2021-09-11

Will China Press CTRL-P Again?

China Lets Evergrande Reset Debt Terms to Ease Cash Crunch Archive link
Regulators in Beijing have signed off on a China Evergrande Group proposal to renegotiate payment deadlines with banks and other creditors, paving the way for a temporary reprieve as the cash-strapped developer struggles to come to grips with more than $300 billion of liabilities.

China’s Financial Stability and Development Committee, the nation’s top financial regulator, gave its blessing to Evergrande’s plan last month after the property giant missed interest and principal payments on some loans, a person familiar with the matter said, asking not to be identified discussing private information.

Evergrande has already contacted some banks and trusts to request deadline extensions, four people said. It’s unclear how many of those discussions have led to agreements and whether the company intends to delay payments to bondholders.

ZH: Mobs Of Angry Evergrande Homebuyers And Employees Begin To Protest
There are more than 1.5 million Evergrande customers who put down payments on yet-to-be-completed condo building projects. This week's protest could be an ominous sign of more social unrest to come.
China's economy is already poast the limit of its credit bubble, with the printer the only thing keeping the economy out of recession. Which is why economists think the credit cycle must be bottoming. The alternative is recession.

ZH: China Credit Growth Finally Bottoms, Setting Stage For Powerful Credit Impulse Bounce

We maintain our view that broad credit growth could bottom in September and rebound modestly in 4Q on the back of a low base and possible acceleration of govt. bond issuance (central + local govt. bonds) – there are Rmb3.7trn remaining quota for Sept.-Dec. (vs. Rmb2.7trn for the same period last year), which suggest a monthly net issuance of ~Rmb900bn in the coming months.

In the NDRC press conference on Wednesday, policymakers also pledged to ramp up preparation work for infrastructure projects related to local govt. special bonds for the rest of this year and 1H22. In our view, this means policymakers will likely push for faster local govt bond issuance in the coming months and front-load next-year's govt. bond quota in 1H22, to arrest downside risks to growth.

One can only chuckle at people who still think China is some kind of ongoing economic miracle. On relative terms it may or may not be in better shape than the U.S., but the idea that either country is a good place to be investing right now, that their currencies or bonds are worth owning, is lunacy.

Caixin: What Does China’s Consumption Slowdown Mean for the Economy?

When considering Chinese economic news, remember that the country has banned negative interpretations from the news. It isn't a blanket ban on bad news, but for instance there aren't as many Evergrande stories in the Chinese press these days. A few years ago, I'd have a sea of articles and blog posts to sift through. Today, I'd more like finding a needle in a haystack, with months old articles coming up as top search results.

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