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Every time I write about China, I feel like a broken record, a negative Nancy (not the stock trader one). Yes, there have been some notable changes in China lately.


Bloomberg has an excellent summary of the measures here 👇

China’s 16-Point Plan to Rescue Its Ailing Property Sector
China’s sweeping rescue package to salvage its real estate market is detailed in a 16-point playbook for finance officials across the country.
China’s sweeping rescue package to salvage its real estate market is detailed in a 16-point playbook for finance officials across the country.
The initiatives range from addressing the liquidity crisis faced by developers and a “temporary” easing of a signature restriction on bank lending, according to people familiar with the matter. It marks all-round efforts to bail out the real estate market, which central bank Governor Yi Gang said he hope would have a “soft landing” after recent data showed improvement.

A 'soft-landing'. Sounds familiar. The TL;DR is that China is pushing new financing to bring some relief to the property sector. Mainly by ensuring that property developers have funding to complete the projects (or can be bought out by larger players who will do so), plus support for buyers and existing owners 👇

  • Support local governments to “reasonably” set down-payment thresholds and mortgage rate floors in a city-specific approach to accommodate basic and improving housing demand.
  • Optimize purchasing rules on first homes by new city dwellers.
  • Encourage banks to negotiate with homebuyers on extending mortgage repayments if their property purchasing contracts have been changed or canceled, or if they are under Covid-induced unemployment.
  • Buyers’ credit scores will be protected. Credit scores have been the center issue of a widespread mortgage boycott since July, as impaired creditworthiness would make it harder for people to buy real estate in the future.

All of this is absolutely a good thing for the property sector. The measures should stop the property slump from worsening, or at a minimum, slow the pace of the property slowdown.

However, most of these developer financing measures are 'temporary', and this is a permanent problem, with another big hurdle to overcome next year.

“China developers are facing another peak in debt maturity next year, if regulators don’t make adjustments for property-related policies, developer liquidity will continue to deteriorate... This will very likely trigger systemic financial risk.”
~Shen Meng, a director at Beijing-based investment bank Chanson & Co.

That debt maturity peak would be the 'at least $292 billion of onshore and offshore borrowings coming due through the end of 2023'...

The weaknesses and risks are still the same in China's economy, even as Covid Zero is gradually reversed. But we don't talk about things like that 🤐

Alibaba Singles’ Day Sales Kept a Secret for the First Time

You can always rely on outgoing officials to speak freely once the restraints are removed... 👇

4 weaknesses in China’s economy highlighted by outgoing officials
Deteriorating local government finances, weak banks and inadequate regulation are among the main risks facing China’s economy, according to outgoing senior officials and regulators.

There's a conflict between this supposed reversal in policy. The ideal of 'common prosperity' requires an increase in domestic demand... 👇

Yet many German companies are still looking to shift production to China (to benefit from production subsidies and relatively lower wages).

How does that boost domestic demand in China? And does it make sense for Germany as a nation??

Chartbook #168: Germany’s economic entanglement with China
For the last twenty years the German economy has thrived on globalization. Now that formula seems under pressure from many sides. Close trading and investment relations with China are yet another facet of the “German model” - after Russian gas - that is being called into question by our current poly…

China's importance as an export market for German industrial goods plateaued a decade ago...

Just because the exports stopped growing, that doesn't make it unimportant, but China's increasing role as a competitor for Germany (especially in the auto sector) should be a big consideration.

The relationship between Germany & China is already under scrutiny and no longer seen as the obvious path that it once was 👇

Germany & China Sitting In A Tree
K.I.S.S.I.N XI. Germany’s getting closer to China just as the US turns away.

Meanwhile, the US is actively ensuring that ties with China cannot deepen further unless China reverses the same "non-market economic practices" that make them so appealing to multinational companies in the first place...

Here's the US statement on the Xi-Biden meeting from earlier today 👇

Readout of President Joe Biden’s Meeting with President Xi Jinping of the People’s Republic of China | The White House
President Joseph R. Biden, Jr. met on November 14 with President Xi Jinping of the People’s Republic of China (PRC), in Bali, Indonesia. The two

China's domestic problems are far from solved, and the political tide has already turned in the West...  Banks are giving up too 👇

Global Banks Are Quietly Cutting China Jobs as Big Bang Fizzles
China’s financial opening that kicked off three years ago was supposed to be the biggest banking play of a lifetime. It’s now at risk of foundering as a slump in deals and growing political tension force global banks to recalibrate their plans to conquer the $56 trillion financial market.

And while we're talking about China... Presume you're a very wealthy person that realises the tide is turning for the Chinese economy at some point in the last five years or so. You want to get your money out.

China's capital controls are a problem for you. Was crypto a solution? Specifically Tether?

If this was a superhero movie and these were the origin stories of the main Tether characters... 👇

Devasini and van der Velde in business with the king of EU VAT scams - Il Fatto Quotidiano
There is a secret behind the foundation of Bitfinex, one of the largest global cryptocurrency exchanges, and Tether, the so-called “central bank of the crypto ecosystem”, which manages the dollar-linked stablecoin of the same name worth 70 billion dollars. A secret that binds the Italian cryptocurre…
Tether, the secrets behind Devasini’s wealth - Il Fatto Quotidiano
There is more than one stain in the career of Giancarlo Devasini, the Italian national celebrity in the cryptocurrency industry. The former plastic surgeon now entrepreneur who as Chief financial officer (CFO) manages Bitfinex, one of the main global crypto exchange platforms, and Tether, the third…

Wouldn't you have a few concerning, unanswered questions about Tether's true purpose?

In other amazingly awesome news, we did a video (for the first time in MONTHS) on why FTX is not Lehman. Give it a watch/listen! 👇