Authored by Gail Tverberg via Our Finite World blog,
It is easy for those of us in the West to overlook how important China has become to the world economy, and also the limits it is reaching. The two big areas in which China seems to be reaching limits are energy production and debt. Reaching either of these limits could eventually cause a collapse.
The legacy of the soon-to-retire PBoC governor, Zhou Xiochuan, will be that in sharp contrast to his western brethren, he warned that China’s credit bubble would burst before the fact. Two weeks ago, Zhou warned during the Party Congress that China’s financial system could be heading for a “Minsky moment” due to high levels of corporate debt and rapidly rising household debt (see here).
The overnight fireworks in Japan, which saw the Nikkei plunge by 860 intraday points and sent vol and volumes soaring (before recovering most losses), spooked traders in Asia and around the globe, and U.S. equity futures are red this morning, along with European shares and oil.
As we've said before, US accusations that countries like China and Russia run sophisticated hacking operations designed to infiltrate sensitive US networks are often hypocritical. After all, we do the exact same thing.
Today, the Daily Beast reported on newly unsealed documents that show the FBI blindly hacked into computers in Russia, China and Iran during a wide ranging investigation that lead to the bust of a global child pornography operation and the liberation of sexual abuse victims.
As the Daily Beast explains...
China’s factory prices (PP) jumped last month despite authorities' continued attempts to curb industrial production to combat pollution. China's PPI rose 6.9% in October Y/Y, higher than the projected 6.6% while consumer prices climbed 1.9%, also higher than the median forecast of 1.8%, and above last month's 1.6% Y/Y increase.