Time Reveals Its “Person Of The Year” Finalists

Time Magazine has released its list of finalists for 2017’s “Person of the Year” issue – and what a list it is.
After Trump criticized Time for informing him that he was in the running to win “Person of the Year” for the second year in a row – an honor last achieved by former President Richard Nixon, who was named man of the year in 1972 and 1973 – it appears Trump was right once again: He is one of 10 contenders for the honor released to MSNBC – even though editors at Time claimed the phone call never happened (though how else would Trump have known he was in the running, other than a lucky guess?).
The other names on the list are: Amazon CEO and world’s richest man Jeff Bezos, the #MeToo movement, Kim Jong Un, Xi Jinping, Crown Prince Mohammed Bin Salman, Colin Kaepernick, the dreamers, Robert Mueller and Patty Jenkins (Jenkins directed the Hollywood blockbuster “Wonder Woman”).
Of the names on this year’s list, only Trump and Bezos have won the honor before (Bezos won it in 1999 at the height of the tech bubble.

This post was published at Zero Hedge on Dec 4, 2017.

“It Could Reshape The Global Trading System For Decades” – US Rejects China’s Bid For “Market Economy” Status

The US has filed a legal submission to the WTO as a third party, intervening in a case that China has brought against the European Union. The US rejects China’s argument that under the 2001 agreement, which confirmed China’s WTO status, it would should automatically be considered a ‘market economy’ fifteen years after joining. The dispute could affect both America’s and China’s future within the international body and, as the New York Times contends, ‘shape the global trading system for decades to come.’ It goes without saying that this will only ratchet up the current tensions between the US and China over trade, which has been a cornerstone of Trump’s rhetoric since he launched his election campaign.
Briefly, the US submission sets out the legal arguments explaining why China should not be designated as a market economy, which would give it preferential treatment under existing WTO rules. China is currently designated a ‘nonmarket economy’ which allows the US, EU and other countries to decide whether China is dumping products at unfair prices under a WTO framework. If they decide that China is dumping, countries can add an extra duty to protect domestic manufacturers.
According to the Financial Times, “the Trump administration has opposed China’s bid for recognition as a ‘market economy’ in the World Trade Organization, citing decades of legal precedent and what it sees as signs the country is moving in the opposite direction under Xi Jinping. The US opposition to China’s efforts to be recognised as a market economy in the WTO came in a legal submission due to be released on Thursday in a case brought by Beijing against the EU. Market economy status would make it more difficult for the US to prove anti-dumping cases against Chinese companies at the WTO.”

This post was published at Zero Hedge on Nov 30, 2017.

29/11/17: China vs U.S. – the WTO Fight

“The Trump administration has lambasted China’s bid for recognition as a market economy in the World Trade Organization, citing decades of legal precedent and what it sees as signs that China is moving in the opposite direction under Xi Jinping. The US move to oppose China’s longstanding efforts to be recognised as a market economy in the WTO came in a legal submission filed last week and due to be released publicly on Thursday in a case brought by Beijing against the EU.”
Here are background slides to the dispute from my recent lecture @MIIS :
First, what’s behind the WTO dispute: the fight between the U. S. and the EU against China and other emerging economies in core Bretton Woods institutions – the IMF and the World Bank

This post was published at True Economics on Thursday, November 30, 2017.

China Hits A Brick Wall: For First Time Ever, Record Chinese Credit Creation Fails To Stimulate Economy

