China’s Economic Stagnation & A Biden-China War

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Peter St. Onge, Ph.D., reports that the Chinese economy is in its fourth year of stagnation. The kicker comes in at the end.

For the past four years, the Chinese economy has experienced slow growth. Last week, China reported a slew of disappointing numbers; retail sales, industrial production, and investment all missed. Meanwhile, China’s years-long housing slump continues despite massive government handouts. This all leaves the one bright spot—exports, which China is currently dumping into America and Europe at a pace that is already eliciting a potential trade war. If Donald Trump wins, of course, that goes into hyperdrive.

So, the first thing is that Chinese retail sales came in at about half their typical pace of growth and are still about 20% below pre-COVID…

Foreign investors keep pulling out of China. Meanwhile, Chinese firms report weaker orders, weaker revenue, and slimmer profit margins. This is all striking given that the Chinese government has been dumping cheap credit into the economy, including infrastructure spending on roads to nowhere and empty cities smack dab in the middle of nowhere.

One of hundreds of ghost cities with roads to nowhere in the middle of nowhere.
THEY CAN EXPORT

In short, the only bright spot in China right now is what they can export. While the other 80% of the economy is draggy, exports are not. So, the US and Europe are now pushing back against the flood of Chinese imports. Europe just slapped a 38% tariff on Chinese-made electric vehicles, with much more on the way.

The Chinese public is not used to stagnant numbers, and they won’t reduce China’s army of unemployed young people, which soared to a new record last year before the government simply stopped reporting the number.

China could very easily turn things around. They had managed decades of double-digit growth as the government let free enterprise rip.

President Xi Jinping is not cut out for letting go. His instinct is to reach for more control when things go wrong.

China’s COVID lockdowns are the poster child, meaning lackluster growth may be the new normal in China.

Indeed, it could get worse if Beijing gives up on growth. Then, we will see whether the famously restive Chinese people put up with a corrupt police state that is no longer putting chickens in its pots.

RIOTS IN CHINA AND JOE’S WAR DISTRACTION

There are hundreds of riots, near riots, every year across China that simply don’t get reported. China censors them. … entire villages are rising up against corrupt property theft, rising up against banks that run out of money. In one case last year, they actually brought out the army to drive tanks around the bank until the protesters dispersed.

The risk for America, of course, is if things get bad enough, she goes for a Hail Mary and picks a fight over Taiwan. Don’t think that happens unless Xi’s backed into a corner, but given the Biden ministration’s need to distract voters with new wars, China would probably find a willing partner only too happy to squander yet more of America’s blood and treasure.”


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