China Loses Money in Postmortem Financial System
November 16, 2007 (LPAC)--China could be hit harder than ever predicted by the effects of the subprime crisis on world finance, and the impact of the crash on Chinese finance needs to be revalued, the weighty China Securities News warned today. Even more important, China's huge foreign reserves of US$1.43 trillion are in danger, with the dollar weakening as the US Federal Reserve lowers interest rates. Already the dollar has fallen over 5% against China's international currency, the renminbi, to now about 7.45 RMB to the dollar.
- The China Investment Corporation just lost about US$741 million on the books, right after buying $3 billion in the morally disturbed Blackstone Group.
- On top of this, other Chinese investors are losing money fast on their international investments. Of the US$10.9 billion invested overseas under the Qualified Domestic Institutional Investors (QDII) program, launched in April 2006, four QDII funds alone have already lost some US$847 million.
- The crash in yields on US treasury bonds will also hit China's financial earnings.
While the China Securities News casually reports that it is the subprime crisis that is having an effect on world finance, Lyndon LaRouche made the following clarification on this tragic error in a Nov. 14 statement:
To call the presently ongoing economic collapse a subprime crisis, or a housing crisis "is a fraud," Lyndon LaRouche said yesterday. "It's an overall systemic crisis."
"If you want to look for a cause, the Senate should look at the way it showed contempt for China," LaRouche said. That didn't cause the crisis, but it precipitated the crisis. It determined the timing of the crisis--that the Senate showed imperial contempt for China, LaRouche said.
The Chinese retaliated, as they had warned the Senate through LaRouche that they would do, he said. And that's what precipitated the timing of the outbreak of this general breakdown crisis.
This is what is behind the large-scale Chinese sell-off of dollar holdings now ongoing.