Layoffs, redistribution and Chinese tail risks

China aims to lay off 5-6 million state workers over the next two to three years as part of efforts to curb industrial overcapacity and pollution, two reliable sources said, Beijing’s boldest retrenchment program in almost two decades. – Reuters on Tuesday Rising unemployment that leads to social instability in China = scary and anathema to China’s leaders. SO, also from Reuters with our emphasis: China’s leadership, obsessed with maintaining stability and making sure redundancies do not lead to unrest, will spend nearly 150 billion yuan ($23 billion) to cover…

Asian Stocks Buoyed by China Stimulus

Asian Stocks Buoyed by China Stimulus as Crude Climbs Above $34 Asian stocks rallied, emerging-market currencies strengthened and crude oil climbed to an eight-week high as monetary stimulus in China brightened prospects for the world’s second-largest economy. European equity futures declined. Benchmark share indexes advanced across most of Asia after the People’s Bank of China cut lenders’ reserve requirements, freeing up funds to help spur lending in the nation. The yuan gained for the first time in eight days and higher oil prices buoyed Malaysia’s ringgit. Copper retreated after a…

Unlikely Near-Term Yuan Devaluation

Here’s Why a Near-Term Yuan Devaluation Is Unlikely Amid rising vulnerabilities to the global economy, world financial leaders and investors fear a disorderly China’s yuan devaluation could trigger a much larger global selloff, potentially pushing the global economy back into recession. That’s a key reason why finance ministers and central bankers from the Group of 20 largest economies meeting in Shanghai this weekend want the G-20 to reiterate past vows to avoid competitive devaluation. But there are a number of good reasons to think any potential significant yuan devaluation by China wouldn’t come until…