China’s ‘Black Monday’ is just the start

One-party states are rarely any good at admitting to any form of blunder. It is certainly the case with China’s prickly political leaders, who love to flood domestic media with jolly tales of fashion shows and bamboo-chomping pandas – anything to divert people’s attention from a flagging economy and rising unemployment.

This makes today’s main headline on China Daily‘s website all the more arresting: ‘Stocks plunge most since 2007 as state support measures fail’ the state-run newspaper blared, after the Shanghai Composite share index lost 8.5 per cent in a single day.

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  • China’s economy has been going downhill for a while. I’m sure China thought that it could do some damage to others on the way down.

    • tom_billesley

      To divert their people’s attention from the economic situation, they’ll try foreign policy adventures – perhaps in the disputed islands and waters of the South China Sea.

      • Are there newer rumblings there?

        There might be given how fried some people are about the economy.

  • Drunk_by_Noon

    It now is being asserted (heard it on the radio this morning can’t yet find a link) that the Chineese have been film-flamming their own economic numbers for quite a while.
    That means they have been grossly overstating their growth at least since about 2006-2007 (and maybe all along).
    I know, shocker!
    Chinese businessmen, bankers, and their own government have been “in on the fix” and now they can’t hide it any longer.
    OMG, the Chineese have been dishonest!
    How could anyone have seen that one coming?

    • Minicapt

      They were fiddling their books in the early 90s as the ‘economic reforms’ were being introduced.

      Cheers

      • Drunk_by_Noon

        I’m pretty certain they were too, however this guy (on the radio) said he only had “proof” going back to the 2003-2004 period.
        I am fairly certain that were China ever to have a western style financial audit done on them, the rest of the world would run screaming into the night.
        That will never happen.
        I have been saying since the 1990’s that the ChiComs were dirty, and in ways we could not fully grasp too.

        • Minicapt

          The original problem was to cover the long-term costs of the old state enterprises which were to be replaced by the new ‘Western’-style corporations. None of that money was ever mentioned in the subsequent two decades of financial studies.
          Second, the new “stock market with Chinese characteristics” was designed to look like London or New York, but the underlying processes were ‘inadequately understood’. The national stock exchange in Kampala was probably better run.
          Third, when word got out about the size of China’s US dollar purchases, some effort was made to track down the math geniuses making this happen. They did interview a physicist for a US lab who came home to do finances, but my understanding of the numbers he presented suggested that about half of the US cash arriving in China disappeared.
          Fourth, enterprises owned by the Peoples Liberation Army …

          The answers to the above must be out there; unfortunately, they avoid me.

          Cheers

          • Drunk_by_Noon

            “Third, when word got out about the size of China’s US dollar purchases, some effort was made to track down the math geniuses making this happen. They did interview a physicist for a US lab who came home to do finances, but my understanding of the numbers he presented suggested that about half of the US cash arriving in China disappeared.”
            That’s the easiest one of all!
            It’s being looted and stolen by the Chinese elite and being spent and invested in the west.
            It’s not staying in China.

          • Minicapt

            Yep.

            Cheers

          • El Martyachi

            I sometimes wonder how much Canadian wealth is of this form.

          • Drunk_by_Noon

            If you are limiting the discussion to immigrants from the third world, then I would say close to all of it.
            There are no honest rich people in third world countries.

    • tom_billesley

      It’s all Greek to me.

  • Norman_In_New_York

    I feel another surge of schadenfreude coming on. After today’s market performance, callers to Paine Webber were not saying “Thank you.” Instead, it was something else with “you” in it.

    • Clausewitz

      Looks like the Quantitative Easing bubble from Obama the blameless is finally about to burst.

  • Canadian

    So, our jobs aren`t coming back?

    • Yo Mama

      Ross Perot was right.

      That loud sucking sound of the North American Free Trade Agreement was the sound of our jobs going down to Mexico where wages are much lower and there are no environmental or worker safety regulations.

  • El Martyachi

    Any thoughts on how the new generation of PLA leadership will handle this? Blaming the west may look like a solid way of holding onto the reigns.