Submitted by Gordon Johnson of Axiom Capital
We believe that exhibit 1 says a lot: it shows that despite a record level of new credit issued by China’s PBoC YTD through Oct. 2017 (which stands in stark contrast to government authorities continued statements that China is de-levering), China’s economic backdrop is currently experiencing:
(a) monthly construction new start (commercial + residential + office) growth slowing Y/Y (Ex. 2), (b) monthly fixed asset investment growth slowing Y/Y (Ex. 9), (c) monthly cement output slowing Y/Y (Ex. 5), (d) monthly electricity production slowing Y/Y (Ex. 6), (e) monthly M2 money supply growth slowing Y/Y (Ex. 7), (f) monthly household loan growth slowing Y/Y (Ex. 8), (g) monthly private fixed asset investment growth slowing Y/Y (Ex. 10), and (h) monthly home price growth slowing Y/Y (Ex. 12) – in fact, select data points have turned negative Y/Y. Stated differently, while the lion’s share of our client base continues to tell us, with respect to our bearish views on China… ‘President Xi Jinping will simply stimulate more if/when things get bad’, we would highlight, again as detailed in Ex. 1 below, China stimulated at a record pace in 2017, yet it did not resonate in improved economic activity (in fact, the exact opposite appears to be unfolding – i.e., economic growth is slowing across a number of data points).

This post was published at Zero Hedge on Nov 28, 2017.

Michael Pettis: China’s Growth Miracle Has Run Out Of Steam

Authored by Michael Pettis, op-ed via The Financial Times,
Beijing must reveal the true level of GDP and wasted investment…
China’s 19th Communist party congress ended last month with an indication that Xi Jinping’s new administration plans to rein in debt by abandoning the country’s long-term economic targets and allowing gross domestic product growth to fall.
Typically, analysts assume that changes in reported GDP reflect movements in living standards and productive capacity. In China, however, this is not the case. Local governments are expected to boost spending by whatever amount is needed to meet the country’s targets, whether or not it is productive.

This post was published at Zero Hedge on Nov 21, 2017.

‘America First!’ AWOL From Beijing, War With North Korea Looms

There’s no indication that President Donald Trump’s summit with China’s Xi Jinping achieved any breakthrough on North Korea. But why didn’t it? After all, Trump said that China could ‘fix’ the North Korea problem ‘easily and quickly’ and it was just a matter of Xi’s making up his mind to do so.
No less divorced from reality was Trump’s half-hearted pitch on the US trade imbalance with China. The problem, he said, was not the Chinese – whom he complimented on their cleverness in exploiting our stupidity – but on the flaccid policies of prior American administrations. Quite true! But what will he do differently? Not much it seems, except maybe give a big tax cut with no strings attached to fat corporations that are thrilled to keep moving their operations overseas. Global market ber alles! And here we all thought Hillary Clinton lost the election . . .

This post was published at Zero Hedge on Nov 13, 2017.

Bank Stocks, Dollar Slide Hit By Fresh Tax Reform Doubts

U. S. equity futures are little changed as European and Asian shares retreated, led by sliding bank stocks and a drop in the dollar as doubts over republican tax cuts and ongoing bond curve flattening hurt sentiment and prompted fresh questions over the viability of the US expansion.
Investor concerns also returned to geopolitics as Trump continued his tour of Asia with a mission of rallying the world to stand up to the North Korean threat. Calling out by name Russia and China, he said Wednesday that all responsible nations must join forces to deny Kim Jong Un’s regime any form of support. As Bloomberg reports, Trump is also expected to discuss trade with his Chinese counterpart, Xi Jinping. But the biggest overnight catalyst was a renewed fear about the fate of GOP tax cuts, as fresh doubts emerged about tax reform progress after the Washington Post reported Senate Republican leaders were considering holding cuts back by a year, while they are also said to be considering repealing deductions for state and local taxes.
Derek Halpenny, head of research at Mitsubishi UFJ in London told Reuters he was dubious over the progress of the tax cuts program being urged by U. S. President Donald Trump’s campaign. ‘The initial phases of discussions within the House (of Representatives) have brought up a lot of divisions and problems … If the story is true that they’re considering a delay of one year to the corporate tax cut, those big differences will need to be sorted,’ he said. Francois Savary, chief investment officer at Prime Partners, said the doubts over the tax issue reinforce the case for some consolidation in the market, which has been fully priced for good news. ‘It’s something that would impact the domestic stocks in the U. S. and would be a setback for the market in general (and) it’s more than stock specific as people would reassess earnings growth expectations to the downside,’ he said.

This post was published at Zero Hedge on Nov 8, 2017.

