A lot of the “Chinese miracle” was on credit and the bills are coming due. From Tyler Durden at zerohedge.com:
Things are getting very ugly for both the so-called “China’s Blackstone“, and China in general.
Just days after we reported that the “secretive” shadow-banking giant, Zhongrong, also called “China’s Blackstone” as it manages (or rather managed) 1 trillion in AUM, had missed payments on “multiple shadow banking (i.e. high-yield investment) products”, stoking fresh worries about contagion amid China’s deflationary pressures and, of course, a tottering real estate sector, which as a reminder is the largest asset class on earth…
… overnight Bloomberg reported that Zhongrong’s troubles have accelerated and the asset manager not only missed payments on dozens of products – adding to delays on at least 10 others since late July – but “has no immediate plan to make clients whole, indicating troubles at the embattled Chinese shadow bank are deeper than previously known.”
The troubles are so deep in fact, that Zhongrong – which is one of the largest players in China’s $3 trillion shadow banking industry – appears to be effectively insolvent: “the company doesn’t have an immediate plan to cover the payments since its short-term liquidity has suddenly dried up”, said Wang Qiang, board secretary of the firm partly owned by financial giant Zhongzhi Enterprise Group.
Don’t they have printing presses there?
Let’s hope they don’t start a war!
Taiwan better get those defenses tightened up.