China’s Economy

April22

How China’s Commodity-Financing Bubble Becomes Globally Contagious

From the article:

Chinese buyers may default on a further 1.2 million metric tons (1.32 million tons) of soybeans worth about $900 million being shipped from the United States and South America, to avoid incurring huge losses in a depressed local market, the country’s top soy buyer said.

So,…..the “exporter’s” (anyone China is doing business with) are left holding the bag if China defaults (doesn’t pay).¬† This isn’t exactly “chump change” (a trivial amount of money).

Also from the article:

“Most of the cargoes were delivered by the seller before receiving letters-of-credit and buyers are unwilling to pay now because they will suffer massive losses,” said Shao, speaking from a hotel suite he uses when in Rizhao in this eastern province.

“If buyers cannot resolve the issue, they may also cancel future shipments.”

http://www.zerohedge.com/news/2014-04-21/how-chinas-commodity-financing-bubble-becomes-globally-contagious 

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Posted April 22, 2014 by Sue Says in category In the News

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