First, to soften the headline: of course China’s economy is going to survive. That said, this video is a good explainer on both how the Evergrande default is currently affecting the economy and possible future effects. My take is that it will likely hurt in the short term, but this was a nearly inevitable consequence of overleveraged entities in the Chinese economy. My biggest concern would be for people who put their life savings into Evergrande expecting a home to be built and local governments that might be pushed towards austerity in social services.
I have been living in China since 2001. Every 3-4 years, on average, there was a crisis that was going to spell the doom of China’s economy trumpeted loudly in the western press. (My favourite one was in 2006 hearing Lou Dobbs (sp?) declare with absolute confidence that China’s economy would collapse and burn before the 2008 Olympics, making those Olympics a farce.)
It’s now 2021. China’s economy hasn’t collapsed yet. I think it may be time to start considering the possibility that the people trumpeting these predictions have reasons other than actually knowing shit to be doing it.
Yeah, where this video falls short is putting the debt crisis in perspective. China had a US$14.7 GDP in 2020. There will certainly be individuals that come out of this hurt, but I kinda doubt China even reaches a recession.