Trump Receives Hero’s Welcome In Beijing As Chinese Roll Out The Red Carpet

Ever since President Donald Trump and Chinese leader Xi Jinping shared a slice of chocolate cake at Mar-a-Lago in April, many have speculated about the burgeoning ‘bromance’ between two of the world’s most powerful men.
Well, if anybody had any doubts about thelr ‘special relationship’, the opulent welcome that the Trump’s received upon landing in Beijing should put them to rest.
A red carpet, military band and flag-waving children met Trump and first lady Melania Trump when they arrived in Beijing. That greeting – which included far more pageantry than is typically bestowed on visiting foreign leaders – was followed by a tour of China’s Forbidden City accompanied by Xi and his wife, Peng Liyuan. Following that, they took in an opera performance. Trump also reportedly showed Xi video clips of his grandchildren singing in Chinese. Indeed, a video of Ivanka Trump’s daughter Arabella reciting a Chinese poem went viral on Chinese social media shortly after Trump’s election last year.
The Chinese have promised that Trump would receive what they call a ‘state visit plus’ – with the Trump’s being accorded courtesies that are rarely bestowed on foreign leaders.

This post was published at Zero Hedge on Nov 8, 2017.

China: Shadow Bank Inflows Are Critical To Sustain The Ponzi… But They’re Falling

During the Party Congress, even China’s somewhat watered down versus of the free markets was suspended so as not to disturb the glorification of Xi Jinping as the nation’s greatest leader since Mao. Returning to ‘business as usual’, some commentators have been disturbed by the continued rise in government bond yields with the 10-year hitting 3.93% earlier this week.
Bloomberg described it this morning as a ‘tumultuous few days’.
We also noted Huachuang Securities Co. comment that bond holders may be about to get hit by ‘daggers falling from the sky,’ if the Party adopts more aggressive deleveraging policies. In a far less sensationalist way, the Wall Street Journal has attempted a post-mortem on the recent sell-off in the Chinese government bond market.
Catching sight of a chain reaction in China’s markets is rare.
Carrying out a postmortem of a recent selloff in China’s $9 trillion bond market shows how it is becoming harder for Beijing to untangle its increasingly intertwined financial system. In the aftermath of China’s twice-a-decade party congress last week, yields on benchmark 10-year Chinese government bonds spiked to 3.9%, their highest in three years. Government bond futures fell.
Reasons proffered for the sudden rout ranged from expectations of higher U. S. interest rates to general fearmongering.

This post was published at Zero Hedge on Nov 3, 2017.

Kyle Bass Warns: Xi Has “Built The Chinese Economy On A Foundation Of Sand”

Earlier this week, Chinese leader Xi Jinping became the third ruler in the communist country’s history to have his named enshrined in its constitution – and the first to receive this honor while still alive. But as China celebrates its most popular, and most powerful, leader since at least Deng Xiaoping, Kyle Bass, hedge fund manager and noted China bear, told Bloomberg the Communist Party will one day regret standing idly by as Xi consolidated his power.
‘Today Xi is celebrated in media reports, but when future historians look back, he will be blamed for recklessly building the Chinese economy on a foundation of sand,’ Bass, founder of Hayman Capital Management, said in an email Wednesday. ‘Xi desperately seeks credibility, but true developed economies do not impose severe capital controls or move short-term rates hundreds of basis points overnight in attempts to manipulate their own currency.’ Xi, who launched the twice-a-decade National Party Congress last week with a three-hour speech where he laid out his vision for ‘communism with Chinese characteristics in a new era,’ the philosophy that was enshrined in the country’s constitution by a unanimous vote. In a move that seemingly confirms suspicions that Xi plans to break with precedent and seek a third term after his second ends in 22, Xi appointed five new members to the Politburo,
China’s most powerful body, all of whom are too old to be viewed as credible heirs. Typically, Chinese leaders have pointed to a successor or possible successors by the time they begin their second term, ensuring that there’s a clear path of leadership transition.

This post was published at Zero Hedge on Oct 26, 2017.

