Beijing

Last April, China had an idea about how to boost the country’s dying credit impulse.

As we’ve been at pains to explain for more than a year, China is attempting to do the impossible. They need to deleverage and re-leverage all at the same time. Efforts to rein in the mammoth shadow banking system after years of expansion put pressure on an economy that was already decelerating and by the end of 2014, Beijing was struggling to figure out how to keep credit flowing without embedding more risk into the system.

On Tuesday, multiple media outlets jumped at the opportunity to report that China has built radar facilities at Cuarteron Reef, Beijing’s southern-most South Pacific sandcastle.

“New radar facilities being developed in the Spratlys, on the other hand, could significantly change the operational landscape,”  Gregory Poling of CSIS’s Asia Maritime Transparency Initiative said, explaining why the radar installations are actually a bigger deal than the deployment of HQ-9 surface-to-air missiles on Woody Island.

China is having an exceptionally difficult time managing  the narrative.

What began in late 2014 as whispers about a so-called “hard landing,” escalated to a cacophony of jeers last month, when investors (rightly or wrongly) blamed volatility in China for one of the worst Januarys in market history.

Downside risks to China’s economy are “relatively big” National Development and Reform Commission Chairman Xu Shaoshi admitted on Wednesday, but that’s not going to stop Beijing from swearing that China is growing at a near 7% clip.

It’s now been nearly a year since the world woke up to what Beijing was doing in the South China Sea.

Early in 2015, satellite images seemed to show that China had embarked on a rather ambitious land reclamation effort in the Spratlys a disputed island chain claimed by Brunei, Malaysia, the Philippines, and Taiwan.

As the months wore on it became readily apparent that this was no small project. Ultimately, China would build 3,000 acres of new sovereign territory atop reefs in the area much to the chagrin of Washington’s regional allies.