{"id":28304,"date":"2021-10-12T22:46:21","date_gmt":"2021-10-12T22:46:21","guid":{"rendered":"https:\/\/thepatientinvestor.com\/?p=28304"},"modified":"2021-10-12T23:06:04","modified_gmt":"2021-10-12T23:06:04","slug":"deconstructing-evergrandes-effect-on-china","status":"publish","type":"post","link":"https:\/\/thepatientinvestor.com\/index.php\/2021\/10\/12\/deconstructing-evergrandes-effect-on-china\/","title":{"rendered":"Deconstructing Evergrande&#8217;s effect on China"},"content":{"rendered":"<p>Elliot Clarke at Westpac says that China will be able to withstand the shock of Evergrande&#8217;s collapse and that power outages are a bigger threat.<\/p>\n<p><span class=\"embed-youtube\" style=\"text-align:center; display: block;\"><iframe loading=\"lazy\" class=\"youtube-player\" width=\"525\" height=\"296\" src=\"https:\/\/www.youtube.com\/embed\/z3wmpdiGRNQ?version=3&#038;rel=1&#038;showsearch=0&#038;showinfo=1&#038;iv_load_policy=1&#038;fs=1&#038;hl=en-US&#038;autohide=2&#038;wmode=transparent\" allowfullscreen=\"true\" style=\"border:0;\" sandbox=\"allow-scripts allow-same-origin allow-popups allow-presentation allow-popups-to-escape-sandbox\"><\/iframe><\/span><\/p>\n<p>We still think that the property sector contagion is part of a broader issue that China will struggle to overcome, as Michael Pettis succinctly explained:<\/p>\n<h3>China&#8217;s debt problem<\/h3>\n<p>Tweeted by <a href=\"https:\/\/twitter.com\/michaelxpettis\/status\/1447517469317414913\">Prof. Michael Pettis<\/a>:<\/p>\n<blockquote><p>In the past \u2014 e.g. the SOE reforms of the 1990s, the banking crisis of the 2000s, SARS in 2003, the collapse of China&#8217;s trade surplus in 2009, COVID, etc. \u2014 whenever China faced a problem that threatened the pace of its economic growth, Beijing always responded by accelerating debt creation and pumping up property and infrastructure investment by enough to maintain targeted GDP growth rates. It didn&#8217;t adjust, in other words, but rather goosed growth by exacerbating the underlying imbalances.<\/p>\n<p>That is why it had always been &#8220;successful&#8221; in seeing off a crisis. But when the main problem threatening further growth becomes soaring debt and the sheer amount of non-productive investment in property and infrastructure, it is obvious, or should be, that accelerating debt creation and pumping up property and infrastructure investment can no longer be a sustainable solution. All this can do is worsen the underlying imbalances and raise further the future cost of adjustment.<\/p><\/blockquote>\n","protected":false},"excerpt":{"rendered":"<p>Elliot Clarke at Westpac says that China will be able to withstand the shock of Evergrande&#8217;s collapse and that power outages are a bigger threat. We still think that the property sector contagion is part of a broader issue that China will struggle to overcome, as Michael Pettis succinctly explained: China&#8217;s debt problem Tweeted by &hellip; <\/p>\n<p class=\"link-more\"><a href=\"https:\/\/thepatientinvestor.com\/index.php\/2021\/10\/12\/deconstructing-evergrandes-effect-on-china\/\" class=\"more-link\">Continue reading<span class=\"screen-reader-text\"> &#8220;Deconstructing Evergrande&#8217;s effect on China&#8221;<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_mo_disable_npp":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[31,41,45,3761,10],"tags":[663,5017,5211],"class_list":["post-28304","post","type-post","status-publish","format-standard","hentry","category-the-fed-banks-interest-rates","category-china-hk","category-debt-levels","category-gdp-and-activity","category-housing-economy","tag-china","tag-china-evergrande","tag-power-outages"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.4 