Just one of the problems that China is facing which of course has implications for Australia is the iron and steel markets.
Naturally even the semi collapse of this market would impact upon Australia and would then snowball both here and in China
If these falter then it continues on to the shadow banking and banks in general.
About one third of the steel traders are being sued or closed down, cannot get anymore credit and apart from using the credit to buy steel they have also been using the money improperly to buy among other things property overseas.
A lot of the money has gone up in a cloud of dust so will never be recovered, and China being China the same assets were used to obtain more and more loans
Iron/steel stock in storage is also the highest ever The banks' rush to recover loans has indicated their concerns about accumulating bad debts, banking analysts said.
China CITIC Bank's outstanding loans in the steel trading sector reached about 40 billion yuan by the end of June 2013, with the non-performing loan (NPL) rate surpassing 8 percent, data obtained by the 21st Century Business Herald showed Thursday.
Minsheng Bank's NPLs in the same sector amounted to 1.1 billion yuan by the end of March 2013, accounting for 3.6 percent of its total loans to steel traders, the bank said in April. No further data is available.
The risk of steel trading loans was not obvious last year as banks pushed down the NPL rate, but it will finally be fully exposed in 2014, Lian Ping, Shanghai-based chief economist at Bank of Communications, told a media briefing on Tuesday.
Another worry in all this is that this will hit global prices; Chinese demand accounts for nearly two-thirds of the world’s seaborne iron ore trade. Many traders are currently making losses of 80-200 yuan a tonne and more are expected to go bust, with steel demand unlikely to pick up significantly.
