China Crisis Too?

The Greek crisis may be concealing another crisis:

While all Western eyes remain firmly focused on Greece, a potentially much more significant financial crisis is developing on the other side of world. In some quarters, it’s already being called China’s 1929 – the year of the most infamous stock market crash in history and the start of the economic catastrophe of the Great Depression.

In any normal summer, a 30pc fall in the Chinese stock market – a loss of value roughly equivalent to the UK’s entire economic output last year – after an ascent which had seen share prices more than double within the space of a year would have been front page news across the globe.

The dramatic series of government interventions to stem the panic – hitherto unsuccessful, it should be added – would similarly have been up there at the top of the news agenda. Yet the pantomime of the Greek debt talks, together with the tragi-comedy of will they, won’t they leave the euro, has relegated the story to little more than a footnote – even though 940 companies, more than a third, have now suspended trading on China’s two main indices.


By now it is clear to everyone, even the most hardened neoliberals, that what is going on in China is nothing short of the complete collapse of a centrally-planned market into sheer chaos, a bubble which while punctuated by the occasional dead cat bounce, is now finished and it is only a matter of time before all the “nouveau riche” farmers and grandparents see all their paper profits wiped out and hopefully go silently into that good night without starting mass riots or a revolution.

Since by some counts there are anywhere between 20 and 40 million of them, it could be a close call, one which the Politburo would dread to see to its fruition and as such the Chinese government together with the People’s Bank of China have engaged in the most desperate and unprecedented series of market bailouts, one which puts good ‘ole plain vanilla QE in the “quaint” category.

But most curiously, it wasn’t until China literally threatened short (or any other for that matter) sellers with arrest last night, that the market finally staged a furious rebound.

Will that rebound hold, or like every other dead cat bounce in history, fade quickly if not quietly into memory, we shall see over the next several days.


The immediate repercussions of the crash, in a week when Europe is preoccupied with Greece, have largely played out inside China. But in a world that has come to rely on China to keep the global economy ticking over, China’s risk is now everybody’s risk.


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20 Responses to China Crisis Too?

  1. jaxthefirst says:

    Ah. Could this be the “16-wheeler” you referred to in your previous comment, SmokingScot?? Or is there another one (gulp!)?

    • smokingscot says:

      Nah, this is a straightforward, good, old fashioned, bubble. It’s essentially a product of cheap money and not enough good investment opportunities.

      You just need to look at the valuations they have for things like Apple, Facebook, Twitter and even my favourite – Air B & B. Stupid with ears.

      (Remember that interest rates went to almost zero in 2008 and this chart (when you click to Max) gives you a vivid picture of what happens when people who can access cheap money chose to take risks)

      Trouble with events in China is they don’t want the market to sort things out.

      It made it, it will sort it.

      But if you enjoy seeing dung hitting fans, just hang around until the Federal Reserve Bank hikes interest rates!

  2. harleyrider1978 says:

    Let the Armegeddon Begin!

  3. harleyrider1978 says:

    Eurogroup Meeting Ends; To Be Continued Tomorrow as Anti-Greek Rhetoric Across Continent Grows

    The eurogroup’s president, Dutch finance minister Jeroen Dijsselbloem raised issues of credibility and trust.

    “We have adjourned our meeting and will continue tomorrow at 11 AM. We had in-depth discussions of the Greek proposal, the issues of credibility and trust and the financial issues involved, but we haven’t concluded our discussion,” he told reporters at the doorstep. “It’s still very difficult.”

    As was reported earlier in the day, Italian prime minister Matteo Renzi is frustrated with Germany’s continuous humiliation of Greece and has reportedly said “enough is enough” and he will share his views with Angela Merkel. Meanwhile, Finland is reportedly dead set against a deal to keep Greece in the eurozone.

    Slovakian finance minister didn’t think the meetings went well. On his way out of the meetings he was quoting as saying “No is the better answer” to Ed Conway, a Sky News correspondent

  4. Rose says:

    10th July
    “The Chinese stock market crash came to a juddering halt yesterday, after a nailbiting three weeks that left investors $3tn poorer.”


