2023-08-19 05:30:11
Buildings of the Chinese developer Country Garden in Zhengzhou, central Henan province, China, August 14, 2023. STR / AFP
Suddenly a concern: can the Chinese real estate crisis cause a systemic financial crisis as did, in 2008, the bankruptcy of the American investment bank Lehman Brothers, causing the worst economic crisis since 1929? “Investors fear China’s ‘Lehman moment’ is looming”title the Wall Street Journal in a Friday, August 18 article quoting Xiaoxi Zhang, a financial analyst from Gavekal Research. “The concern is that a ‘Lehman moment’ is coming, threatening the solvency of the Chinese financial system”she writes, before estimating that the “regulatory vigilance” of Beijing makes this outcome unlikely.
On Wall Street, observers are finicky, especially since the Chinese crisis is combined with the rise in American long-term interest rates, which on Thursday reached their highest level since 2007 (at 4.329%) and leave herald the final end of the free money that had prevailed since the Great Recession. Markets are caught in a ‘perfect storm,’ amid soaring rates, deteriorating economic data in China, weak summer liquidity and a buyers’ strike. [d’actions] »writes Emmanuel Cau, head of European equity strategy at Barclays.
Can the Chinese crisis create a domino effect on the planet? “There will be no Lehman effect, says Patrick Artus, chief economist at Natixis. There is no amplifying or leverage effect. These will be dead capital losses for investors.estimates the economist, who recognizes that it is very hard to know who holds the 200 billion dollars (184 billion euros) of debt of Country Garden, a giant Chinese promoter who defaulted on its international debt this week.
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A study by the European Central Bank (ECB), carried out in 2022, estimated that with a closed market, a financial shock in China had half the effect on global equity financial markets than an equivalent shock in the United States. United. On the other hand, the impact is stronger on the energy and raw materials markets, with China consuming, for example, 56% of the world’s copper.
It is certain that the difficulties of China, the second largest economy in the world, will weigh on the world economy and its main economic partners, in particular Japan, South Korea or Germany. In mid-July, Germany, which exports machine tools and automobiles to China, presented a plan to free itself from Chinese geopolitical risk.
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