Sunday, August 23, 2009

China Datapoints

Xinhua News Agency reported earlier this week that China's reduced its holdings of US government debt (ChinaNewsWrap) though one wonders if there is debt being moved around internally rather than at the sovereign level. Either way, this can't be good news for the US where the Obama administration reported that they are projecting a ten year deficit of $9 trillion, up from $7 trillion this past Friday (to put this in context it's estimated that the Iraq war "only" $700 billion since 2003).

There is growing number of those who believe China's economic problems may be bigger. Seeking Alpha asks whether China is exactly where Japan was in the 1980s (before it entered into its decade long recession). Of course it might help if we could be more certain China wasn't manipulating the data that it releases (Kedrosky). Meanwhile, despite stated ambitions for Shanghai to become a global financial center that displaces even Hong Kong, a recent quote from Shanghai's mayor highlights some of the issues that they'll have to navigate before they can do so (Kedrosky): "Financiers have the least conscience in the world when it comes to making money. By saying that, I would have offended many bankers and financiers, but this is my personal experience".

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