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A local government vehicle in China, Sixth Division of XPCC fails to make a bond payment in August 2018. This is the first such instance of failure to make a bond payment for a local government vehicle in 2018. Economists estimate China's total debt at 242% of GDP in 2017, and government efforts to tighten liquidity and reduce support for overextended local government investment vehicles.

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President Hu Jintao at the opening of the 17th National Congress of the Communist Party of China. China's goal is to quadruple per capita GNP by 2020 compared to 2000. Population is expected to increase by 200 million people by 2020. While he described rampant corruption, the degradation ogf the environment and disparities between the urban and rural areas andbetween the coastal and interior areas as the major challlenges facing China he gave few details on how he planned to meet these challenges suggesting that not much that is new is being planned to address these challenges. He also pointed to the need for consumption driven growth moving away from the present export driven growth, but offered few details on how this would be addressed. This suggests that while Chinese leaders recognize some of the challenges facing them they may not understand the severity of these challenges as time passes or they have not the will to address them with major changes in the current model of economic growth or that the momentum of th currrent model is so great and the power is so spread out in China between different provinces and local regions in meeting economic goals of GNP growth that the central government cannot make major changes withouth the whole system losing some of its momentum and they fear that that would lead to problems that they would be even less effective in dealing with and the system could then come apart with the Communist Party being unable to direct things as the "core" leadership of the country....

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This report in The South China Morning Post in Hong Kong, gives insights into the Chinese position in trade war with the U.S.  China has its own internal groups which support China being able to take a leadership role in world affairs. Xi Jinping made giving China a prominent role in the world a feature of his presidency. China  has this internal audience and its own sense that China's resurgence was won with hard work and cooperation, plus dedication of the Chinese people. In the past Japan and South Korea also used state subsidized industries, and subsidies to gain leadership in key business sectors involving high technology. China would see this state subsidies model as its own model of development. From this standpoint the U.S. demands on subsidies as unfair competition could be seen as changing a key part of its economic model.  Asking China to put everything in writing and show tangible proof of enforcement as the U.S. insisted in talks, was too much for the Chinese side. China said trust us to do this, and lift the tariffs based on our verbal assurances. The U.S. having seen decades of no progress on this point, wanted tangible proof before tariffs were lifted. Added to the demands on subsidies were the demands for no more of what the U.S. calls stealing of U.S. technology through forced transfer of technology by U.S. firms as a condition to operate in Chinese markets. With the U.S. lagging in 5G technology and Huawei ahead the issue resonates on the U.S. side. Add to this Mr. Trump's key voter base includes the former Democratic party supporting workers who have shifted to him because of trade agreements and policies of Clinton and Obama that hurt American workers through seemingly endless closure of manufacturing plants from Chinese competition.   ...

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Economist John Spence on advice to the Chinese government to tackle problems of shifting from an export based economy to one more dependent on domestic spending. And managing the shift upscale to sophisticated technologies from basic consumer goods.

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The election win of Sebastian Pinera in Chile marks a shift in Latin America away from left parties. Economic conditions improved initially with the left parties in Brazil, Chile and Argentina, following currency crises and debt problems. The commodities boom helped the left party governments finance social programs which increased their popularity. The middle class also benefited with increased consumer spending and a growing economy. All this changed as the commodities boom collapsed and state finances were stretched thin in Brazil and Argentina. Corruption scandals, and decline in economic growth exposed serious problems in delivery of services, infrastructure and other areas which had been neglected. Voters decided to turn to alternatives and parties from centre right with Macri in Argentina and Pinera in Chile as a consequence.   The striking fact is that instead of shifting to the right leaders of the centre right, Macri in Argentina and Pinera in Chile have decided it is best to keep some of the best initiatives and achievements of the previous governments that have created a broader middle class in Chile and Argentina. Pinera says he will preserve some of Bachelet's initiatives in bringing broader access to education and health care. In this sense Latin America has matured so that the sharp conflicts have been set aside to set a more conciliatory tone and work together. Compared to Chile and Argentina Brazil is different in that corruption scandals affect most parties and there is a general loss of confidence in Congress and politicians across the spectrum. Brazil is looking at a situation in which a whole generation of politicians would have to give way to a new generation for the public to gain a renewal of confidence- so deep is the loss of confidence.  ...

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China raises the inflation target from 3% to 4% in December 2010, accepting some of the inflationary pressures in the Chinese economy.

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Local investment companies were allowed to borrow beyond their limits after the financial crisis of 2008. There are about 8000 local investment companies (LIC's) and they were used during 2008-2010 to get funds quickly to projects. The LIC's borrowed for local governments, and borrowed extensively to build roads, railroads, power plants, and other infrastructure and buildings. Northwestern University Professor Shih has followed this carefully, and estimates LIC debt owed to banks at $1.68 trillion, or 34% of China's GDP. Some of the banks have collateral in land, but many banks are relying on the ability of the local governments to pay back the loans. And some of this is in money losing projects.

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China takes another step to curb inflation. Effective May 18, 2011, China's largest banks will have a 21% reserve requirement. Food prices were up 11.5% in April. There were a larger number of bank loans in April 2011, of $112 billion, and a larger trade surplus of $11.4 billion. This may cause banks to lend in ways that go around these requirements, say experts. It may also ration capital to the entrepreneurial sectors of the economy.

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WSJ reporter Bob Davis writes this report on the end of the China economic miracle in 2014 as he completes a 4 year assignment covering China. He says China's economy is slowing rapidly and he is pessimistic abou the future. Construction cranes visible across China's skyline says Davis, can no longer be interpreted as growth inducing. With rows upon rows of empty flats in third and fourth tier cities which account for the bulk of the increase in housing construction, the consequences of a debt fueled construction boom are easy to see. Davis cites the IMF on the dangers of credit fueled growth in China- only 4 countries have experienced as rapid an increase in credit to GDP ratio in 5 years. Each of the 4 countries Brazil, Ireland, Spain and Sweden experienced a sharp decline in GDP growth and banking crises following the credit bubble. Estimates of debt to GDP are as high as 250% for China. Krugman, Roubini and other economists have warned about the credit bubble, saying China is no exception to the rule for the risks posed by such a bubble. ...

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Deposit insurance at the top of the priorities for economic and banking changes in China in 2014.

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Protests in Indonesia for labor protections and higher minimum wage in Sept.-Oct. 2012. Protesters rallied in the hundreds of thousands across Indonesia from 700 companies in 80 industrial parks in Java, Sumatra and other areas. It was an effort to influence the political debate ahead of elections.