China is once again on the brink of an economic crisis

The decline in the main indicators of China's economy, export and import of goods, and demand for oil indicate that the world's second largest economy is approaching another crisis, which may trigger a global crisis and a drop in grain demand.

One of China's largest trust funds, Zhongrong International Trust, which is partly owned by a Beijing-based asset management conglomerate with stakes in many financial sector companies, has missed the payment schedule for almost all of its projects.

After the audit, Zhongrong plans to stage an asset sale to pay off debt owed to investors, putting the trust fund's future in question. The roots of Zhongrong Financial Group's problems lie in the real estate market, as the group has many projects in the development industry, and in 2022 had an 11% investment in it with $86.2 billion under management.

The crisis in the real estate market in China began in 2020, and since then it has intensified, causing losses to related industries as well. In July, for the first time in a year, prices on the market of new buildings fell by 2.4%, on the secondary market - by 6%, and in some cities (Shanghai, Shenzhen) - by 15%, and in Guangzhou, where the headquarters of Alibaba Group Holdings is located , - by 25%.

To reduce turbulence, the Chinese authorities are suspending the publication of a number of economic indicators. Yes, data on the youth unemployment rate, which has already reached 21.3%, will no longer be reported. Financiers are now waiting for further steps by the regulator to have data for making investment decisions.

Economic problems can provoke social discontent, and some depositors have already held protests outside Zhongrong's office. However, the country's authorities remain true to their principles, which is why more and more investors throughout the country complain about the visits of representatives of the security forces with "requests" not to organize public protests.

Last week, one of the largest companies in the real estate market, Country Garden, also missed bond payments. If she does not pay $22.5 million within 30 days, then a wave of bankruptcies will begin both in the real estate market and in the adjacent ones. This will be a severe blow to the Chinese economy, which has still not recovered from the default of developer Evergrande in 2021.

Against the backdrop of a decline in the exchange rate to 7.35 yuan/$, the regulator began to force state banks to increase interventions in the foreign exchange market, lowered the interest rate and increased the volume of public investment in the financial system. In addition, to support the exchange rate, the possibility of simplifying the requirements for currency reserves of the banking system is being considered.

Despite this, the yuan has fallen to its lowest level since 2007, the main stock index on the Hong Kong stock exchange is close to a "bear" market, and in general, the number of bad news for the economy is increasing every day.