    Beijing public smoking ban begins
    1 June 2015

    “The World Health Organization has welcomed the new tougher regulations.

    “When implemented, this new law will permanently bring clean air to all of Beijing’s indoor public places – in doing so, protecting Beijing’s more than 20 million residents from the deadly effects of exposure to toxic second-hand smoke,” said its representative in China, Dr Bernhard Schwartlander.”

    4 July 2015

    “ONE month after Beijing introduced a tough smoking ban, 40 organizations and 90 individuals have been fined for breaking the regulation, local authorities said yesterday.

    “The fines totaled about 100,000 yuan (US$16,120),” said Gao Xiaojun, an official with the capital’s health authority.

    Gao said an anti-smoking tip-off hotline had received 3,305 complaints, of which 56 percent were about smoking in office buildings and restaurants.

    The ban that has been in effect since June 1 prohibits smoking in all indoor public places, workplaces, and on public transport.

    Individuals caught smoking may be fined up to 200 yuan, while businesses may have to pay up to 10,000 yuan if they fail to discourage smoking on their premises.”

    It’s really odd how these things seem to coincide, do you think that after the shock of a smoking ban people just lose heart?
    I know from personal experience that it really shakes your confidence when the massive power of government suddenly turns it’s beady eye on you.

    • Frank Davis says:

      The only surprise might be that the massive power of government hasn’t been felt earlier, given that China remains a communist state – albeit one which which now pursues very liberal economic policies.

      But then, China is oddly liberal in lots of ways. When some people refused to sell their houses in order to comply with town planning, the state proved powerless to compulsorily purchase them (as happens in the UK) and so there are buildings in the middle of these new towns, sticking out like sore thumbs.

      I also find it odd that it’s these communist or former communist countries – eastern Europe, Russia, and now China – who have been the slowest in introducing smoking bans. Perhaps that’s because many of their leaders were avid smokers. e.g. Mao, Castro.

      But I certainly agree about the impact of smoking bans. You wake up one day, and you find you’re unwelcome in your own country, and it’s a tremendous shock. It’s a shock I still feel to this day. It’s never gone away.

      • Rose says:

        Well, some of the propaganda has got to get through to you eventually, for example I had no idea that 70% of the people I met hated me so much that they wanted me banned from everywhere, they’d never said a word about it before.

        Now that I look, they were supposed to secretly hate me even more, so 70% was quite a modest claim.–30.11.pdf

        Shortly after the ban came in and people had been given official permisson to express their long hidden disapproval, I finally went to the supermarket rather timidly, expecting at least some signs of disgust, after all they would all know who I was because as even the NHS had assured me, “If you smoke you stink”

        Nothing, not a glimmer.

        • jaxthefirst says:

          “It’s really odd how these things seem to coincide, do you think that after the shock of a smoking ban people just lose heart?”

          Yes, Rose, I think that the fact that all smoking bans have been swiftly followed with economic decline wherever they have occurred has a lot to do with morale. There’s nothing worse than feeling that one is on the wrong end of someone else’s favouritism to deflate one’s spirit and make one feel that it isn’t worth trying that hard or “going the extra mile” any more, because ultimately – as one of the “non-favoured” – you’ll never get any credit for it. And sadly, it doesn’t work the other way – the “favoured” non-smokers don’t get a big buzz from the smoking ban showing how “favoured” they are, and suddenly start working much harder than before – most don’t even notice the difference, and the ones that do (mostly the antis) simply see it as their God-given right to a non-smoking environment and not something, therefore, that they should be in the least bit grateful for or show any appreciation of.

          But I think it goes beyond that, as a link some while ago from our own good Klaus K (on here, I think) highlighted. I’m not very good at putting in links, but here goes: (if that doesn’t work, copying and pasting it into the search bar should!). But in the meantime, here’s an extract from towards the end:

          “Can nicotine have had a beneficial effect on innovation and growth in the economy in the last century? If this is true, it may help to explain why the productivity of labor in the western world has decreased slightly each year since the 1970s, when the official health campaigns began to reduce the number of smokers.