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Deconstructing Evergrande&#039;s effect on China - the patient investor<\/title>\n<meta name=\"robots\" content=\"noindex, follow\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Deconstructing Evergrande&#039;s effect on China - the patient investor\" \/>\n<meta property=\"og:description\" content=\"Elliot Clarke at Westpac says that China will be able to withstand the shock of Evergrande&#8217;s collapse and that power outages are a bigger threat. We still think that the property sector contagion is part of a broader issue that China will struggle to overcome, as Michael Pettis succinctly explained: China&#8217;s debt problem Tweeted by &hellip; Continue reading &quot;Deconstructing Evergrande&#8217;s effect on China&quot;\" \/>\n<meta property=\"og:url\" content=\"https:\/\/thepatientinvestor.com\/index.php\/2021\/10\/12\/deconstructing-evergrandes-effect-on-china\/\" \/>\n<meta property=\"og:site_name\" content=\"the patient investor\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/profile.php?id=61572934660810\" \/>\n<meta property=\"article:author\" content=\"https:\/\/facebook.com\/people\/The-Patient-Investor\/61572934660810\/\" \/>\n<meta property=\"article:published_time\" content=\"2021-10-12T22:46:21+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2021-10-12T23:06:04+00:00\" \/>\n<meta name=\"author\" content=\"Colin Twiggs\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Colin Twiggs\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"1 minute\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\\\/\\\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\\\/\\\/thepatientinvestor.com\\\/index.php\\\/2021\\\/10\\\/12\\\/deconstructing-evergrandes-effect-on-china\\\/#article\",\"isPartOf\":{\"@id\":\"https:\\\/\\\/thepatientinvestor.com\\\/index.php\\\/2021\\\/10\\\/12\\\/deconstructing-evergrandes-effect-on-china\\\/\"},\"author\":{\"name\":\"Colin Twiggs\",\"@id\":\"https:\\\/\\\/thepatientinvestor.com\\\/#\\\/schema\\\/person\\\/d42b18d516a80149d739845749ac6454\"},\"headline\":\"Deconstructing Evergrande&#8217;s effect on China\",\"datePublished\":\"2021-10-12T22:46:21+00:00\",\"dateModified\":\"2021-10-12T23:06:04+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\\\/\\\/thepatientinvestor.com\\\/index.php\\\/2021\\\/10\\\/12\\\/deconstructing-evergrandes-effect-on-china\\\/\"},\"wordCount\":222,\"publisher\":{\"@id\":\"https:\\\/\\\/thepatientinvestor.com\\\/#organization\"},\"keywords\":[\"China\",\"China Evergrande\",\"Power Outages\"],\"articleSection\":[\"Banks &amp; Interest Rates\",\"China &amp; HK\",\"Debt Levels\",\"GDP and Activity\",\"Housing\"],\"inLanguage\":\"en-US\"},{\"@type\":\"WebPage\",\"@id\":\"https:\\\/\\\/thepatientinvestor.com\\\/index.php\\\/2021\\\/10\\\/12\\\/deconstructing-evergrandes-effect-on-china\\\/\",\"url\":\"https:\\\/\\\/thepatientinvestor.com\\\/index.php\\\/2021\\\/10\\\/12\\\/deconstructing-evergrandes-effect-on-china\\\/\",\"name\":\"Deconstructing Evergrande's effect on China - the patient investor\",\"isPartOf\":{\"@id\":\"https:\\\/\\\/thepatientinvestor.com\\\/#website\"},\"datePublished\":\"2021-10-12T22:46:21+00:00\",\"dateModified\":\"2021-10-12T23:06:04+00:00\",\"breadcrumb\":{\"@id\":\"https:\\\/\\\/thepatientinvestor.com\\\/index.php\\\/2021\\\/10\\\/12\\\/deconstructing-evergrandes-effect-on-china\\\/#breadcrumb\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\\\/\\\/thepatientinvestor.com\\\/index.php\\\/2021\\\/10\\\/12\\\/deconstructing-evergrandes-effect-on-china\\\/\"]}]},{\"@type\":\"BreadcrumbList\",\"@id\":\"https:\\\/\\\/thepatientinvestor.com\\\/index.php\\\/2021\\\/10\\\/12\\\/deconstructing-evergrandes-effect-on-china\\\/#breadcrumb\",\"itemListElement\":[{\"@type\":\"ListItem\",\"position\":1,\"name\":\"Home\",\"item\":\"https:\\\/\\\/thepatientinvestor.com\\\/\"},{\"@type\":\"ListItem\",\"position\":2,\"name\":\"Deconstructing Evergrande&#8217;s effect on China\"}]},{\"@type\":\"WebSite\",\"@id\":\"https:\\\/\\\/thepatientinvestor.com\\\/#website\",\"url\":\"https:\\\/\\\/thepatientinvestor.com\\\/\",\"name\":\"The Patient Investor\",\"description\":\"Smart. 