In fact, aggregate lending by Chinese banks to developers came to $2.2 trillion at the end of June, according to Moody's Investors Service. This behemoth, with apparently $404 billion in leverage, lies at the center of a property sector that represents 29 per cent of Chinese gross domestic product, and the whole sector is more than $5 trillion in debt.
The situation with Evergrande alone is dire. Investors not knowing, in my opinion, was certainly the intention of the company and their government. That silence should ring like a bell in any investor’s mind. Moreover, there has not been one peep from the Chinese government that Evergrande had committed any sort of violation by not informing investors that they had guaranteed Fantasia’s bonds. We have also seen that Evergrande guaranteed the bonds of Fantasia, which is nowhere to be found in any of Evergrande’s financial statements. We have already seen an instance where the Chinese bonds for Evergrande ( OTC:EGRNF) have been paid off in some form which we don’t know, while their Dollar-denominated bonds have gone into default. There is no “due process.” There is no “rule of law.” There is only what the Communist Party decides to do, at any time that they wish to do it. What my opinion is, however, is that nothing good will come from making investments in China unless they allow it - and no one on Earth has any real idea of what these people will allow or not allow. I will state that the Chinese Communist Party is the ruling party of China, and so, they can govern their nation as they see fit. As a matter of fact, I would question why any American would want to invest in a country that wants to dominate the world, at the expense of our own nation. The ruling party in China is the “Communist Party,” and their rules and aspirations are a far cry from Western civilization. Let’s be totally honest here, these are not Democrats or Republicans, or Tories or Liberals, or any sort of party that is found in Europe or the United States. and the list goes on, including American movies just recently, if any company is not living up to the expectations of the Chinese Communist Party. The Chinese government has gone after big tech, educational companies, ride-hailing companies. I have no axe at all here, but the writing is clearly on the wall and I can read it. John Steinbeck, The Winter of Our DiscontentĪs I have stated before, and as I state again today, I have said “Goodbye” to investing in China. Good-by is short and final, a word with teeth sharp to bite through the string that ties past to the future.” “Farewell has a sweet sound of reluctance. Hannah Bichay/DigitalVision via Getty Images
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