          “One can also raise questions about whether the numerous smoking bans in workplaces could have contributed to the recent large productivity decline. In Denmark an unexpected and inexplicable collapse in labour productivity was apparent in 2007 and 2008 – right after the state banned smoking in all Danish workplaces.

          “There may of course also be other reasons for this decrease, but the issue should be explored, as innovation and economic growth has shown historically weak development in countries that have banned smoking in workplaces. It is very likely that governments simply cannot obtain unilateral advantages with huge interventions like the war on smoking and smoking bans.

          “Everything has a price, and the advantage of achieving health benefits in the war against smoking may very well be matched by paying a high price in the economy in terms of loss of innovation and economic growth.”

          Who knows? Maybe that’s why so many Western-based health bodies (like the WHO) are so keen for smoking bans to be shoehorned into any remaining non-Western societies that don’t have them – they’re probably terrified that those societies who still allow smoking (as, indeed, China did up until now), will swiftly overtake their own non-smoking-and-thus-uninspired-and-dispirited workforces. As indeed has been happening.

          Just a thought …

        • Joe L. says:

          @Jax (the thread was too deep to reply directly):

          Maybe that’s why so many Western-based health bodies (like the WHO) are so keen for smoking bans to be shoehorned into any remaining non-Western societies that don’t have them

          While this is all very plausible, it leaves one burning question: why would China, currently an economic powerhouse, dare to risk a setback/collapse by caving to the requests of Western-based health bodies like the WHO? What incentive (threat?) was given for China to impose the smoking bans? Why would they not just reject the WHO and claim, “if it ain’t broke, don’t fix it?” China has proven time and time again they don’t play well with others, so what could possibly have caused them cave to a request the WHO?

        • Frank Davis says:

          @joe L

          I wondered the same about Russia (aside from the fact that Putin seems to be an antismoking healthist). China successfully resists all the global warming stuff, and builds a new coal-fired power station every week. So why isn’t it resisting the antismokers?

      • harleyrider1978 says:

        You wake up one day, and you find you’re unwelcome in your own country,

        Just like being a Jew circa 1937-45

    • nisakiman says:

      …in doing so, protecting Beijing’s more than 20 million residents from the deadly effects of exposure to toxic second-hand smoke”

      The deadly effects of exposure to toxic second-hand smoke? Are they actually being serious?

      Really, my jaw drops when I read stuff like that, Rose. How can anyone, even the most gullible, believe a statement like that? It’s like mandating that everyone should wear hard-hats to protect against the ‘deadly danger of being hit by a meteorite’. It’s just utterly risible.

      • Rose says:

        Not really, Nisakiman, they are doing exactly what British government did in the 1950’s and under exactly the same circumstances.

        Inside Beijing’s airpocalypse – a city made ‘almost uninhabitable’ by pollution

        “The 21 million inhabitants of China’s capital appear to be engaged in a city-wide rehearsal for life on an inhospitable planet. Only it’s not a rehearsal: the poisonous atmosphere is already here”

        “The day I arrive in Beijing, the AQI hits 460, just 40 points away from maximum doom. It’s the kind of air that seems to have a thickness to it, like the dense fug in an airport smokers’ cubicle. It sticks in the back of your throat, and if you blow your nose at the end of the day, it comes out black. Pedalling around the city (I am one of the only cyclists mad enough to be on the road) is an eerie experience – not just for the desolation, but for the strange neon glow coming from signs at the top of invisible buildings, like a supernatural, carcinogenic version of the northern lights. The midday sun hangs in the sky looking more like the moon, its glare filtered out by the haze.”

        “And yet denial still persists. Many Beijingers tend to use the word “wumai” (meaning haze), rather than “wuran” (pollution), to describe the poor air quality – and not just because it’s the official Newspeak of weather reports. It’s partly because, one local tells me, “if we had to face up to how much we’re destroying the environment and our bodies every day, it would just be too much.” A recent report by researchers in Shanghai described Beijing’s atmosphere as almost “uninhabitable for human beings” – not really something you want to be reminded of every day.”

        And according to the Beijing Patriotic Health Campaign Committee, it’s working.

        More than half of Beijing smokers want to quit: Poll
        Source:Xinhua Published: 2015-7-10

        “During a recent online survey, 55.8 percent of Beijing’s smokers said they intended to stub out the habit, according to the Chinese Center for Disease Control and Prevention on Friday.