Xi Could Rule For “Decades” As China’s New Leadership Team Unveiled

Xi solidified his power base with loyalists without signalling a successor. It’s looking increasingly like China and the rest of the world will be stuck with Xi Jinping beyond 2022.
As the BBC reports, China has revealed its new senior leadership committee, breaking with tradition by not including a clear successor to President Xi Jinping. The omission cements Mr Xi’s grip on China for the next five years and possibly beyond, a day after his name was written into the constitution.
Five new appointments were made to the seven-member Politburo Standing Committee, China’s most powerful body, while the absence of an heir raises questions over how long Mr Xi intends to rule… Apart from 64-year-old Mr Xi, premier Li Keqiang, 62, was the only committee member to retain his position. Chinese leaders have in recent decades hinted at one or more possible heirs to the Standing Committee at the beginning of their final term, indicating a clear line of succession. There had been speculation that Mr Xi would elevate his protg Chen Miner and Guangdong party secretary Hu Chunhua, both of whom are in their 50s – young enough to be credible successors. But the six dark-suited men who walked out on stage on Wednesday were all in their 60s and are all likely to retire at the end of this five-year term. The absence of any younger members will fuel speculation about Mr Xi’s long-term intentions and his eventual successor. There had been rumors that Mr Xi would reduce the size of the Standing Committee from seven to five, further tightening his control, but they proved unfounded.

This post was published at Zero Hedge on Oct 25, 2017.

All Hail: Xi Jinping Confirmed As “Most Powerful Chinese Leader Since Mao”

The phrase ‘Socialism with Chinese characteristics in a new era’ is hardly catchy, but wields immense power. Xi Jinping became the first incumbent leader since Mao to have his name and thought added to the Party’ guiding principles, symbolising a major elevation in his power.
Bloomberg reports ‘China’s ruling Communist Party approved a revised charter that enshrined President Xi Jinping’s name under its guiding principles, elevating him to a status that eluded his two immediate predecessors. The amended constitution voted on by the Communist Party in Beijing listed ‘Xi Jinping thought on socialism with Chinese characteristics for a new era’ alongside the theories of Mao Zedong and Deng Xiaoping. While presidents Jiang Zemin and Hu Jintao also secured contributions to the document, neither was featured by name. The revisions confirmed Xi’s rapid consolidation of power and will reinforce speculation that he might seek to stay on after his second term ends in 2022.
No Chinese leader since Mao has managed to put his stamp on the party’s prevailing ideology in its foundational document before stepping down. ‘Enshrining ‘Xi Jinping thought’ in the Constitution will ensure that Xi Jinping is considered one of the great transformative leaders’ of China, said Elizabeth Economy, director of Asia Studies at the New York-based Council on Foreign Relations.
The move ‘again puts him on par with Mao Zedong and Deng Xiaoping.’

This post was published at Zero Hedge on Oct 24, 2017.

One River CIO “We’re Willing Participants In Our Own Demise”

With the world’s focus falling on Beijing this week, where president Xi Jinping give a glowing account of China’s future during the 19th Party Congress, boasting that ‘the banner of scientific socialism with Chinese characteristics is now flying high and proud for all to see,” not all are impressed by China’s vision of the world in which China sees itself as increasingly taking over from the US as the world’s superpower. And it’s not just stories about China’s neverending behind the scenes bailouts of anything that may telegraph a hard landing for the economy (as decribed in “China’s Government Is Expected To Buy 24% Of All Residential Real Estate For Sale In 2017“); it’s the country’s entire financial system, which Kyle Bass has been shorting for nearly two years now but which he has failed to recognize now holds the entire world hostage: if it goes, so does the global financial system, unleashing a worldwide depression the likes of which have not been seen.
Here is Eric Peters, CIO of One River Asset Mgmt, explaining why everyone is wrong about the $35 trillion Chinese financial system, and yet how Beijing has figured out a way to become a parasite on the global financial system, resulting in an outcome in which “we’re willing participants in our own demise.”
Excerpted from One River’s latest Weekend Notes:

This post was published at Zero Hedge on Oct 22, 2017.

