{"id":16298,"date":"2017-11-17T22:41:15","date_gmt":"2017-11-17T14:41:15","guid":{"rendered":"http:\/\/chinaworker.info\/?p=16298"},"modified":"2017-11-18T18:08:14","modified_gmt":"2017-11-18T10:08:14","slug":"chinas-central-bank-warns-of-financial-crisis","status":"publish","type":"post","link":"https:\/\/chinaworker.info\/en\/2017\/11\/17\/16298\/","title":{"rendered":"China\u2019s central bank warns of\u00a0financial crisis"},"content":{"rendered":"<p><strong>People\u2019s Bank of China governor warns economic bubble could burst<\/strong><!--more--><\/p>\n<p>chinaworker.info<\/p>\n<p><em>(2nd in our three-part series of articles on\u00a0October\u2019s 19th CCP Congress)<\/em><\/p>\n<p>There are a great many \u201cPonzi\u201d features present in China\u2019s economic growth and we could say the same about the CCP regime\u2019s pumped up global ambitions and schemes like Xi Jinping\u2019s \u2018Belt and Road Initiative\u2019 (BRI) to incorporate over 60 countries with a combined 4.5 billion people under Chinese economic hegemony.<\/p>\n<p>The BRI was written, along with \u2018Xi Jinping Thought\u2019, into the CCP\u2019s constitution at October\u2019s party congress \u2013 the first time this has ever happened in the case of a specific foreign policy. This is a case of boldness masking a tendency towards risk-taking and bombast. The aim is to sustain the capitalists\u2019 confidence in China\u2019s economy and above all to deceive the masses.<\/p>\n<p>In November alone, two countries, Pakistan and Nepal, cancelled BRI infrastructure deals saying Beijing\u2019s conditions including full Chinese ownership and control are too strict. In Pakistan\u2019s case, the now axed Diamer-Bhasha dam project, costing US$14 billion, represented one-third of the total BRI package in a country that has so far been the flagship for Xi\u2019s plan. This confirms our warnings about the overly ambitious, unrealisable nature of the capitalist-imperialist Belt and Road scheme.<\/p>\n<p>In his marathon congress speech, Xi described China as a \u201cgreat power\u201d or a \u201cstrong power\u201d 26 times, and mentioned the word \u201carmy\u201d 86 times \u2013 twice as often as Hu Jintao at the previous congress in 2012. Xi mentioned \u201cworking class\u201d once in his speech.<\/p>\n<figure id=\"attachment_16299\" aria-describedby=\"caption-attachment-16299\" style=\"width: 600px\" class=\"wp-caption alignnone\"><img loading=\"lazy\" decoding=\"async\" class=\"size-large wp-image-16299\" src=\"http:\/\/media.chinaworker.info\/2017\/11\/PBoc-600x338.jpg\" alt=\"\" width=\"600\" height=\"338\" \/><figcaption id=\"caption-attachment-16299\" class=\"wp-caption-text\">PBoC chief Zhou Xiaochuan.<\/figcaption><\/figure>\n<p><strong>\u201cMinsky moment\u201d <\/strong><\/p>\n<p>The increasing risks of a Chinese financial crisis, of a so-called \u201cMinsky moment\u201d of collapsing asset prices as occurred in Southeast Asia in 1997 and the US in 2007, was the surprise topic of a speech by veteran central bank governor Zhou Xiaochuan during the congress.<\/p>\n<p>Numerous such warnings have been made by international capitalist agencies such as the World Bank and IMF, but it is unusual from so senior a Chinese official. Zhou\u2019s comments contradict the Xi regime\u2019s \u2018strong and stable\u2019 mantra. The central banker came \u201cas close as someone in Mr Zhou\u2019s position can come to yelling \u2018fire\u2019 in a crowded theatre,\u201d noted Financial Times columnist John Authors.<\/p>\n<p>Zhou\u2019s speech, clearly made with Xi\u2019s authority, was a signal that the regime\u2019s yearlong crackdown on shadow banking and attempt after repeated failures to deleverage the overextended financial system will continue and possibly intensify, setting the stage for clashes between Beijing and debt-addicted regional governments. China\u2019s banking sector is now 310 percent of GDP, up from 240 percent at the start of the Xi era in 2012.<\/p>\n<p>This is a ratio only exceeded by a few developed capitalist nations like Britain and Germany, but three times the average level for emerging economies. Zhou blamed the \u201cdemands\u201d from local governments for pressuring the central government to hold to an excessively loose monetary policy thus exacerbating financial risks.<\/p>\n<blockquote><p><em>China\u2019s property market is now the most expensive in the world \u2013 worth as much as the rest of the world\u2019s real estate combined<\/em><\/p><\/blockquote>\n<p>China\u2019s economic growth of the past decade, upon which global GDP growth is increasingly dependent, has been driven by an unprecedented and unsustainable expansion of credit, with unregulated shadow banking loans now accounting for one-third of total loans. This credit tsunami has produced monstrous asset bubbles and a crushing burden for working people and the poor particularly with the exploding cost of housing.<\/p>\n<p>These factors nullify the regime\u2019s attempts to stimulate consumer spending in order to wean the economy off its current over-dependence on debt-driven investments. An increasing share of the income of workers and the middle-classes is being sucked into the housing market.<\/p>\n<p>Because of unprecedented speculation, which has seen average house prices increase 8-fold in the past decade, China\u2019s property market is now the most expensive in the world \u2013 worth as much as the rest of the world\u2019s real estate combined. Even Xi\u2019s congress speech included the line, \u201cHouses are built to be lived in, not for speculation.\u201d<\/p>\n<h4><a href=\"http:\/\/chinaworker.info\/en\/2017\/11\/17\/16289\/\">Read more:\u00a0Xi Jinping \u2013 How strong is China\u2019s strongman?<\/a><\/h4>\n","protected":false},"excerpt":{"rendered":"<p>People\u2019s Bank of China governor warns economic bubble could burst<\/p>\n","protected":false},"author":33,"featured_media":16299,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_exactmetrics_skip_tracking":false,"_exactmetrics_sitenote_active":false,"_exactmetrics_sitenote_note":"","_exactmetrics_sitenote_category":0,"tdm_status":"","tdm_grid_status":"","footnotes":""},"categories":[132,124],"tags":[],"class_list":{"0":"post-16298","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-china","8":"category-news"},"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.5 - 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