Will the Evergrande debt crisis be the spark that sets off panic and a meltdown in the global financial markets? Or will the CB'ers step in to stave off a disaster? The month of October is right around the corner, and it's notorious for being the month for major stock market crashes (think 1929 and 1987).
-NW

F.W. Engdahl -- China Debt Crisis Eclipses 2007 Credit Crunch
(excerpt by henrymakow.com)
Sep 23, 2021

[snip]

If it were only Evergrande that is insolvent due to unpayable debts in a contracting economy, Chinese authorities could no doubt manage it in one or another way by demanding its state banks or large groups like CITIC simply swallow the bad debts to contain spread of the crisis. The problem is that Evergrande, Huarong, PingAn and other large Chinese property investors are clearly only symptoms of an economy which has taken on debt far beyond what was prudent. In April, Beijing's CCP State Council told local governments that their so-called Local Government Financing Vehicles, with estimated (no one knows) trillions of dollars they had in unregulated shadow bank loans used to finance local projects, had to get rid of excess bad loans or go under.

On July 1, Beijing announced that local government revenues from land sales to developers, some half of all local revenues, must be sent to the central Beijing Finance Ministry and no longer used locally. That insures a catastrophic collapse in the multi-trillion dollar local shadow banks and construction projects. No more Beijing bailouts. At the same time, solvency of China's fragile multi-trillion "small" banking sector is in doubt, as bank closings increase. Now, with national state-owned giants nearing bankruptcy, the verbal war between BlackRock and George Soros takes on a significant new light. China is in a serious debt collapse crisis.

China already has the world's largest extent of high-speed rail track, and those are losing money.

The Belt Road Initiative is bogged down in debts that countries are unable to repay and China banks have sharply cut loans to BRI Silk Road projects from $75 billion in 2016 to $4 billion in 2020. Its demographic crisis means the endless flow of cheap rural labor to build that infrastructure is sharply declining.

The middle class is deeply indebted from buying new cars and homes when times were good. Total household debt including mortgage and consumer loans for cars and household appliances in 2020 was a whopping 62% of GDP. The Institute of International Finance (IIF) estimated that China's total domestic debt rose to 335 per cent of gross domestic product (GDP) in 2020. Beijing's Wall St Bailout?

It appears that Beijing is seeking a major de facto bailout from foreign investors into its troubled stocks and bonds led by Wall Street.