These numbers are truly staggering. The phrases that immediately come to mind are, “fasten your seat belt, it’s going to be a bumpy ride” and “last one out please turn off the lights”, not to mention my previously posted “abandon ship!”.
It’s also going to be “every man for himself”. Where will the Chinese, multinational corporations, and others park their money for safekeeping? It’s not all going into Swiss bank accounts. How much will be invested in the New York Stock Exchange, American real estate, and the multinationals’ other foreign manufacturing plants? Which Southeast Asian nation will be seen as the preferred investment opportunity, and which African nation will benefit most from the reallocation of investment funds? How will all the economic turmoil affect the dozens of elections held in the world this year? And what draconian measures are the CCP going to implement in a futile attempt to stave further outflow of funds?
We are in for not only a tumultuous year, but a completely unpredictable one. Peter Nayland Kust is the man to help us make sense of it all as it unfolds. Thanks in advance, Peter!
Yes! The CCP doesn’t really have a way to ‘fix’ this; no matter what they try, the Chinese economy is going down. And a huge number of Americans are going to be caught by surprise by the international consequences!
One point to remember is that the CCP can never be the solution. They're the problem. Government intrusions into an economy do not work, and never have.
That part of what is happening in China really ought to be a cautionary tale for the US. The more the government meddles, the worse off people are.
And this is why I, sadly, can’t be a Kennedy supporter. I really like and admire so much about the man, but he has the fatal flaw of still thinking government is the ‘solution’. Government is nearly always the ‘problem’.
Yes, but the very obvious and available capital (investment) market information is in the process of saving many foreign investors with skin in the game.
The other thing I worry about is the prospect of a second Trump term causing Xi and Putin (and world oligarchs of all stripe) to take advantage now of a weak and compromised US administration.
Not sure my opinion qualifies as an "expert" opinion (not even sure if that's a good or a bad thing!), but no, I do not see this as a "prewar" move.
Investment capital has been exiting China for most of the past two years at least. That's not a time frame that indicates a general perception that war is imminent.
Other countries and firms from other countries are pulling their money out of China, and have been doing so at an increasing pace for the past two years. The extended time period suggests that businesses are increasingly disenchanted with China as an investment prospect. This is not capital flight because businesses believe war over Taiwan is imminent--that would entail a much more chaotic and much more immediate exodus of capital, and probably would be accompanied by a surge in Bitcoin valuations, as entities looked for ways to sidestep Beijing's capital controls.
However, Bitcoin is not even trading at an all-time high against the Remninbi, even though it has appreciated significantly.
Whether China is preparing a surprise invasion of Taiwan I could not say. Certainly, there has been no reporting to date of Chinese troops massing along the Taiwan Strait, so at a minimum we may conclude that an invasion is unlikely to happen this month. However, I do not see in the capital flight a perception by global investors that war is imminent and so now is the time to pull their money out of the Middle Kingdom.
Could the capital flight catalyze a power struggle within the CCP that forces Xi to mount an invasion of Taiwan in a "wag the dog" sort of maneuver? I won't say that's impossible, but it does seem unlikely. Invasion just doesn't play out as a scenario which is economically beneficial in the short term.
There are some interesting insights in these:
https://www.theepochtimes.com/article/why-chinas-economy-is-worse-than-you-think-5584150?utm_source=ref_share&utm_campaign=copy
https://www.theepochtimes.com/china/quant-quake-china-imposes-restrictions-on-quant-funds-to-boost-market-confidence-5592126?utm_source=ref_share&utm_campaign=copy
These numbers are truly staggering. The phrases that immediately come to mind are, “fasten your seat belt, it’s going to be a bumpy ride” and “last one out please turn off the lights”, not to mention my previously posted “abandon ship!”.
It’s also going to be “every man for himself”. Where will the Chinese, multinational corporations, and others park their money for safekeeping? It’s not all going into Swiss bank accounts. How much will be invested in the New York Stock Exchange, American real estate, and the multinationals’ other foreign manufacturing plants? Which Southeast Asian nation will be seen as the preferred investment opportunity, and which African nation will benefit most from the reallocation of investment funds? How will all the economic turmoil affect the dozens of elections held in the world this year? And what draconian measures are the CCP going to implement in a futile attempt to stave further outflow of funds?
We are in for not only a tumultuous year, but a completely unpredictable one. Peter Nayland Kust is the man to help us make sense of it all as it unfolds. Thanks in advance, Peter!
Agreed, and excellent questions, Gbill7.
However, the average American is ignorant of the state of the Chinese economy, and therefore of the danger of this collapse.
The over-riding question is: What will the CCP do?
Yes! The CCP doesn’t really have a way to ‘fix’ this; no matter what they try, the Chinese economy is going down. And a huge number of Americans are going to be caught by surprise by the international consequences!
One point to remember is that the CCP can never be the solution. They're the problem. Government intrusions into an economy do not work, and never have.
That part of what is happening in China really ought to be a cautionary tale for the US. The more the government meddles, the worse off people are.
And this is why I, sadly, can’t be a Kennedy supporter. I really like and admire so much about the man, but he has the fatal flaw of still thinking government is the ‘solution’. Government is nearly always the ‘problem’.
Yes, but the very obvious and available capital (investment) market information is in the process of saving many foreign investors with skin in the game.
The other thing I worry about is the prospect of a second Trump term causing Xi and Putin (and world oligarchs of all stripe) to take advantage now of a weak and compromised US administration.
Edit: fwiw, I remain a steadfast Trump voter.
The future is always uncertain, but this next era we’re entering into seems especially so, doesn’t it? I hope you can take care of yourself, Timothy!
Likewise, Gb!
Any chance, in your expert opinion that this is a prewar move?
Not sure my opinion qualifies as an "expert" opinion (not even sure if that's a good or a bad thing!), but no, I do not see this as a "prewar" move.
Investment capital has been exiting China for most of the past two years at least. That's not a time frame that indicates a general perception that war is imminent.
Other countries and firms from other countries are pulling their money out of China, and have been doing so at an increasing pace for the past two years. The extended time period suggests that businesses are increasingly disenchanted with China as an investment prospect. This is not capital flight because businesses believe war over Taiwan is imminent--that would entail a much more chaotic and much more immediate exodus of capital, and probably would be accompanied by a surge in Bitcoin valuations, as entities looked for ways to sidestep Beijing's capital controls.
However, Bitcoin is not even trading at an all-time high against the Remninbi, even though it has appreciated significantly.
https://www.xe.com/currencycharts/?from=BTC&to=CNY&view=5Y
Whether China is preparing a surprise invasion of Taiwan I could not say. Certainly, there has been no reporting to date of Chinese troops massing along the Taiwan Strait, so at a minimum we may conclude that an invasion is unlikely to happen this month. However, I do not see in the capital flight a perception by global investors that war is imminent and so now is the time to pull their money out of the Middle Kingdom.
Could the capital flight catalyze a power struggle within the CCP that forces Xi to mount an invasion of Taiwan in a "wag the dog" sort of maneuver? I won't say that's impossible, but it does seem unlikely. Invasion just doesn't play out as a scenario which is economically beneficial in the short term.