China

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.

It was exactly one week ago today when we reported that Guo Guangchang, a self-styled Chinese Warren Buffett worth some $7 billion, had disappeared. 

For those who follow developments in China’s capital markets, it was obvious what had happened. Guo was swept up in Xi’s campaign to root out misconduct tied to the country’s equity market meltdown and subsequent government-engineered rescue effort. 

The main purpose of this article is to bring to USA government's attention that " Pivot to Asia" policy is far more dangerous than they expected, because China may use this policy reversely to trigger U.S.'s crisis.