China Bans Gold Exchanges

Here's another indication that the price inflation in China is much greater than the official reports of around 4.0%.

Gold exchanges in China outside of two in Shanghai have been banned, according to a statement from the the People's Bank of China, the Ministry of Public Security and other regulators. This is a clear sign of panic among government officials. Chinese people were protecting themselves against the inflation by buying gold.

Until this order, gold exchanges operated throughout China.

"No local authority, institution or individual is allowed to set up gold exchanges," said the notice dated December 20.

The statement also said that the Shanghai Gold Exchange and the Shanghai Futures Exchange are enough to meet domestic investor demand for spot gold and futures trading.

The PBOC said it would lead a team to insure that gold exchanges will be closed, banks will stop providing clearing services to them; and some people will be put under police investigation for possible irregularities at exchanges.

More Proof of Economic Madness in China: China Public Debt is 80% of GDP, Not Official 17%

The very tied in Nouriel Roubini tweets:

RGE estimate of China public debt is 80% of GDP. Official # = 17%

Here's the latest via Bloomberg on the insanity going on in China:

A copy of Manhattan, complete with Rockefeller and Lincoln centers and what passes for the Hudson River, is under construction an hour’s train ride from Beijing. And like New York City in the 1970s, it may need a bailout.

Debt accumulated by companies financing local governments such as Tianjin, home to the New York lookalike project, is rising, a survey of Chinese-language bond prospectuses issued this year indicates. It also suggests the total owed by all such entities likely dwarfs the count by China’s national auditor and figures disclosed by banks.

Bloomberg News tallied the debt disclosed by all 231 local government financing companies that sold bonds, notes or commercial paper through Dec. 10 this year. The total amounted to 3.96 trillion yuan ($622 billion), mostly in bank loans, more than the current size of the European bailout fund.

There are 6,576 of such entities across China, according to a June count by the National Audit Office, which put their total debt at 4.97 trillion yuan. That means the 231 borrowers studied by Bloomberg have alone amassed more than three-quarters of the overall debt...

Fraser Howie, the Singapore-based managing director of CLSA Asia-Pacific Markets who has written two books on China’s financial system.

“You should be more worried than you think,” he said of Bloomberg’s findings. “Certainly more worried than the banks will tell you.

“You know how this story ends -- badly,” he said.

The centrally planned manipulation of the Chinese economy, including massive amounts of money printing, could result in the greatest economic crash of all time.

Unrest in South China

FT has a video report on unrest in a sector of South China.

A Chinese man accused of participating in a riot over land claims has died in police custody, fanning tensions.

This unrest should not be viewed in isolation. There has been much unrest in China, particularly because of climbing prices. Which suggests the price inflation in China is much higher than the official reported rate of around 5%.

Many believe that China will again begin to increase the money supply in an effort to halt the declining economy, however, the unrest over climbing prices makes it very dangerous for the People's Bank of China to print aggressively and risk fanning price inflation even more.

The FT clip is here. Although the FT report doesn't deal directly with the unrest over prices, it does provide a sense for the tensions and willingness of Chinese citizens to confront the police in the overall price inflationary climate. Note at the end of the clip, the villagers pick up sticks and beat back police attempting to arrest one man.

China’s Deserted Fake Disneyland

I am not making things up when I say a good chunk of China's GDP is fake.  Things have been built in China, through government planning that register as part of the phenomenal GDP, but have no real value, like 30 to 50  million vacant apartments.

Here's the latest. China has a fake deserted Disneyland-type amusement park. David Gray writes at Reuters:

Along the road to one of China’s most famous tourist landmarks – the Great Wall of China – sits what could potentially have been another such tourist destination, but now stands as an example of modern-day China and the problems facing it.

Situated on an area of around 100 acres, and 45 minutes drive from the center of Beijing, are the ruins of ‘Wonderland’. Construction stopped more than a decade ago, with developers promoting it as ‘the largest amusement park in Asia’. Funds were withdrawn due to disagreements over property prices with the local government and farmers. So what is left are the skeletal remains of a palace, a castle, and the steel beams of what could have been an indoor playground in the middle of a corn field.

Pulling off the expressway and into the car park, I expected to be stopped by the usual confrontational security guards. But there was absolutely no one to be seen. I walked through one of the few entrances not boarded up, and instantly started coughing. In front of me were large empty rooms and discarded furniture, all covered in a thick layer of dust, along with an eerie silence that gave the place a haunted feeling – an emotion not normally associated with a children’s playground...

All these structures of rusting steel and decaying cement, are another sad example of property development in China involving wasted money, wasted resources and the uprooting of farmers and their families...

Click here for pics of the deserted "Disneyland"

The Chinese crash that is going to hit the stock market is going to be very loud. Not only are there empty apartments, children's amusement parks, but also train stations, airports and super trains.