"China's Lehman Moment" - coming soon to a Monday near you?
Posted: Tue Sep 21, 2021 9:26 pm
After the giant ship Evergiven ran aground in the Suez Canal and disrupted the world's global trade, now it's looking like the giant Chinese company Evergrande is about to crash onto the rocks sending ripples (or maybe a tsunami) around the world. Word on the financial grapevine is that they'll miss a couple of payments on Thursday, and their numerous creditors will "review their positions" over the weekend. Now this could all be pushed out by a month, as seemingly they've got 30 days' grace to dig around in the sofa to find the 50-odd million dollars they don't have (having spent it all on soccer jerseys 
) but there's no indication that anyone'll be coming to their rescue, least of all the Chinese government.
Does it matter to us, comfortably sitting a few tens of thousands of kilometres away from their unbuilt apartments? Probably more than a bit of a volcano off the coast of Africa. The people who will be most affected will be the Chinese middle and upper classes, who are our (European) main market. We buy cheap tat from their factories, but we sell them premium quality goods. And the alternative markets into which we might hope to redirect our sales, well they tend to be the countries that sell huge volumes and values of raw materials to the Chinese construction industry, so they're not going to be very flush with cash either.
If - and it remains an if for now - this does indeed turn into a Lehman's-like contagious meltdown, it'll be yet another crisis that Brexit-Britain has to face on its own, before any of the current crises have been resolved. Could be an "interesting" winter ahead.
) but there's no indication that anyone'll be coming to their rescue, least of all the Chinese government.Does it matter to us, comfortably sitting a few tens of thousands of kilometres away from their unbuilt apartments? Probably more than a bit of a volcano off the coast of Africa. The people who will be most affected will be the Chinese middle and upper classes, who are our (European) main market. We buy cheap tat from their factories, but we sell them premium quality goods. And the alternative markets into which we might hope to redirect our sales, well they tend to be the countries that sell huge volumes and values of raw materials to the Chinese construction industry, so they're not going to be very flush with cash either.
If - and it remains an if for now - this does indeed turn into a Lehman's-like contagious meltdown, it'll be yet another crisis that Brexit-Britain has to face on its own, before any of the current crises have been resolved. Could be an "interesting" winter ahead.