spiked so hard.
Basically (and this was suspected at the time) the People’s Bank of China let the rates spike as a tough measure to induce a level of tightening and discipline in the banking system.
What caused the PBOC to do this?
According to a previously undisclosed summary of a PBOC internal meeting on June 19, the central bank was especially concerned that in the first 10 days of June, Chinese banks increased lending by 1 trillion yuan ($163 billion)—an amount the central bank said “had never been seen in history.” And about 70% of that amount consisted of short-term notes that mostly don’t show up on banks’ balance sheets—making it easier for the banks to get around regulatory lending restrictions-—rather than lending the money to promising companies or projects.
The PBOC evidently took that lending spike to be a sign of an expectation of further easy policy, and so the response was to do the hard opposite, let interest rates spike, and basically give the banks the back of the hand, letting them know that their risky behavior would not be rewarded.
…perhaps most interesting are Bass’ thoughts on China:
The speed and depth of the Chinese policy response will help determine the severity and duration of this crisis. If the Chinese address the issue quickly and move decisively to rein in credit expansion and accept a period of much lower growth, they may be able to use the government and People’s Bank of China’s balance sheet to cushion the adjustment in the economy. If, however, they continue on the current path and allow this deterioration to reach its natural and logical limit, we will likely see a full?scale recession as well as a collapse in asset and real estate prices sometime next year.
China’s direct contribution to global growth is enormous, but perhaps equally as important is its role in generating growth in developed and emerging economies. A slowdown, whether significant or extreme, in the Chinese economy heralds very bad news for asset prices around the world. A growth crisis centered in Asia will further exacerbate the instability and volatility in Japan and have a devastating impact on second derivative marketplaces such as Australia, Brazil and developing markets in South East Asia. The combination of rich valuations and further threats to growth has led us to dramatically reduce risk in the portfolio and actively position ourselves to withstand the uncertainty and instability ahead.
China’s “Giant Ponzi Scheme” Won’t End Well: Jim Rickards
One reason U.S. is again most desirable place for foreign investment: better labor costs. China’s, meantime, have doubled since ’07
China riots: Mobs attack police in Xinjiang killing 27: