- If China were serious about preventing a downturn and continuing the credit buildup, they would be bailing out the property developers right now. We are not seeing that.
- Instead, I think they opt to hard-land and inject new RMB into the banking system. As the Fed tightens and PBOC eases, capital outflows from China will likely increase.
- The yuan will likely depreciate as a result of narrower China-UST bond yield premiums. This worsens the USD-denominated, offshore China corporate debt problem.
- China's explosive growth since around 2000, which has significantly downshifted recently, has been a major driver in commodity demand and global inflation expectations.
- Gold has been a beneficiary of China's economic build-out and credit expansion as higher inflation expectations and increased demand for metals as a sector are good for gold prices.
For further details see:
China's Economy And Real Estate Market Have Yet To Bottom