China

In a year marked by numerous dramatic (and often deadly) infrastructure failures in China's industrial sector, culminating with several deadly explosions at its port towns, the latest tragedy to strike took place yesterday in China's southern town of Shenzhen where at least 91 people were missing after a giant mound of mud and construction waste spewed out of an overfull dump site in a southern China boomtown and buried 33 buildings in the country's latest industrial disaster.

In a weekend of little macro newsflow facilitated by the release of the latest Star Wars sequel, the biggest political and economic event was the Spanish general election which confirmed the end of the PP-PSOE political duopoly at national level, with Rajoy's leading block losing the absolute majority it had enjoyed since the last elections while rewarding the anti-austerity Podemos and the liberal Ciudadanos party, who between them took 109 seats in the 350-member parliament. As a result no clear governing majority emerged.

As those who frequent these pages are no doubt aware, NPLs at Chinese banks are rising.

Here’s a kind of 30,000 -foot view from RBS’ Alberto Gallo:

Late last month in “South Pacific Showdown? Japan May Send Warships To China Islands,” we documented a meeting between Japanese PM Shinzo Abe and Philippines President Benigno Aquino on the sidelines of the Asia-Pacific Economic Cooperation summit held in Manila. 

The two leaders discussed the possibility that Japan could provide Manila with “large ships” that the Philippines can use to patrol the South China Sea. 

This was, of course, a direct response to China, whose land reclamation efforts in the Spratlys have ruffled more than a few feathers in the South Pacific. 

It’s notoriously difficult to get a read on the health of China’s economy. 

The ambiguity is in large part attributable to the NBR’s tendency to goalseek the data in order to ensure that growth remains in line with the Party’s “targets.” To be sure, virtually no one believes the official numbers and when it comes to GDP, the situation is complicated by what we’ve called Beijing’s deficient deflator math, which causes China to habitually overstate economic growth during times of rapidly falling commodity prices.