How China’s Skewed Sex Ratio Is Making President Xi’s Job a Whole Lot Harder

David Skidmore, Drake University
As odd as it sounds, China’s economic policy is being held hostage by its heavily skewed sex ratio.
China’s excess of young, unmarriageable males poses an acute dilemma for President Xi Jinping and other leaders as they set the country’s path for the next five years during the 19th Chinese Communist Party Congress, which opened on Oct. 18.
After years of heavy spending and investment to boost growth and employment, China is at risk of economic stagnation if it doesn’t restructure the economy. Yet there is peril that doing so will lead to dangerous levels of unrest among the millions of unmarried men – known as ‘bare branches’ – who will be laid off from shuttered unneeded steel, coal and auto factories.
So far Xi has tempered reform and kept the money taps open in order to avoid political instability. As the costs of domestic economic imbalances rise and international pressures to cut excess industrial capacity grow, Xi will have to decide what to do about the bare branches strewn in his way. And that won’t be an easy task, as my research on the intersection of economics and politics suggests.
China’s Spending Spree
This dilemma has been building for almost a decade since Chinese leaders responded to the 2008 global financial crisis by channeling massive investments into infrastructure and heavy industry to sustain economic growth and prevent political unrest.

This post was published at FinancialSense on 10/19/2017.

Escobar Exposes Real BRICS Bombshell: Putin’s “Fair Multipolar World” Where Oil Trade Bypasses The Dollar

Putin reveals ‘fair multipolar world’ concept in which oil contracts could bypass the US dollar and be traded with oil, yuan and gold…
The annual BRICS summit in Xiamen – where President Xi Jinping was once mayor – could not intervene in a more incandescent geopolitical context.
Once again, it’s essential to keep in mind that the current core of BRICS is ‘RC’; the Russia-China strategic partnership. So in the Korean peninsula chessboard, RC context – with both nations sharing borders with the DPRK – is primordial.
Beijing has imposed a definitive veto on war – of which the Pentagon is very much aware.
Pyongyang’s sixth nuclear test, although planned way in advance, happened only three days after two nuclear-capable US B-1B strategic bombers conducted their own ‘test’ alongside four F-35Bs and a few Japanese F-15s.

This post was published at Zero Hedge on Sep 6, 2017.

The Trump Administration Reaches for a Trade Sledgehammer

The White House is planning to launch new investigations into China’s trade and intellectual property practices, and soon. The move underscores how talks between the United States and China have broken down over Washington’s expectations that Beijing would help rein in North Korea’s nuclear program. With the 100-day action plan on trade that followed US President Donald Trump’s April meeting with Chinese President Xi Jinping over, and with Pyongyang still aggressively pursuing a fully functional and deliverable nuclear weapon, the White House already had signaled it would no longer be constrained when dealing with China before Trump tweeted July 29 that he was “very disappointed in China” for its inaction on North Korea. And now that comprehensive trade talks are frozen, the United States is pursuing far more aggressive measures against China’s economic policy – though it still retains the option to walk this pursuit back if needed.
According to several reports, the Office of the US Trade Representative will investigate technology transfers mandated by China pursuant to Section 301 of the Trade Act of 1974. Beijing requires foreign companies to share technology in exchange for allowing them to invest in China or access the massive and lucrative Chinese market. The investigation could be announced this week and is likely to be rolled into an executive order by Trump that includes other enforcement actions related to trade, investment, and intellectual property.

This post was published at FinancialSense on 08/04/2017.

Trump Set To Retaliate To China’s “Unfair Trade Practices”

President Trump has given China six months to prove that it is committed to preventing a nuclear-armed North Korea, and it seems his tolerance for China’s dithering has finally reached its limit. Now that President Xi Jinping has established that his government is unwilling to engage in a meaningful crackdown on its neighbor, the era of using carrots like improving trade relations to coax China into helping solve the ‘North Korea problem’ has ended. It is now time for the stick.
According to reports in the New York Times, Wall Street Journal and Associated Press, the Trump administration is planning to use an obscure 1970s law to launch a “broad-based” investigation into whether China’s trade-related intellectual property policies constitute ‘unfair trade practices.
The US inquiry could become an obstacle for one of the Communist Party’s top economic priorities: the Made in China 2025 initiative, while calls for China to become a ‘global leader’ in ten industries with the help of huge infusions of state money.
In the coming days, the US trade rep will launch a ‘Section 301’ investigation, named after a portion of the 1974 Trade Act. Here’s a breakdown of the likely timeline for the investigation, as well as possible outcomes, courtesy of the NYT:

This post was published at Zero Hedge on Aug 2, 2017.

