• About us
  • Careers
  • Brand Partnerships
TFI Official Merchandise
TFI हिन्दी
TFI Global
Friday, February 3, 2023
Tfipost.com
  • Premium
  • Politics
    • All
    • Analysis
    • Opinions
    • Trending
    Dr Jaishankar

    Left’s lobby’s plot to tarnish Jaishankar’s reputation

    The Final Word on Bharat Jodo Yatra: An In-Depth Analysis

    The Final Word on Bharat Jodo Yatra: An In-Depth Analysis

    Artificial Intelligence India

    Unlocking Artificial Intelligence Potential: India’s 2023 Budget and the Future

    new tax regime

    Budget 2023: Income Tax breakthrough for India’s middle class

    • Analysis
    • Opinions
    • Trending
  • Economy
    • All
    • Business
    • Economy1
    • Finance
    Budget 2023’s Delicate Dance: Balancing Fiscal, Populism and the Public Interest

    Budget 2023’s Delicate Dance: Balancing Fiscal, Populism and the Public Interest

    Artificial Intelligence India

    Unlocking Artificial Intelligence Potential: India’s 2023 Budget and the Future

    new tax regime

    Budget 2023: Income Tax breakthrough for India’s middle class

    Union Budget 2023 live updates

    Union Budget 2023 live updates: Modi Govt announces New Tax slab

    • Business
    • Finance
  • Defense
    • All
    • Defence
    • Strategy
    • Weaponry
    Defence budget India

    Modernization of Indian defence: Right trajectory but low velocity

    AK-203 rifles

    Amethi has started producing the dreaded AK 203 for India and the world

    HELINA and VSHROD

    Amidst build up on China and Pakistan border India gets HELINA and VSHROD

    K9-Vajra

    K9 VAJRA: The Made in India weapon that China fears

    • Defence
    • Strategy
    • Weaponry
  • Geopolitics
    • All
    • Africa
    • Americas
    • Asia Pacific
    • Europe
    • South Asia
    • West Asia
    In the Presidential year of G20, they have waged an info war against India

    In the Presidential year of G20, they have waged an info war against India

    Macron-Modi-Biden: France gives India an edge in dealing with the USA

    Macron-Modi-Biden: France gives India an edge in dealing with the USA

    Ajit Doval Jake Sullivan

    The Quiet Revolution: India’s Diplomatic Success in Bringing Tech Transfer

    India UNSC

    UNSC Row: Time for China to choose between Competition and Cooperation with India

    • Africa
    • Americas
    • Asia Pacific
    • Europe
    • South Asia
    • West Asia
  • Knowledge
    • All
    • Culture
    • History
    • Indology
    Ram V. Sutar

    The legacy of Ram V. Sutar: A gift from Bhagwan Vishwakarma

    Dilip Kumar Indira Gandhi

    When Dilip Kumar silenced Indira Gandhi

    Bhagwan Vishnu Bhavishya Badri

    Is Bhagwan Vishnu leaving Badrinath and shifting to Bhavishya Badri?

    Banjara community

    Banjaras are Sanatani and everything else about them is cropped up

    • Culture
    • History
    • Indology
  • Law
  • Lounge
    • All
    • Books
    • Cinema
    • Food
    • Health
    • Lifestyle
    • Satire
    • Sports
    • technology
    • Travel
    Sharad Kelkar: An underrated gem of Indian Cinema

    Sharad Kelkar: An underrated gem of Indian Cinema

    Sayaji Shinde

    Unrecognized in Bollywood, but Celebrated Everywhere Else: The Tale of Sayaji Shinde

    Anurag Kashyap

    Anurag Kashyap’s new facade: Bollywood’s left intelligentsia plans to befool the nationalist audience

    Govinda congress

    When Govinda started literally pleading in front of Sonia Gandhi

    • Books
    • Cinema
    • Food
    • Health
    • Sports
    • technology
    • Travel
    • Satire
No Result
View All Result
Tfipost.com
  • Premium
  • Politics
    • All
    • Analysis
    • Opinions
    • Trending
    Dr Jaishankar

