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OOOPS! Financial Bird Flu leaked [Copy link] 中文

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Post time 2013-4-18 09:01:16 |Display all floors
Local government debts soared after 2008, when Beijing loosened borrowing constraints to soften the impact of the global financial crisis. Provinces, cities, counties and villages across China are now estimated to owe between Rmb10tn and Rmb20tn ($1.6tn and $3.2tn), equivalent to 20-40 per cent of the size of the economy wrote Simon Rabinovitch in a recent article for CNN.

He went on to report "The International Monetary Fund, rating agencies and investment banks have all raised concerns about Chinese government debt. But it is rare for a figure as established in the Chinese financial industry as Mr Zhang to issue such a stark warning."

Mr Zhang, who is also vice-chairman of China's accounting association stated "Most (counties) don't have strong debt servicing abilities. Things could become very serious." said many local governments had invested in projects from public squares to road repairs that were generating lacklustre returns, and so were relying on financing rollovers to pay back their creditors. "The only thing you can do is issue new debt to repay the old," he said. "But there will be some day down the line when this can't go on."

The Central Banking Authority (ie: The Fed) has allowed local governments to raise funding through Bond sales to finance infrastructure improvemments. The investment by local governments in larger cities has on the most part been positive but there are too many projects either completed or halted which do not bring the financial return expected--now or the foreseable future.

Mr Zhang said many local governments had invested in projects from public squares to road repairs that were generating lacklustre returns, and so were relying on financing rollovers to pay back their creditors. "The only thing you can do is issue new debt to repay the old," he said. "But there will be some day down the line when this can't go on."

This reaching for the Gold is not new and has been part of Chinese culture for thousands of years. The difference is you now have to take repsonsibility for mishandling public funds at a much faster rate than ever before.

All good things come to those who wait. I am waiting.





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Post time 2013-4-19 10:43:07 |Display all floors
Well that is another matter altogether.
Who, and or What created the Gold crisis has yet to be identified.  After the first news report of the 'Gold Crash 2013' , gold retail stores in China were emptied of their inventory in less than 8 hours.
Cash is 'Still King in China'.  We will see the 2000 usd (or roughly 18000 Yuan) per troy ounce but not -at least-until 2016 when the exchange rate will drop to around 6 Yuan per USD.

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Post time 2013-4-19 10:53:02 |Display all floors
But what does that have to do with the post?
The post identified a hidden danger of "selective accounting" which is the method used by all business and governments.
Mr. Zhang...is one of the leading Accounting firms in China today.
There RE CITIES AND Counties all across the US and Europe who are going bankrupt because of these hidden accounting practices and CHINA is no different.
It is noteworthy Zhang's Beijing based Accounting firm is the first company who is being received well by Western countries for his straight forward and semi-transparent accounting methods.

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Post time 2013-4-19 15:07:51 |Display all floors
You say probably true.If the leader still persue GDP,then the People will lose more happiness

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