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Look Under The Surface News

While things might feel better, look under the surface for reality

By Joel Ross | joelross | Updated on April 25, 2016

joel-ross

While things generally seem like they are settling down, and oil has seemingly plateaued, China on the surface seems Ok, and there are no new terror incidents, under the surface is another story. Chinese consumers seem to be out spending as normal and shopping and eating out, the debt situation in the country is ominous. Small and medium sized companies are still struggling under debt burdens they are unable to keep current, and many are in default. The government is pouring out more and more debt to carry the unprofitable state owned companies, and that is a road to nowhere good. The underlying movement back to more state control and the unwinding of the past 30 years reforms is causing a political displacement that could well become very serious and lead to major leadership battles which could become violent. China remains at serious risk in ways that are more concerning than at any time over the past 20 years or more. It was the government that killed the Anbang deal, and that should be a risk concern you need to be aware of if you are contemplating any new large transaction with a large Chinese company. It ain’t over until the fat lady sings, as the saying goes.

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