    Left’s lobby’s plot to tarnish Jaishankar’s reputation

    The Final Word on Bharat Jodo Yatra: An In-Depth Analysis

    The Final Word on Bharat Jodo Yatra: An In-Depth Analysis

    Artificial Intelligence India

    Unlocking Artificial Intelligence Potential: India’s 2023 Budget and the Future

    new tax regime

    Budget 2023: Income Tax breakthrough for India’s middle class

    • Analysis
    • Opinions
    • Trending
  • Economy
    • All
    • Business
    • Economy1
    • Finance
    Budget 2023’s Delicate Dance: Balancing Fiscal, Populism and the Public Interest

    Budget 2023’s Delicate Dance: Balancing Fiscal, Populism and the Public Interest

    Artificial Intelligence India

    Unlocking Artificial Intelligence Potential: India’s 2023 Budget and the Future

    new tax regime

    Budget 2023: Income Tax breakthrough for India’s middle class

    Union Budget 2023 live updates

    Union Budget 2023 live updates: Modi Govt announces New Tax slab

    • Business
    • Finance
  • Defense
    • All
    • Defence
    • Strategy
    • Weaponry
    Defence budget India

    Modernization of Indian defence: Right trajectory but low velocity

    AK-203 rifles

    Amethi has started producing the dreaded AK 203 for India and the world

    HELINA and VSHROD

    Amidst build up on China and Pakistan border India gets HELINA and VSHROD

    K9-Vajra

    K9 VAJRA: The Made in India weapon that China fears

    • Defence
    • Strategy
    • Weaponry
  • Geopolitics
    • All
    • Africa
    • Americas
    • Asia Pacific
    • Europe
    • South Asia
    • West Asia
    In the Presidential year of G20, they have waged an info war against India

    In the Presidential year of G20, they have waged an info war against India

    Macron-Modi-Biden: France gives India an edge in dealing with the USA

    Macron-Modi-Biden: France gives India an edge in dealing with the USA

    Ajit Doval Jake Sullivan

    The Quiet Revolution: India’s Diplomatic Success in Bringing Tech Transfer

    India UNSC

    UNSC Row: Time for China to choose between Competition and Cooperation with India

    • Africa
    • Americas
    • Asia Pacific
    • Europe
    • South Asia
    • West Asia
  • Knowledge
    • All
    • Culture
    • History
    • Indology
    Ram V. Sutar

    The legacy of Ram V. Sutar: A gift from Bhagwan Vishwakarma

    Dilip Kumar Indira Gandhi

    When Dilip Kumar silenced Indira Gandhi

    Bhagwan Vishnu Bhavishya Badri

    Is Bhagwan Vishnu leaving Badrinath and shifting to Bhavishya Badri?

    Banjara community

    Banjaras are Sanatani and everything else about them is cropped up

    • Culture
    • History
    • Indology
  • Law
  • Lounge
    • All
    • Books
    • Cinema
    • Food
    • Health
    • Lifestyle
    • Satire
    • Sports
    • technology
    • Travel
    Sharad Kelkar: An underrated gem of Indian Cinema

    Sharad Kelkar: An underrated gem of Indian Cinema

    Sayaji Shinde

    Unrecognized in Bollywood, but Celebrated Everywhere Else: The Tale of Sayaji Shinde

    Anurag Kashyap

    Anurag Kashyap’s new facade: Bollywood’s left intelligentsia plans to befool the nationalist audience

    Govinda congress

    When Govinda started literally pleading in front of Sonia Gandhi

    • Books
    • Cinema
    • Food
    • Health
    • Sports
    • technology
    • Travel
    • Satire
No Result
View All Result
Tfipost.com
No Result
View All Result

HOME » Economy » Economy1 » With China’s own Lehman Brothers moment, Chinese financial crisis is here

With China’s own Lehman Brothers moment, Chinese financial crisis is here

Trouble for Xi Jinping

Amit Agrahari
by Amit Agrahari
1 July 2020
in Economy1
0
chinese financial crisis china
7.7k
VIEWS
Share on FacebookShare on Twitter

A shadow banking crisis was brewing in China for the last few years and with the discovery of the biggest gold counterfeiting scandal in human history, this might blow up in the next few days.

