Fitch says China credit bubble unprecedented in modern world history

"This **could** feed into a massive over-capacity problem, "

"We have no idea who the borrowers are, who the lenders are, and what the quality of assets is"

So due to the 'maybe's, could be's, and no idea's', the whole article is redundant. Come back with some facts...or else don't come back at all.....

You said: "do you think there is no credit bubble in china? it is pretty obvious there is a problem there."

I'm asking, where did you get your information from?

Well if that's your attitude, then discussion with you is impossible. I'm simply trying to establish where you are getting your information from, but you won't answer a simple question.

Have a nice day

Precisely......they didn't get to be the 2nd largest economy by accident!

Listen.....I do not know whether there is a bubble in China or not because there is no reliable source of information that I have seen to substantiate such a claim.

If you have this information, where did you get it from?

On top of the problem of trying to get reliable information free from the biases of western press, and the ignorance of the people who rely on it, the other majour issue is what cannot be quantified. And that has regard to what cannot be counted in terms of GDP in China; the cash-cash economy.

USA is so heavily dependent on electronic transactions of everything. Even at most petrol stations you cannot refuel until you provide credit card details at the pump first. That it is a reportable issue if you transact at a bank more than $10,000 in cash. That even a fart has a tax applied to it, and every fart is counted.

In China, almost no one pays tax. Ten's of millions of small businesses everywhere, none pay tax. Millions of vendors on mega-sized online shopping sites like Taobao never pay tax; and yet in recent YEARS the Govt has talked about one day bringing about such reporting requirements and eventually after that taxing vendors.

My point is that China's economy and GDP is MUCH larger than reported.

There is China the geographic area. There is China the Capitalist Govt with a communist name. And then there are the CHINESE PEOPLE, and every single one of them can live on the smell of an oily rag while hording cash-cash for their every asset investment.

As a nation, China has a Govt net ASSET position of 2 Trillion, compared to the USA which has a Govt net DEBT of 17 Trillion. I'd say that's not bad going for an "emerging economy" with 4 times the people of the USA after 5 years of GFC.

Haha, yeah fetch Fitch.

The headline, Fitch says "China credit bubble unprecedented in modern world history".

What then have the US Fed Res's QE measures been then?

85 BILLION in printed money a MONTH for how long? And this is QE3? Yet this is only the PRINTED money part of the issue. Debt is what printed money is created for and the debt comes out at about 10:1; $10 debt for every dollar printed.

If anyone is not sure of the complexity of economics involved, and what "Fractional Reserve Banking" is about, watch the first 20 minutes of Zeitgeist The Addendum.

The movie makes it very easy to understand WTF is really going on with QE issues. You can download it for free; I got it from www.thepiratebay.org.

Basically, Fractional Reserve Banking, as documented by the Fed is that the $85 Billion they print (every month) is banked by the Govt, and that the bank is then permitted to lend out 90% of that in new money loans. Only 8.5 billion is kept in "reserve".

Then the $76.5 billion in new loans gets banked by those who borrow it, of which $7.65 billion must be kept in "reserve" with the rest being available to lend out.

This formula continues, until what happens is that basically, $85 Billion dollars of money printed by the Fed becomes $850 Billion in new debt/loans as part of the USA money supply.

This is PER MONTH to growth of the USA money supply/debt.

No way China beat the USA at this Kamikaze implosion.

I have been living here in China for 6 years.

The only things I miss by living in China is being able to buy lamb/beef at the supermarket to cook at home and seeing millions stars at night time with a clear sky.

I will never miss the caked on makeup of lipstick, nail polish, body piercings and tattoos of hugely fat-assed and hairy western women.

The grass is not always greener in the other country my friend.

You have to plough the field to grow crops Jaygee.

Chinas ghost cities, why do you think they are building them?

Granted, but I doubt they assumed to retain double digit growth. Govt officials were quoted as saying they were concerned about inflation and eased back. The Govt funded these cities, and while they may have got ahead of themselves, I simply don't take all the news reel scaremongering at face value.
China has been investing in infrastructure (something other nations probably should have been doing lately) at a rapid pace and you won't fill that void overnight.
They are changing the face of their economy and while it won't be easy, change never is.

My reading is, they saw that the western bubble shite was going to hit the fan and have been in a race against time to position themselves appropriately. Investing huge excess $ in infrastructure and a self sustaining economy so they won't have to rely on exports to a decaying western economy for too much longer.

The Chinese know about long term sustainable vision, something we lost long ago.

Interesting info for us to consider.
China is clearly very different to the US and elsewhere.

