Too Many Crooked Third-Party Payers in China, PBoC Forces Bank Deposits

ECNS: PBOC in move on payment agencies
China's central bank, or PBOC, said on Friday that it will eventually ban all non-bank payment agencies, including Alipay, from using clients' money. As a first step, it will require all platforms to deposit some 20 percent of clients' funds to appointed bank accounts.

The move is the latest step taken by the central bank to tackle the financial risks caused by a rising number of institutions found illegally embezzling the money.

Starting from April 17, a total of 267 third-party organizations with the central bank's licenses in China, including Alipay, have to submit around 20 percent of provisions to a single account opened in a commercial bank, with the central bank's approval.

..."The 20 percent level aims to leave time for institutions to adapt to new rules," said Xie Zhong, head of the central bank's payment and settlement department. "The final level will be 100 percent," meaning that the central bank will be the only authority governing provisions.
The Economic Observer outlines some of the recent firms running into trouble: 央行为何担忧第三方支付备付金存管?看完这些案例你就明白了
The People's Bank of China ordered the following misappropriation of misappropriation of funds and has not yet completed the funding gap of the shortfall of funding agencies to fill the gap, and control the implementation of the management system reform, and effectively protect the security deposit.

1. Xi'an silver letter to Electronic Payment Co., Ltd. misappropriation, occupied reserves of 3,393.73 million, funding gap of 23.252 million yuan.

2. An Yi Lian Rong Electronic Commerce Co., Ltd. misappropriated, occupied reserves of 94,621,300 yuan, the reserve fund gap of 33 million yuan.

3. Hunan Star Media Co., Ltd. misappropriated, occupied reserves of 23.6356 million yuan, the reserve fund gap 23.5532 million yuan.

4. Guangxi Paiduantong Business Service Co., Ltd. misappropriated and appropriated 9,953.91 million yuan of reserve funds, and the gap of reserve funds was RMB 66.6128 million yuan.


Chongqing Home Sales Collapse Amid Restriction Blitz

Chongqing home sales collapsed 64 percent week-on-week by area sold in the week of January 2 to January 8 (iFeng: 重庆一周六次喊话遏制炒房 主城区楼市成交量大降60%), amid a government regulatory blitz that continued into this past week. With the supply of housing also rising 54 percent that same week, a slide in prices is all but inevitable.
January 6, there are reports that the name of flying to the Chongqing "real estate" phenomenon, the Chongqing Municipal Land and Housing Bureau, the relevant responsible person said, "the recent housing market, the city overall stable, the next step will strengthen the market judged, Timely release of market information, guide the people rational purchase, good policy reserves, to ensure the city's real estate market stable and healthy development.

January 7, Chongqing City Land and Housing Bureau issued "on the strengthening of the main city commercial housing project pre-sale program management notice," respectively from the strict pre-sale program for the record, to strengthen the record price review, strict pre-sale program changes and strict pre-sale program Implementation and other four aspects to strengthen management.

January 10, Chongqing Municipal Land and Resources and Housing Authority to crack down on illegal sales behavior, announced the hotline, including 24-hour hotline to facilitate the acceptance of public complaints. At the same time, Chongqing Guotufangguan bureau listed 9 people in the purchase process can report the intelligence.

Followed by the financial sector.

January 12, Chongqing City, the housing provident fund management center in Chongqing, 12 local banks jointly issued a statement against the real estate.

January 13, the central bank of Chongqing, the Department also held a conference on housing credit, requiring members of the self-discipline mechanism to strictly limit the flow of credit funds to invest speculative buyers, and promote the steady and healthy development of Chongqing real estate market.
More detail on recent moves:

iFeng: 重庆再出重拳!外地户口首套房开征房地产税

DM: China's Chongqing imposes harsher property tax measures to deter speculators
China's southwestern city of Chongqing will impose a property tax on first-time home buyers who are non-residents with no job or company in the city, state news agency Xinhua reported on Friday.

The new rule, effective from Jan.14, is being brought in in response to recent large price fluctuations in Chongqing as speculators from outside the city flood the market, Xinhua said.