Kingold Jewelry Inc, China’s largest privately-owned gold processing and jewellery company headquartered in Wuhan, took a loan of more than 20 billion Yuan (2.8 billion dollars) with 83 tons of pure gold as collateral. But, when the shadow banks claimed the pure gold after the company was unable to pay back, they found that what the company claimed as pure gold is actually gilded copper.

The fake gold came to light in February this year when Dongguan Trust (one of those infamous Chinese shadow banks) set out to liquidate Kingold collateral to cover defaulted debts.

In late 2019 Kingold failed to repay investors in several trust products because it lost billions of dollars in China’s housing bust. China built many ghost cities when there was no demand for housing in the country. When a manufactured demand was being created; several companies like Kingold invested billions of dollars in the housing sector by taking loans from shadow banks with counterfeit gold as collateral and now unable to pay back due to the crash of the housing prices.

The news of counterfeit scandal sent shockwaves through Kingold’s creditors. China Minsheng Trust – another shadow banking company and one of Kingold’s largest creditors – obtained a court order to test collateral before Kingold’s debts came due. On May 22, the test result returned saying the bars sealed in Minsheng Trust’s coffers are also copper alloy.

Just like the collapse of Lehman Brothers due to housing price crash led to the 2008 financial crisis in the United States, the collapse of shadow banks due to the inability of the companies like Kingold to payback would lead to another financial crisis, this time in China.

The collapse of the shadow banks will not only hurt the banking sector but the insurance sector, too. The loans given to companies like Kingold are secured by state-owned People’s Insurance Company of China and other small insurers, and therefore, the insurers are set to suffer massive damage.

The cascading effect would lead to the collapse of China’s financial sector which is already under stress due to rising defaults. “I wouldn’t be surprised to see some losses,” said Jasper Yip, Hong Kong-based principal of financial services at Oliver Wyman, a consulting firm. “More borrowers will run into payment difficulties in a slowing economy.”

As for the gold, several billion in gold bars never existed and yet resulted in a cascade of subsequent cash flow events allowing tens of billions in funds to be released, “benefiting” not only founder Jia, but China’s broader economy.

This is terrifying because whereas just after the financial crisis China was engaged in building ghost cities; everyone knew these were a symbol of demand that would never materialize, even if the cities themselves did exist. However, it now appears that a major part of China’s subsequent economic boom has been predicated on tens of billions in hard assets — such as gold — which simply do not exist, the report said.

Kingold is certainly not the only Chinese company engaging in such blatant fraud, and the consequences are clear: once Chinese creditors or insurance companies start testing the “collateral” they have received in exchange for tens of billions in loans and discover, to their “amazement”, that instead of gold they are proud owners of tungsten or copper, they have two choices: reveal the fraud, risking tremendous adverse consequences and/or prison time, or quietly buy up all the gold needed to literally fill the void from years of gold counterfeiting.

In conclusion, China’s 3 trillion dollars shadow banking industry is set to get a reality check in the next few days, as the whole counterfeit collateral unravels. As most of the loans by shadow banking companies went to the real estate sector which are unable to pay back, more and more companies would go to claim collateral- which never existed.

“Borrowers behind the trust products are those with a higher risk,” said Yang Hao, an analyst at Nanjing Securities. “It represents the most vulnerable part of corporate financing and when a crisis comes, this is the first link to go awry.”

Therefore, the Chinese economy is set to suffer a big jolt in the next few days, shockwaves of which would be felt around the world, thanks to China’s counterfeit culture and forced demand creation.

