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Behold China's $300 Billion Accounting 'Fudge' (Or Where The Corrupt Money Flows)
When an accounting 'fudge' accounts for $300 billion of a nation's Balance of Payments, you might suspect something is amiss. And sure enough, as Goldman notes, the growing 'error and emission' items in China’s balance of payments may reflect a pickup in hidden cash transfers as China's anti-corruption probes encouraged the corrupt oligarchs to get their money out of dodge. As Goldman warns, "such outflows may be harder to contain with regulations, a continuation of their recent acceleration could start posing tangible financial stability concerns."
Wondering where all that Oligarch cash flooding into London, New York, and SoCal is coming from? Here it is...
Nothing to see here, move along!!!
As Bloomberg reports,
Growing error items in China’s balance of payments may reflect a pickup in hidden cash transfers from the nation and the central bank will likely favor a stable yuan to prevent outflows quickening, Goldman Sachs said.
Net errors and omissions, an accounting fix used to plug the gap when official records of cross-border flows don’t balance, was negative by more than $300 billion since 2010, Goldman Sachs economists MK Tang and Maggie Wei wrote in a note today. That included a record $63 billion in the third quarter of 2014, a year in which yuan sentiment soured and President Xi Jinping’s anti-corruption drive widened.
“Since such outflows may be harder to contain with regulations, a continuation of their recent acceleration could start posing tangible financial stability concerns,” Tang and Wei wrote in the note.
President Xi’s campaign to rein in corruption has ensnared more than 480 officials spanning all of China’s provinces and largest cities. Cash outflows may tighten funding conditions at a time when the government is attempting to lower borrowing costs to boost an economy estimated to have grown at the slowest pace since 1990 last year.
...
As falling confidence in the yuan will exacerbate any hidden outflows, the PBOC may aim to maintain a stable exchange rate, according to the Goldman Sachs economists. The U.S. lender expects the monetary authority to weaken its daily fixing for the yuan only slightly to 6.16 a dollar in three months and to 6.20 in a year, compared with 6.1195 today.
It is not in the PBOC’s interest to allow the yuan to decline because that could lead to capital outflows and increase financial risk, Australia & New Zealand Banking Group Ltd. economists Liu Li-Gang and Zhou Hao said in a note today. The currency is unlikely to drop sharply in 2015, they added.
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Having weakened into year-end, the Yuan has stabilized in the last week or two...
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Super double fudge with icing. Apparently the corrupt can run faster than the anti-corruption people can.....
The anti-corruption people are the corrupt people.
Whatever side you play looks good on a plaque.
And this is the country we're afraid is going to dominate the world in a few short years. Every time a new billionaire shows up in China the first thing they do is get their money and their family the hell outta there. Probably good reason for that.
Priority number one - convert ill gotten gains to physical assets that cannot be repatriated to China... Western property is particularly flavoursome especially if it can be used later to leverage permanent residency or citizenship.
the US housing recovery in two easy to read charts.
Housing needs more than $300 Billion to recover.
Someone tell the chinese London and New York are just as corrupt as their system.
This is what happens when criminals turn on each other
I tried. Maybe they will listen to WB7.
They know only too well. The good news is the Chinks properly punish the corrupters once they've been found guilty so we can look forward to plenty more death sentences, unlike the west where corruption is a career requirement if you want to get promoted.
Punishing the corrupt won't fix China's accounting problems. It's a miracle the yuan is valued as highly as it is given the rate with which money miraculously manifests itself over there. At this rate, soon we'll need more QE.
"Also, Dude, chinaman is not the preferred nomenclature."
Bullshit, I live in Asia. Justice for bankers in China? lol
yeah, they should stick to that "strong yuan" story.
“Everybody has a plan until they get punched in the face.” - Mike Tyson.
Heh, the growing 'error and emission' items...; Is that Freudian
"As Goldman warns, "such outflows may be harder to contain with regulations, a continuation of their recent acceleration could start posing tangible financial stability concerns.""
REALLY, crimiality is hard to track??? Only Goldman Sucks would know that about criminality and hiding asets.
but there's no trouble in the bond market, right?
nope. bonds are good. no trouble there. move along. move along. nothing to see in the BOND market.
and all those BASAL BONDS are good too, right. no, they were'nt designed to absorb loses. nope. no designing of bonds to take loses here. move along.
bub by. move along. bub by
Looks kind of like the months leading up to ruble collapse.
You know capital outflows.
Is everyone jumping on the dollar train now? Weeeee
Right. The end of QE is going to put a lot of leveraged Chinese in the hole. The dollar will strengthen and deflation will hit China hard.
What? How can anybody tell what the Chinese are doing? Everything is a fraud. Liars lying about liars.
US accepts all criminals and their money to prop up uncle ponzi
I don't know. 2015 might very well still shock the bears/realist. These fuckers still have lot's of ammo. If the ECB actually goes even semi-retard, oil ($$$$), Krugmans plan for the Japanese demise maintains current flight path, AND the people living in 'America' remain oblivious to the "giant sucking sound"
https://www.google.com/?gws_rd=ssl#q=ross+perot+%22giant+sucking+sound%22
It'll be over soon enough. But I don't believe 2015 is gunna be the year.
This bollox, and I know it for a fact. I visited Guangzhou and met with some Chines business friends and one in in particular working in banking consultancy, introduced to me, that we had a long very interesting conversation with, made is realize there was a huge opportunity here.
3 companies, mine a company in China owned by a close friend we have done business together for years and one in the UK, formed a new company and in 3 months tied up contracts with some sports training companies in the west, and stuck a culture exchange flag on it and thus virtually guaranteed visas, we are arranging upwards of 150 visas and packages a month now, and growing fast.
Behind the scenes we run an offshore financial services business and we moving cash out out of China for each and every one of those clients.
You see the fact is that this banking consultant knew, not guessed like GS, knew the government liked cash getting leaked out and buying up foreign assets, and was pissed when it was forced to close its own Bank of China operations doing precisely that in Guangzhou.
So it turns a completely blind eye to what we do.
Shifting your cash out of China is good for China, because it turns all the printed trillions of yen into foreign hard assets and helps keep inflation down and assets bubbling at home.
Do not believe shit from GS