China's Confidence Game

Nearly a year ago, we warned of what might happen if a crisis of confidence strikes China's economy. Recent economic numbers return this worry to the spotlight.

In 2018, China's economy grew at its slowest pace in nearly 30 years. In response, the country's central bank moved earlier this month to boost bank lending and then pumped a record $84 billion into the banking system.



Then we got a warning that excessive lending itself has become a problem with news that bad debt has reached its highest level in a generation. The International Monetary Fund warned recently that the biggest current threats to global economic growth are a "no-deal Brexit" and a sharp slowdown of China's economy. At the World Economic Forum in Davos last week, Kenneth Rogoff, a widely respected expert on debt crises, warned that China may be forced to rescue large parts of its financial and economic system.

China's economy has been cooling for several years, and there's no sign yet the country's leaders have lost confidence in their ability to manage. The government's latest moves signal concern, but not panic, about the current strength of the economy and its ability to weather the storm created by the trade war with Washington. A speech by President Xi Jinping last week at a special meeting of central and provincial-level leaders focused on other risks to China's future.

But China's leaders can't control how markets see their country and its economy. Particularly since, as I wrote last February, all of China's big political and economic decisions are made behind closed doors by seven men — the Politburo Standing Committee of China's Communist Party.

The day is coming when doubts about China's economic resilience will abruptly begin to grow, and it won't be easy for state officials, even if they're telling the absolute truth about what they believe, to calm markets. Today, there is confidence in the stats that China's government produces mainly because growth is believed to be relatively strong. That makes it easy for investors to ignore stories about Chinese provincial governments admitting they've faked their GDP data.

But here's the key question: During a Chinese market meltdown, when the government tries to ease fears with a release of reassuring numbers, will investors believe them?

Ferrera Erbognone, a small town in the northern Italian province of Pavia, is home to one of the most cutting-edge computing centers in the world: Eni's Green Data Center. All of the geophysical and seismic prospecting data Eni produces from all over the world ends up here. Now, the Green Data Center is welcoming a new supercomputing system: HPC5, an advanced version of the already powerful HPC4. Due to be completed by early 2020, HPC5 will triple the Green Data Center's computing power, from 18.6 to 52 petaflops, equivalent to 52 million billion mathematical operations per second.

Learn more at Eniday: Energy Is A Good Story

This week, the process of impeaching President Trump entered the critical phase as the House of Representatives held its first public hearings. The battle lines are now drawn.

The Democrats say that there is compelling evidence that Trump withheld badly needed military to aid to an ally at war to pressure that country's government to provide him with personal political benefit by helping him discredit a political rival.

The Republicans say that the evidence comes mainly from witnesses with little or no direct contact with the president, and that the military aid was delivered to Ukraine without the Ukrainian president taking the actions Trump is alleged to have demanded.

More Show less

The fight for the Nile: In recent days, the Trump administration has tried to mediate three-way talks between Egypt, Sudan, and Ethiopia on their long-running dispute to access the waters of the Nile. In short, a 1929 treaty gave Egypt and Sudan rights to nearly all Nile waters and the right to veto any attempt by upstream countries to claim a greater share. But in 2011, Ethiopia began work on the so-called Grand Renaissance Dam on the Blue Nile tributary from where 85 percent of the Nile's waters flow. The project, due for completion next year, will be Africa's largest hydroelectric power plant. Egypt, which draws 85 percent of its water from the Nile, has made threats that raised fears of military action. We're watching as this conflict finally comes to a head early next year.

More Show less

13: More than 13 percent of US adults, 34 million people, report having a friend or family member who has died in the past five years because they couldn't afford medical treatment, according to a new Gallup poll. Polls show that voters consider healthcare a high-priority issue in next year's US elections.

More Show less

What were the reasons behind the rise of the Vox Party in the Spanish general election?

I think it was basically the question of Catalonia, the unity of the Spanish nations. And VOX played very hard on that particular issue and it was eating into the support of the other center-right forces there. So, it has now established itself fairly firmly on the Spanish political scene with the consequences that that will have.

More Show less