The 20th Party Congress, scheduled for October 16, got a week closer but the news didn’t get much better. Property giant Evergrande had its Hong Kong headquarters seized by an unknown creditor, and its stake in a mainland bank was bought out by a consortium of SOEs. In Zhengzhou, which apparently has more unfinished apartment blocks than any other city, developers have been threatened with criminal action unless they finish the damn things. That’s one way of dealing with the immediate problem, but it might not incentivize developers to stay in the business longer term.
Meanwhile, COVID lockdowns are confining millions of people across the country, most particularly in Chengdu and Guiyang. How to get out from under this Zero policy is a fundamental question for China in the coming months. It has got to be slamming economic activity and eating away at confidence. The Q3 data will be available in a month’s time.
And speaking of confidence, the RMB is edging close to the magic 7 and everyone is wondering if it will depreciate conclusively below that crucial level against the USD. Short players had tried this before in recent years and the PBOC has always made them pay for it by supporting the currency. Is it different this time? Might be, might not be.
Lots at stake as the days go by. Everyone is wondering how it will play out. If you mull it over the weekend, you will not be alone.
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