This news reports on real estate bubble lacks more details on the following matters:

a) The profiles of the developers and the total amount they owe the banks;
b) The profile of the buyers and the total amount they owe the banks;
c)The market share of foreign buyers;
d) The nature of the real estate market in China; and
e)The number and the total value of the projects under construction.

The report is based on the assumption that there is a real estate bubble in China, similar to that in the US resulting in the 2008 Great Financial Crisis. For such a crisis to happen, it is crucial that there are enormous bank loans and financial derivatives tied to these loans that would decimate the economy when the bubble bursts. The report only makes passing references to huge developers’ bank loans and loss of household savings (not massive household’s debts as Chinese buyers are known to pay for the properties in cash or largely in cash) when the property prices plunge quickly and sharply.

Since most of the properties are already sold over the last 15 years, the ones that are being built and hold by the developers would probably be marginal when compared to the total stock of the properties in this sector of the real estate in China. So comparatively speaking, the huge developers’ loans are not that huge that would decimate China’s financial system when the bubble bursts.

The report mainly focuses on the “ghost cities” and other vacant properties. Since
these properties have already been sold, some for years, it is quite clear that they are not bought for occupation. They were bought for investments by people who are rich in cash and in no hurry to rent them out. In the investment community, they are referred to as the “strong holders” who could ignore the fluctuations of the property prices. So there will be no massive foreclosure by the financial institutions and bad loans and no gigantic bubble bursting. Moreover, because of the huge rising reservoir of cash available, property prices would recover quickly when the effects of policy restraints wear off.

As these investment properties are left vacant, they in fact do not form part of the housing markets where properties are bought or rented to be used as homes. Therefore, it is inaccurate to refer to the escalating prices in this sector of the real estate in China as a “housing bubble” as it is not about housing.

These properties are actually the physical manifestation of the wealth of a relatively small group of people in China. There are beyond the reach of the vast majority of the Chinese people. If there are people in this group who buy the properties for speculative gains, they are in essence no different from the stock market or currency speculators who sometimes have to learn very painful lessons at first hand from the market about the brutality of capitalist excesses.

((From the above, it is clear that China’s “housing bubble” is not as serious or
gigantic as the sinophobes and the China bears want to believe. {{Chinese property buyers pay in cash or mainly in cash.}} ))

If indeed there is a crash in the prices of the luxury properties, thousands of
people may demonstrate at the developers’ offices, but over a billion people
would be celebrating. It would be the celebration of the masses.

Fitch and western rating agencies are talking out of their butts. By law they are banned from auditing mainland Chinese companies. Any major Chinese company caught handing over their balance sheets to such agencies will face sanctions and possible jail time.

This is the real reason why they have no idea who lends to what and what little information they have in China is purely conjecture without hard data. This is also why they're locked out of the lucrative Chinese money market business and are jealous to get back in.

The kicker is do you know why this happened? They were caught selling confidential info about several Chinese companies to their other clients and were suspected of spying for the US government.

You reap what you sow.

Cant complain either. Good place to live. Especially more in the south, better climate, less smoggy. And of course everyone in the west says that China is going to implode, just to make their system look as bad as or worse than the west. In the end, we couldnt even predict our own doom and our 'experts' still struggle to explain the definite causes, 7 years after the kaboom, so how are there articles writing about the doom of China. Lol. Pretentious and arrogant, that's what i call it

Lol out of the 12 million in NYC, how many are actually working and how many are just sitting on their big fat bum watching soaps n Winfrey or jerry springer? What a laughable comment from noobs

Us the west are simply talking from our bum

Theres no question that the future doesnt look good for China. Its really just a question of degree. Im optimistic about China in the extreme long term, but their bubble is only just about to burst.

The global situation is pretty ugly, when you think about it. Its kind of like being a spectator to a horrible car accident about to happen... fascinating, except the problem is we're all collectively sitting in the back seat.

So rather than print nothing, print bullshit?

How is it obvious? Where did you get your information from?

I ask again. Where did you get your information from?

Exactly right Phil.....China isn't about to open it's books to show the west.....let alone Fitch!!

At least with the 1 apartment law, you won't have the unemployed owning 5 properties

lol...

Hey man , leave me outa this

lol...

Don't anybody think Chinese economists and leadership are smart enough to know what is going on and how to take care of it.