Under previous rules, non-residents who didn't work and owned no companies in Chongqing only needed to pay a property tax for second homes in the city.
This decision follows the voluntary tightening of credit by Chongqing financial institutions.

Yuan Bears Unfazed

Reuters: China slap at yuan shorts barely tickled bigger bears
Traders also suspect that while some of the hedge funds that routinely borrow short-term funds to speculate on the yuan might have been forced to square off their trades last week, the yuan bears are mostly longer-term funds with staying power.

"A lot of hedge funds do fund themselves overnight, but most people are in the three-month plus area, and it doesn't affect them," said Richard Benson, co-head of portfolio investment with Millennium Global in London. "Spot movement is spot movement, and you aren't forced to do anything."

The People's Bank of China (PBOC) hasn't explicitly confirmed it was behind the squeeze that drove interbank overnight CNH rates to 87 percent last Friday, from 4 percent a week earlier, and caused the biggest ever weekly gain in the offshore yuan against the dollar - just under 2 percent.

But that is the assumption of market professionals.

The Slow Collapse of the West

Yahoo: US woman dies of infection resistant to all 26 available antibiotics
A US woman has died from an infection that was resistant to all 26 available antibiotics, health officials said this week, raising new concerns about the rise of dangerous superbugs.

The woman, who was in her 70s, died in Nevada in September, and had recently been hospitalized in India with fractured leg bones, the US Centers for Disease Control and Prevention reported.

The cause of death was sepsis, following infection from a rare bacteria known as carbapenem-resistant Enterobacteriaceae (CRE), which is resistant to all antibiotics available in the United States.

The specific strain of CRE, known as Klebsiella pneumoniae, was isolated from one of her wounds in August.

Tests were negative for the mcr-1 gene -- a great concern to health experts because it makes bacteria resistant to the antibiotic of last resort, colistin.
Socionomics takes a positive view of positive mood, and a negative view of negative mood. During periods of positive mood, people see the upside in everything. Immigration brings new entrepreneurs, GMOs will make us healthier, AI will free us from labor. Negative mood makes people see the downside: immigration brings crime, GMOs will give us cancer, AI will kill us. Socionomics also applies positive and negative values to the two groups. Openness is good, xenophobia bad. Reliance on science good, reliance on superstition bad. There is some objective value however: negative social mood does lead to more disease outbreaks and war, for instance, but that makes it all the more important to avoid situations that create extreme negative mood.

The Austrian economist's view of the business cycle is a good way to look at it. Most people, and most economists, think recessions are bad, but the Austrians "like" recessions because they remove the bad from the economy. For an alcoholic, a recession is the first days, weeks and months of going dry. It is painful and difficult, but a positive step forward. Continued alcohol consumption is the worst outcome. Similarly, declines in social mood can offset the excesses of positive mood. In the case of the economy, avoiding the buildup of debt (a decision backed by extreme optimism in the future) is also needed to avoid an extreme depression. Similarly, avoiding the extreme excesses of positive mood can counteract the negative.

The spread of infectious diseases is a direct consequence of peak social mood. It is considered xenophobic to stop migrants who carry diseases, in fact the United States doesn't check at all. The national news media doesn't connect the dots for you, but there are a growing number of local news stories around the country, reporting the spread of diseases long thought gone, but which are still common in Central America or other parts of the world. President Obama had a policy of flying migrant children into the country, the U.S. government picked them up on planes and flew them into the U.S. so as to help them avoid the dangerous journey by foot. These migrants, along with ones who came across the border, were then sprinkled around the country without any medical checks. Later, there were stories of TB outbreaks, enterovirus and measles, among others.

Tolerance also spreads disease. The AIDS epidemic exploded because it was considered homophobic to shut down gay clubs in cities, such as New York City, where the disease was spreading. Homosexual groups fought for social acceptance in the 1970s and refused to give up their gains. The result was millions of deaths around the world. Nothing has changed more than 30 years later.

Center for Infectious Disease Research and Policy: Shigella in gay men growing more antibiotic resistant
Nearly a quarter of Shigella isolates tested in New York City showed decreased susceptibility or resistance to recommended antibiotics, and most of those infections were among gay men, researchers reported today in Emerging Infectious Diseases.