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He co-founded Incredible Charts and writes the popular Trading Diary and Patient Investor newsletters. Using a top-down approach, Colin identifies key macro trends in the global economy before evaluating selected opportunities using a combination of fundamental and technical analysis. Focusing on interest rates and financial market liquidity as primary drivers of the economic cycle, he warned of the 2008\\\/2009 and 2020 bear markets well ahead of actual events. 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Now a belated crackdown on excessive borrowing, setting \u201cthree red lines\u201d in August 2020, threatens a major collapse. Trading in China Evergrande bonds was suspended for the second\u2026","rel":"","context":"In &quot;Banks &amp; Interest Rates&quot;","block_context":{"text":"Banks &amp; Interest Rates","link":"https:\/\/thepatientinvestor.com\/index.php\/category\/economy\/the-fed-banks-interest-rates\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":28286,"url":"https:\/\/thepatientinvestor.com\/index.php\/2021\/10\/12\/china-snippets\/","url_meta":{"origin":28304,"position":1},"title":"China snippets","author":"Colin Twiggs","date":"October 12, 2021","format":false,"excerpt":"China power cuts Since mid-September, periodic power cuts have darkened homes and shut down factories across much of China. Several factors are sparking power cuts, including enforcement of energy intensity targets and outright gaps in power generation capacity. The high price of coal \u2013 which pushed the cost of generating\u2026","rel":"","context":"In &quot;China &amp; HK&quot;","block_context":{"text":"China &amp; HK","link":"https:\/\/thepatientinvestor.com\/index.php\/category\/countries-regions\/china-hk\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":7427,"url":"https:\/\/thepatientinvestor.com\/index.php\/2013\/04\/09\/michael-pettis-china-not-headed-for-disaster-but-slower-growth\/","url_meta":{"origin":28304,"position":2},"title":"Michael Pettis: China not headed for disaster but slower growth","author":"ColinTwiggs","date":"April 9, 2013","format":false,"excerpt":"http:\/\/youtu.be\/cOfBlYnMAcM Extract from an interview with Michael Pettis [professor of finance at Peking University in Beijing] on the Daily Ticker talking about China's economy, which he claims is not headed for disaster, but will necessarily slow as the economy rebalances. Full HD interview can be watched here: http:\/\/finance.yahoo.com\/blogs\/daily-ticker\/plenty-things-worry-china-bird-flu-not-one-174030450.html","rel":"","context":"In &quot;China &amp; HK&quot;","block_context":{"text":"China &amp; HK","link":"https:\/\/thepatientinvestor.com\/index.php\/category\/countries-regions\/china-hk\/"},"img":{"alt_text":"","src":"https:\/\/i0.wp.com\/img.youtube.com\/vi\/cOfBlYnMAcM\/0.jpg?resize=350%2C200","width":350,"height":200},"classes":[]},{"id":36826,"url":"https:\/\/thepatientinvestor.com\/index.php\/2022\/08\/30\/chinas-real-estate-dilemma\/","url_meta":{"origin":28304,"position":3},"title":"China&#8217;s real estate dilemma","author":"Colin Twiggs","date":"August 30, 2022","format":false,"excerpt":"China's three decades of unprecedented growth has led to an accumulation of imbalances in the real estate sector that now threaten financial stability. As Hyman Minsky explained, extended periods of stability