        The poll was conducted between June 29 to July 1 by Beijing Patriotic Health Campaign Committee. Of the 16,074 respondents, 4,437 were smokers, among whom 55.8 percent said they wanted to abandon the habit.

        Jiang Yuan, deputy director of the Tobacco Control Office under the center, said that before the smoking ban only 30 percent of Beijingers said they wanted to quit.

        Beijing’s ban, which has been in effect since June 1, prohibits smoking in all indoor public places, workplaces, and on public transportation.

        Xiao Lin, associate professor with the office, said the ban has effectively increased public awareness of the dangers of tobacco.

        According to the poll, of the 11,637 non-smokers, 84.8 percent said they would like to help family and friends quit smoking.

        Additionally, 83.9 percent of respondents were aware of the smoking ban, and 63.7 percent said they had some knowledge about the rules.”


        “The Xinhua News Agency is the official press agency of the People’s Republic of China. Xinhua is a ministry-level department subordinate to the Chinese central government. Its president is a member of the Central Committee of the Communist Party of China.

        Xinhua operates more than 170 foreign bureaus worldwide, and maintains 31 bureaus in China—one for each province, plus a military bureau. Xinhua is the sole channel for the distribution of important news related to the Communist Party and Chinese central government.

        Xinhua is the regarded the most influential media outlet in China as almost every newspaper in China relies on Xinhua feeds for content.”
        https: //

        So it must be true.

      • smokingscot says:


        Do please excuse me for giving you pretty much the same as Rose.

        WHO guidelines for pm 2.5 is:

        WHO last revised its AQG values for PM in 2005, as follows:
        for PM2.5: 10 µg/m3for the annual average and 25 µg/m3for the 24-hour mean (not to be exceeded for more than 3 days/year);• for PM10: 20 μg/m3 for the annual average and 50 μg/m3 for the 24-hour mean

        And this link gives a pretty little graph that shows it regularly tops 800 µg/m3!

        So it’s kind of like seeing an elephant in the room and sorting that by trimming one toe nail!

        But here’s a good one for those wonderful folk who’ll be having their next COP meeting in New Dehli on the subject of tobacco control. There pm 2.5 levels are frequently worse than Beijing! How wonderful!

  5. c777 says:

    China the workshop of the World.
    They’re buying less Oil, less minerals, less metals.
    Its not the Chinese economy that’s imploding, its the Worlds, they’re not buying so many Chinese goods.
    Next on the agenda going by historical precedent..

  6. harleyrider1978 says:

    It seemed Owebamas attempt at increasing the birth rate in america via gay marriage has failed. Of 120,000 gay male married couples ZERO have yet to concieve. Amoung Lesbian Married couples the picture of cheating and divorce drove the conception rate up. It now appears Gay men are seeking out Gay women to have children with. The problem said social engineers at the MAYO BLOOMBERG RESEARCH CENTER said the phenomenon was increasingly causing gay people to become heterosexual after feelings for the opposite sex became apparent with child rearing.

  7. jaxthefirst says:

    Joe – In answer to your last question, well, I suspect because they aren’t aware of the connection. It hasn’t exactly been widely publicised, after all, has it? I suspect that the WHO et al have pushed very hard for bans using the power of all their propaganda “good for business” “massive public support” “health care savings” etc etc – they might also have slid in that little factoid that Rose highlighted on here recently about smokers being less gullible and more cynical than non-smokers; a compliant, malleable population of non-smokers being just the kind of society that a dictatorial regime such as China or Russia would be very keen on.

    And I think it takes the reality of a ban and its ensuing economic effects for anyone to put two and two together. After all, with the exception of the hospitality industry, where a downturn was widely and accurately predicted, even we in the west didn’t think that the ban would have any major effect on overall productivity, did we? But it did. And those countries in the west who have bans, being largely run by anti-smokers, after putting their weight and, often, their whole careers, behind the anti-smoking movement certainly aren’t – for all number of reasons, not least trying not to lose “face” – going to flag up these problems to other countries, are they?

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