The major problems from China still ahead?

PBoC reduced the exchange official rate of CNY with additional 0.22 percent to 6.3772 against the USD. Bloomberg reports that China’s officials again confirmed that China has no intention of "currency war", but seeks to hold the exchange rate of its currency within reasonable limits. Continued rumors that the devaluation of the end of 2016 will look for targets of ¥ 8 / 1 USD, which makes -20%. In Hong Kong, where the limit of +/- 2% for CNY is not valid immediately it was registered rate of 6,4682 ¥ / 1 USD.

Oleg Deripaska, United Co. Rusal's president, discusses aluminum prices and production and the risk of a debt crisis with Bloomberg's Stephen Engle at the World Economic Forum in Dalian. He said that the collapse of the stock market in China is only the first phase of the coming crisis. According to him, the collapse of the stock market was triggered by concerns of investors towards the new level of risk and nervous behavior of hedge funds, which try to overtake rivals in auctions. "I think the main problems are ahead," says Deripaska. The idea is that we have not yet seen the response of the debt market. It is not clear how constantly increasing during the year unprofitable companies will be able to service their debts. To this is added the negative consequences of the expected interest rate increase in the US. These factors will affect not only the Chinese, but overall global debt markets. The growth of the Chinese economy was based on very soft monetary policy; Money could receive literally everyone. So multiply the number of new production capacities, but on behalf of this balance can cause a debt crisis. The debt market needs to find a new equilibrium in the presence of many capacities over to constantly declining prices of both raw materials and production.

Inflation in China accelerated in August stronger than expected thanks to strong growth in food prices, but manufacturing prices fell further - with the biggest step for the last six years. Serious is the effect of the fall in commodity prices and reduced demand. This signals the risks of deflation in the economy and reinforces expectations for new stimulus. No comments clear, however, dwindling reserves and the continued selling of US Treasuries from China.

Today, the Chinese premier said only that China was able to fight the "potential systemic financial risks" and that all risks on sovereign debt in China are under control. In this regard, global stock markets react very positively to vague Chinese promises.