Trump Lashes Out At China Over North Korea: “We Will No Longer Allow This To Continue”

One month after Trump’s ominously tweeted in the aftermath of Otto Warmbier’s death, that while he greatly appreciates the efforts of President Xi & China to help with North Korea, “it has not worked out”, confirming that the post Mar-A-Lago honeymoon period was officially over, moments ago the president blasted out his latest two tweets Saturday tweets, #12 and 13, in which he said he was “very disappointed” in China.
“Our foolish past leaders have allowed them to make hundreds of billions of dollars a year in trade, yet they do NOTHING for us with North Korea, just talk. We will no longer allow this to continue. China could easily solve this problem!” Trump tweeted one day after North Korea launched its second successful ICBM in the past month, one which according to both experts and Kim Jong-Un, can reach most US metro areas.
Relations between the world’s two largest economies soured after an initial honeymoon between Trump and President Xi Jinping. The U. S. last month sanctioned a regional Chinese bank, a shipping company and two Chinese citizens over dealings with North Korea, which could be a precursor to greater economic and financial pressure on Beijing to rein in its errant neighbor.
Trump has also vowed to put more pressure on China to do help curb Pyongyang’s rapidly advancing programs, which however judging by the recent spike in Chinese exports to NKorea, has not been successful.

This post was published at Zero Hedge on Jul 29, 2017.

Shocking rise in China’s shadow banking enrages Xi Jinping

China’s central bank has revealed shocking figures on the scale of shadow banking operations in the country, admitting that off-balance sheet business is more than double previous estimates.
Bank assets are approaching $38 trillion (29 trillion). The explosive growth of hidden activities on the margins of the financial system has alarmed the People’s Bank (PBOC), and suggests that the two-year credit spree since the downturn in early 2015 is treacherously unstable.
The Chinese version of the PBOC’s Financial Stability Report – not yet available in English – shows that the shadow banking nexus is bigger than all other regular activities of the lenders put together.
Regulators had thought it was equivalent to 42pc of on-balance sheet business at the end of 2015. They have revised this drastically, admitting that it reached 110pc by the end of last year.

This post was published at The Telegraph

China’s Economy Charges On as Officials Target the Risk ‘Gray Rhino’

China’s economy grew faster than expected in the second quarter, putting the nation on track to meet its growth target this year and giving backing to officials in their campaign to corral oncoming financial risk.
Data showing that the world’s second-largest economy expanded 6.9 percent in the second quarter, matching the pace from the first three months, was released hours after the Communist Party’s People’s Daily newspaper warned of potential “gray rhinos” — highly probable, high-impact threats that people should see coming, but often don’t.
In China’s case it’s the relentless buildup of risks caused by the debt-fueled investment that’s contributing to growth, a development tackled by a major meeting of top leaders in Beijing at the weekend. Until now, regulators have homed in on financial-sector excesses; that probe is now widening to debt in the broader economy, a shift that prompted a sell-off in domestic stocks.
China is grappling with how to ensure annual growth of at least 6.5 percent this year while reining in financial sector risks ahead of a twice-a-decade leadership transition this fall at the 19th Communist Party Congress. A regulatory crackdown pushed up money market rates and helped damp down speculative lending while at the weekend President Xi Jinping warned regulators that failing to spot and dispose of risks in a timely manner would amount to a “dereliction of duty.”
“The gray rhinos are containable,” said Liu Ligang, chief China economist for Citigroup Inc. in Hong Kong. But the economy is “still relying quite a lot on investment and credit and overall financial leverage is still building up. There’s no doubt that China’s debt overhang is still a serious challenge.”

This post was published at bloomberg