..."The introduction of this MSM-associated S flexneri 3a lineage into Taiwan in 2015 illustrates that the pathogen can spread rapidly across continents, possibly through intensified sexual networks among MSM," the authors write.
The rise of Trump, Brexit, Le Pen, AfD, nationalism, anti-immigration, this whole stew is not a temporary or short-term phenomena. It can't be dealt with as a problem because the source of the problem isn't the nationalist sentiment, it's the globalist, peak social mood excesses that people are reacting against. Even if no one connects the dots between ideology behind the rise of drug-resistant diseases, the democratic governments in power will lose legitimacy as the economy, society, and even basic science and medicine crumble.

Much of the "Establishment" in the West still has no idea of the level of change underway. There is a sense among the more alert that the religious indoctrination taking place on university campuses is out of control, but there's no sense yet that the ruling ideology/religion in the West is fundamentally flawed, or at least hijacked by peak social mood. Everything has become political in the West, and the correct decision is what is "politically correct," not what is scientific or logical or practical.

Against this backdrop, many look to China's rise as the new global leader. But more likely, at least for right now, is there is no replacement for the United States, and no change in leadership. There will be no smooth transition as there was from the UK to the US. Instead, order will transition to disorder.

Yahoo: Chinese leader meets Davos elite as voters revolt
In that context, it is noteworthy that Xi Jinping will become the first Chinese president to attend the forum when he gives a keynote speech on Tuesday that is expected to extol Beijing's efforts to negotiate new types of regional trade deals shorn of US influence.

This year's Davos "may be the start of China's new role as a leader in promoting globalisation and a speedy recovery of the global economy", as Western countries turn to "isolationist self-centredness", commentator Sun Ding wrote for China's official Xinhua news service.

IHS Markit chief economist Nariman Behravesh stressed China is in no position yet to replace the United States as a global hegemon, but told AFP: "In Davos, Xi will likely articulate China's vision for the world economic and political order."


Leveraged Bettors Blew Up Bitcoin

This explains why the pullback in Bitcoin was so deep.

SCMP: China’s bitcoin market: another ticking time bomb?
With the market in free fall, Ding was unable to log into his account with China’s biggest bitcoin trading platform, Huobi, meaning he could not sell off his holdings or top up his principal to meet the margin call.

By the time he managed to log on in the evening, most of the bitcoins in his account had been compulsorily sold off by Huobi for 6,361 yuan each, lower than his purchase price of 8,101 yuan. This included the part of his investment he had bought using a loan he obtained from Huobi by pledging the bitcoins he owned originally.

Property Tax Back On?

SCMP: New rules to nudge local governments into property tax action in China
According to the guidelines, the central government will encourage local authorities to explore innovative approaches to urbanisation, state firms, regional financial markets, property taxes, health and elderly care.

Pilot property tax schemes were introduced in 2011 in Chongqing and Shanghai, ahead of a planned roll-out nationwide.

Shanghai’s tax is aimed big new properties, while Chongqing’s targets owners of luxury homes, including high-end flats and villas. The tax rate in both cases is about 1 per cent.

ChiNext Analog Breaks to New Currency Adjusted Low

The ChiNext is a little more than 5 percent above its post-bubble low in renminbi, but adjusted into the dollar, the ChiNext broke to new lows this week.


The Return of the Eagle

You can't look at any issue in the U.S.-China relationship separately anymore. Under Trump, everything is on the table and the United States has a big advantage over China. If the U.S. can force an economic confrontation, it will hurt China far more than it hurts the United States. China cannot afford an economic war (the yuan is toast in that scenario), and probably for the next 18 months to 2 years at least, the situation will only worsen for China.

SCMP: Trump’s secretary of state nominee Tillerson wants to deny Beijing access to South China Sea islands
Asked whether he supported a more aggressive posture toward China, he said: “We’re going to have to send China a clear signal that, first, the island-building stops and, second, your access to those islands also is not going to be allowed.”
Luttwak's The Rise of China vs. the Logic of Strategy remains a must read.