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Did Beijing Seize 1 Trillion Yuan In Cash? Or Is It Conducting A ‘Secret’ QE Program?
China seems to be going great lengths to protect its stock market, or even more importantly for them, to avoid losing face. It knows the entire world is watching the country as its economy seems to be unraveling at a fast pace. We already reported in a previous article about how the IMF seems to be overstepping its boundaries by putting another country in the spotlights to reduce the pressure on China.
A lot of wild guesses are circulating, but the country’s state planner says the country has approximately 200B Yuan in ‘unspent fiscal funds’ which it intends to deploy as fast as possible; potentially on major construction and infrastructure initiatives to provide a boost to the economy. However, a more unsettling rumor has reached us, as the central government in Beijing allegedly has seized 1 Trillion Yuan in cash from local governments to boost its cash pile it can spent on these infrastructure projects.
Even though the state planner denied these rumors, we wouldn’t be surprised if they turned out to be true, because let’s be honest, do you really trust and believe the ‘state planner’ on his word? In every decent first-world country, governments, both federal and local, always run out of money and have to cut expenses and revise their budgets by the end of this year, but in China there would be a 160 billion dollar cash pile lying around without any local government wanting to touch it? Let’s keep it real, please.
China has always said it would not resort to Quantitative Easing to fight the current downturn in its economy, but the cash that will be spent on its major infrastructure projects will have to come from somewhere and we all know the country wouldn’t hesitate for a minute to conduct a ‘silent’ quantitative easing whereby the government could ‘temporarily’ borrow cash from the Chinese central bank to fill the gaps. Do you think they’d ever tell us? Think again! And maybe China already has conducted an unannounced QE. One of the signs might be the fact the total amount of loans extended to China’s private sector has more than doubled in just five years time. That's a CAGR of 17.6% per year, definitely much higher than the GDP growth.
Or maybe the M2 money supply?
Source: Tradingeconomics.com
Additionally, instead of accepting market volatility and understanding that when a stock market’s value more than doubles in a very limited period of time a correction could be something healthy, the Chinese authorities are still looking for a scapegoat for the current crisis on the stock market. According to recent information, the Chinese government is focusing on one specific financial institution, alleging that company has damaged the country’s perception abroad by its fraudulous intention.
Source: stockcharts.com
That being said, it’s great for China to finally (try) to crack down on corruption, but the problem is this isn’t even the issue. Trying to reduce the corruption is a good start, but that’s not what the world is worried about. We know that corruption is an inherent part of the Chinese culture as of this moment, but the reason why the stock market crashed are the worries about the country’s economic situation. A round of quantitative easing might ‘ease’ the pressure on the economy, but China would have to swallow its pride if it wants to initiate one.
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Well, if you are China and you see that despite all the BS the FED and western banks are doing, yet the dollar continues to rise in value, wouldn't you copy the US?
If I had 200 billion in "unspent fiscal funds" I'd spend it on hookers!
If you really want to know why Chinese finance looks like the U.S., just go back to when they were "educated" with 70 trips made by Hank "The Hammer" Paulson. Wouldn't be surprise if he was still on retainer.
I started reading this article with an open mind until I got to this piece of shameless propaganda:
"In every decent first-world country, governments, both federal and local, always run out of money and have to cut expenses and revise their budgets by the end of this year"
The hell they do. None of them are decent then since they just print and stop the debt clock.
Then the author goes on to talk about China using stealth QE which may be true but is also probably true in the US. All in all this is propaganda simply used to distract from the free money machines for the banks in the west.
Saw a young Chinese couple setting up an account at my bank the other day. These are the ones who got their money out early and are coming here. We're just a very small ag town and have quite a few Chinese buying property in our community.
That index chart is a huge bear flag, which is why China is stepping in. You think t/a don't work? Of course it does lol.
Other than that, easy to do gods work with a digital zero machine. They just don't let anyone have one of those, you know.
Excuse me for suspecting some facial is him when I see a 10 digit long number rounded off nine digits ; 1,000,000,000,000!!!
China will school us in how how QE is rolled out...Big push real ,real close...
Governments don't need "money".
With a single party system controlling the central bank, they can basically do what they want. In the US there is a presumption that if you have the cash to pay the tax, it is yours to the extent that you can and are able to operate see-ably within the regulations. In China they have freed up thigs so that this type of market can exist, but they tightly control the chinese currency and prefer that if one is exiting China that one takes other instiments, of mnitary value, not linked or being linked to the yaun. in cases of overproduction, such as housing, i would be logical that these essentially bankrupt projects go into recievership and end up being monitorized. It is also consivable that debt instuments have been liqudated for stratigic metals and monitorized. China sees the day that external demand doesnot meet their production and will continue to produce for the local market monitorizing such production while running inflation to keep their economy from crashing. Nothing new here as wharehousing has also been done in the US, but that entails more risk as the US is enbarked on a deflationary cycle to make Bank on next year's Christmass presents. While the US looks for the transfer of much production to the closer and miod seemingly more controlable Centeral American States, what they don't realize is much of that will be under Chinese control in 15 years, due to expat Chinese restarting their core busineses and eventually inporting the dedicated labor. Point is that the Chinese Communist Party has rigged the game. Only the Japanese have a potential out, Robots. Watch the sex industry to see of this is really advancing....
There has always been a single party. It is called the Bankster party.
It has a few factions that align themselves with an elephant and a donkey and have separate colors for hats, but otherwise they are identical.
Take out a school loan get married buy a SUV and have four kids, go on welfare and get 6 Obama phones for free.
There, fixed it for ya!
https://www.youtube.com/watch?v=tpAOwJvTOio
Yes invest in emerging communist capitalism and by all means ship all your technology and jobs too. It's good for America. It's time to reinvent ourselves to be useless sloths. Take out a school loan get married buy a SUV and have four kids. It's the new American way.
This trend by China being exactly like the US except on a different point in the cycle is a useful data point for those who believe their actions re gold will be muchly different from the US.
They can't admit to it since they rely on being infallible. They should do like America and pretend it doesn't exist.....
'one country' 'one company' and a CAGR...very informative...