lead to instability. Participants take on increasing amounts of risk, assuming that stability will continue, making the economy increasingly\u2026","rel":"","context":"In &quot;China &amp; HK&quot;","block_context":{"text":"China &amp; HK","link":"https:\/\/thepatientinvestor.com\/index.php\/category\/countries-regions\/china-hk\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":40639,"url":"https:\/\/thepatientinvestor.com\/index.php\/2023\/01\/30\/michael-pettis-the-china-shock-is-coming\/","url_meta":{"origin":28304,"position":4},"title":"Michael Pettis: The China Shock is Coming","author":"Colin Twiggs","date":"January 30, 2023","format":false,"excerpt":"https:\/\/youtu.be\/QcdPMOMS7N8 Michael Pettis is a professor of finance at Peking University in Beijing and one of the foremost Western experts on China, having lived there for almost two decades. He explains the Chinese growth model, why it no longer works, and the hard choices ahead. China's Growth Model China's growth\u2026","rel":"","context":"In &quot;China &amp; HK&quot;","block_context":{"text":"China &amp; HK","link":"https:\/\/thepatientinvestor.com\/index.php\/category\/countries-regions\/china-hk\/"},"img":{"alt_text":"China Non-Financial Credit\/GDP","src":"https:\/\/i0.wp.com\/www.incrediblecharts.com\/images\/2023\/2023-01-30-china-credit.png?resize=350%2C200&ssl=1","width":350,"height":200,"srcset":"https:\/\/i0.wp.com\/www.incrediblecharts.com\/images\/2023\/2023-01-30-china-credit.png?resize=350%2C200&ssl=1 1x, https:\/\/i0.wp.com\/www.incrediblecharts.com\/images\/2023\/2023-01-30-china-credit.png?resize=525%2C300&ssl=1 1.5x"},"classes":[]},{"id":12306,"url":"https:\/\/thepatientinvestor.com\/index.php\/2015\/09\/01\/if-we-dont-understand-both-sides-of-chinas-balance-sheet-we-understand-neither-michael-pettis\/","url_meta":{"origin":28304,"position":5},"title":"If we don\u2019t understand both sides of China\u2019s balance sheet, we understand neither | Michael Pettis","author":"ColinTwiggs","date":"September 1, 2015","format":false,"excerpt":"From Michael Pettis' OpEd in the Wall St Journal: History suggests that developing countries that have experienced growth \u201cmiracles\u201d tend to develop risky financial systems and unstable national balance sheets. The longer the miracle, the greater the tendency. That\u2019s because in periods of rapid growth, riskier institutions do well. Soon\u2026","rel":"","context":"In &quot;China &amp; HK&quot;","block_context":{"text":"China &amp; HK","link":"https:\/\/thepatientinvestor.com\/index.php\/category\/countries-regions\/china-hk\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]}],"_links":{"self":[{"href":"https:\/\/thepatientinvestor.com\/index.php\/wp-json\/wp\/v2\/posts\/28304","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/thepatientinvestor.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/thepatientinvestor.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/thepatientinvestor.com\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/thepatientinvestor.com\/index.php\/wp-json\/wp\/v2\/comments?post=28304"}],"version-history":[{"count":6,"href":"https:\/\/thepatientinvestor.com\/index.php\/wp-json\/wp\/v2\/posts\/28304\/revisions"}],"predecessor-version":[{"id":28319,"href":"https:\/\/thepatientinvestor.com\/index.php\/wp-json\/wp\/v2\/posts\/28304\/revisions\/28319"}],"wp:attachment":[{"href":"https:\/\/thepatientinvestor.com\/index.php\/wp-json\/wp\/v2\/media?parent=28304"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/thepatientinvestor.com\/index.php\/wp-json\/wp\/v2\/categories?post=28304"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/thepatientinvestor.com\/index.php\/wp-json\/wp\/v2\/tags?post=28304"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}