Typical snoobish yankie talks, they simply forgot who bought over most of their toxic assets and who went to China begging for help. O well, its just typical snoobish low intellects.....what can I say

do you think there is no credit bubble in china? it is pretty obvious there is a problem there. i mean whole cities funded by middle class investors with absolutely no one in them. who is going to pay for all that? not me.

because they assumed...there is that word again eye'll b bakk...that the economy would continue to grow at 25% annum and everyone and their brother would want to live there. it didn't happen. ....Look, there are birds roosting in the hallway now. it is typical of emerging mkts when things are screaming. I am not saying it wasn't justified but the outlandish growth is over for now so.......window washers are out of a job for now in those empty cities. the problem is the loans taken out for those whole cities. Haw are the middle classes going to pay for them?

infrastructure is one thing, cities with no one in them is quite another. they have no plans of stopping them either because they assume...that word again..gee...the growth will continue. one other thing, although the govt financed these things, they have been sold to middle class investors and are waiting for buying occupants that are not available. It is a credit bubble of monstrous proportions and building more infrastructure is NOt going to help that. The chinese don't have a clue and are about to feel the pinch. they have NO experience with any of this.

ok, so i will ask you again. Do you think there is no credit bubble in china? that was the first question. If there are cities in china with no one in them and they are sold to middle class investors that cant move them, does that constitute a credit bubble? Will those middle class investors have to pay the loans back or is the govt just going to forgive them?

When asked what has happened in the past six months since the ghost cities were built, he said: 'China built more of them.
'China consumes more steel, iron ore and cement per capita than any industrial nation in history.


And despite pictures last year showing some of the reported 64 million empty homes, Chinese authorities have since erected masses more buildings.

lol build it and they will come. 64 MILLION empty homes. everything is fine.

i believe there are 12 million people in New York City. This represents over 5 NYC's with no one in them. If you think for one minute that the Chinese economy can't recess or maybe depress, you are kidding yourself. if you don't want to discuss it, that is fine with me. Some people don't want to know the truth or admit they are wrong. i understand completely. here is one site with satellite proof of the empty cities that was easily looked up. A picture is worth a thousand words don't you know.

http://www.dailymail.co.uk/news/article-2005231/Chinas-ghost-towns-New-satellite-pictures-massive-skyscraper-cities-STILL-completely-empty.html

I guess there is nothing wrong with a newly developed town or apartment with no one in it. Its normal because it takes times for any newly developed apartment let alone township to be occupied. Full occupation will happen maybe 4-5 years down the line or maybe longer.

The good thing is the chinese have made top of the line assets which only needs to be used. If I am a planner I would definitely wants to have this peculiar west biased problem. (its an advantage just like the US govt. claim of evil unethical hacking when its chinese and its the cutting edge technology when its US's hacking of other countries servers courtesy Edwards Snowden. he had shown what is meant by double standard.)

China is a Dreamland !!! Ah ah ah !!!
China wants and WILL rule the World !!!

Live in China, there are lots pressure that we can't endure.

Absolutely right about that ! I think the Chinese authorities will have to start preparing their people for hard times ahead. We may start seeing more negative data out of China sooner rather than later.

where are you going to get facts from? that is the whole problem with investing in china. a lot of people are about to get burned up there. it IS going to blow up. BOOM!

are you asking me about the empty cities in china?

one thing that I follow closely is the iron ore and coal industry. iron ore + coal = steel, and the main driver of steel cosumption is chinese infrastructure: building construction and railroads. same as the chinese import and export figures, you can believe them or not. fact is iron ore and coal demand is going down, therefore I reckon chinese infrastructure building is on the way down. you don't have to believe me.

"Coal is Australia’s second-biggest export earner behind iron ore – which has also been hit by falling prices, as China moves away from an industrial economy to one driven by consumer demand, and hence requires less steel. Both iron ore and coal are key components in making steel."

http://www.fool.com.au/2013/06/11/55000-coal-mining-jobs-at-risk/?source=aptyholnk3030003

FITCH makes me laugh.

China has been showing the world how to do it in what concerns to building the economy... The rest of the world is not paying attention...

They don't give a f### to what rating agencies think about them and their economy. China doesn't recognize the "power" that all other countries recognize to this rating agencies so the rating agencies' opinions value is less than 0 for China.

They're not open for speculations. The Chinese Gov doesn't want others to tell them how to run things in their own land. They know how to make it work, and do the other countries know better? Comparing things... I don't think so.

The truth is that China could buy the world if they wanted to... and they are doing it... slowly...

the borrowers are the property magnates, the lenders are ex-Mao communist insiders with fingers in the till.

the assets are ghost town apartment blocks

chinese building BOOM ...

http://www.dailymail.co.uk/news/article-2338764/Now--Moment-Chinese-demolition-men-blow-26-floor-hotel-heart-built-city-old-27.html

whatever "fx forever", china knows shit about forex. but having there for a while, chinese chicks have got the best legs in the world. talking as a world traveller. I'll be back

haha, haha, I didn't tell you, haha

"Asian Stocks Drop as Chinese Developers Fall"

http://www.bloomberg.com/news/2013-06-18/asian-stocks-climb-to-two-week-high-before-fed-meeting.html