Tags: Chinafinancial crisis
Share368TweetSend
Previous Post

Over 5 million could flee to UK: Hong Kong is set to witness a mass exodus of its citizens

Next Post

Eye on China: With 40% spike in defence spending, Australia seeks long-range missiles for the first time

Amit Agrahari

Amit Agrahari

Engineering grad but Humanities and social sciences are my forte. Avid reader of religious Scriptures (Especially Hindu), Lord Shiva devotee

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

I agree to the Terms of use and Privacy Policy.
This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.

  • Most Read
  • Comments
  • Latest
Xi Jinping, coronavirus, Shinzo Abe, china, Japan, coornavirus, COVID-19, Wuhan Virus

‘Pack up and get out of there,’ Japan to spend $2.2 billion to get Japanese companies to exit China

9 April 2020
ajay devgn karan johar

The man who bullied the Bully – How Ajay Devgn made Karan Johar’s monopoly a joke and forced him to apologize

22 June 2020
Huawei, China, Trump, USA, Xi Jinping

‘Our survival is at stake now,’ Chinese Telecom giant Huawei crumbles after US ban on Semiconductor exports

19 May 2020
T-Series Sonu Nigam Divya Khosla Kumar Bhushan Kumar

T-Series forced to take down Atif Aslam’s video, Divya Khosla trolled. T-Series has a bad day in office

25 June 2020
Meat Ban

A Jain responds to Meat Ban in Mumbai

Public Sector Bank, Government, Bill

Dear bank employees, continue your stride but PSBs will be privatized

anti-Hindi

Anti-Hindi Forever?- In search of a National Language!

Dear Liberals – your Beef Parties are not protests, they just intend to displease the Majority

Dear Liberals – your Beef Parties are not protests, they just intend to displease the Majority

Sharad Kelkar: An underrated gem of Indian Cinema

Sharad Kelkar: An underrated gem of Indian Cinema

2 February 2023
In the Presidential year of G20, they have waged an info war against India

In the Presidential year of G20, they have waged an info war against India

2 February 2023
Macron-Modi-Biden: France gives India an edge in dealing with the USA

Macron-Modi-Biden: France gives India an edge in dealing with the USA

2 February 2023
Budget 2023’s Delicate Dance: Balancing Fiscal, Populism and the Public Interest

Budget 2023’s Delicate Dance: Balancing Fiscal, Populism and the Public Interest

2 February 2023

Popular This Week

Preity Zinta
Cinema

Preity Zinta – The woman who stood up to the underworld, but paid a heavy price for it

by Paurush Gupta
30 January 2023
Adani-Hindenburg row: Decoding the hidden agendas
Premium

Adani-Hindenburg row: Decoding the hidden agendas

by Abhishek Kumar Singh
29 January 2023
Govinda congress
Cinema

When Govinda started literally pleading in front of Sonia Gandhi

by TFIPOST News Desk
31 January 2023
The untold story of Swami Pranavananda
History

The untold story of Swami Pranavananda

by Abhishek Kumar Singh
29 January 2023
Reality of Bageshwar Dham
Analysis

The Bageshwar Dham: The Reality of Dhirendra Krishna Shastri

by Tejasvi Malhotra
31 October 2022

©2023 TFI Media Private Limited

  • Terms of use
  • Privacy Policy
  • Sitemap
No Result
View All Result
  • Premium
  • Politics
    • Analysis
    • Opinions
    • Trending
  • Economy
    • Business
    • Finance
  • Defense
    • Defence
    • Strategy
    • Weaponry
  • Geopolitics
    • Africa
    • Americas
    • Asia Pacific
    • Europe
    • South Asia
    • West Asia
  • Knowledge
    • Culture
    • History
    • Indology
  • Law
  • Lounge
    • Books
    • Cinema
    • Food
    • Health
    • Sports
    • technology
    • Travel
    • Satire
TFI Official Merchandise
TFI हिन्दी
TFI Global
  • About us
  • Careers
  • Brand Partnerships

©2023 TFI Media Private Limited

Follow us on Twitter

and never miss an insightful take by the TFIPOST team

Follow @tfipost