That non-stop fountain of doom 'n' gloom, Tyler Durden at Zero Hedge, has yet more cold water to pour on our flickering fires of hope. Barely bothering to hide the smacking of his lips, he quotes in full a blog post by Simon Black at the 'Sovereign Man' site in which Mr. Black informs us that the richest man in Asia, a certain Mr. Li Ka-Shing - and, no, that is not pronounced 'ker-ching'! - has just completed the final sale of all his Chinese holdings. If you live in China, all you will see is the exit door swinging on its hinges as Mr. Li departs with his suitcases packed - with dosh, possibly! At the latest count, apparently, Mr. Li was worth around $30 billion and his final deal was to sell off the $928 million Pacific Place shopping center in Beijing.
At this point, a huge three-letter word looms up over the horizon and in fiery symbols spells out - 'WHY?'
Well, that was a nice dramatic opening, don'cha think? But alas, I cannot answer the question with any exactitude. Mr. Black offers his analysis of what he believes might be Mr. Li's motives:
This isn’t a person who became wealthy by being flippant and scared. So what does he see that nobody else seems to be paying much attention to?
Simple. China’s credit crunch.
After years of unprecedented monetary expansion that has put the economy in a precarious state, the Chinese government has been desperately trying to reign in credit growth.
The shadow banking system alone is now worth 84% of GDP according to an estimate by JP Morgan. The IMF pegs total private credit at 230% of GDP, jumping by 100% in the last few years.
Historically, growth rates of these proportions have nearly always been followed by severe financial crises. And Chinese leaders are doing their best to engineer a ‘soft landing’.
Well, he's not the first expert I have quoted in these distinguished columns warning that the Chinese banking system is a busted flush. However, as one or two commenters on both sites have indicated, Mr. Li may have more personal reasons for departing. Today in China we have the first generation to grow up in real, tangible wealth. Any threat to that will be like snatching a favourite toy away from a child at Christmas - multiplied and amplified by 1.3 billion, that is, the current populationof China! It is worth bearing in mind that although the Communist Party apparatchiks in China have changed their dull brown Mao suits for equally dull blue western suits, they remain dictatorial gangsters at heart. They will fight to the last man - even if it's the last Chinaman - to maintain their grip on power if the economy implodes and they will seek about for suitable 'criminals' to seize and try for treason. Hence, perhaps, Mr. Li's early exit!
Of course, if several zillion Chinese perish in civil war and impoverishment, well, I'll manage somehow but, alas, the demise of the Chinese economy will have global consequences reaching even as far South Somerset where I try, desperately, to just mind my own business. I gather that 'Dim (Sum) Dave' has decided to 'do' religion, even writing a piece today for the Church Times to that effect. If true, he and George should instantly fall to their knees and pray that nothing happens in China before the next election!
In the meantime, Mr. Li! ... Mr. Li! ... yes, you, Mr. Li! ... er, buddy, can you spare a dime?