China has reached the end of its economic boom. What comes next should worry every American business — and the rest of the world.
The phrase “it’s official” sits right alongside “literally” for most frequently misused statements.
I was wondering if the article was about a credit rating change or something, but I’m halfway through and there is no specific event mentioned. Just generalized analysis and forecasting.
Ugh, learn to data. Maybe the analysis is spot on, but “trust me bro” is not a valid citation.
That’s Business Insider for you
It’s official!!! Business Insider is shit
It’s literally official, you read it here first.
Bro china’s gonna fall any day now, trust me bro. Bro this is different bro, they’re falling bro. Dude any day now they’re gonna fall bro you gotta believe me bro.
That is undoubtedly true. They are protected to lose a shit ton of their population. By 2050,they will likely have 100 million fewer people. They are projected to lose another 100 million the following decade.
Granted that is a couple decades away.
But the demand for useless junk isn’t going down (see Black Friday), so China will remain a player in making scrappy junk sold for far too much.
Can’t wait for this cash grabby capitalist stage to die out.
That’s roughly equal to losing Germany, France, and Italy, the three most populous EU countries.
As a French I find this terrifying
(I’m not a tankie but) Doubt
No no.
See, we ran the Numbies.
China Numbies Go Down.
Numbies supposed to Go Up.
China is doom.
/s
This strain of brainworm never ceases to amaze me. I’m not a tankie, either and I hate the mainland with a passion. But counting China completely out when it’s clowning the rest of the world on infrastructure right now is just plain mouth-breather stupid.
Yeah, the only scenario where this is true is the one where they realize that China never had ‘global dominance’. China is a major player and is set to remain so for the foreseeable future.
I don’t directly deal with China, but I do know that it’s pretty much the only place where you can say “I need a factory with 20k people manufacturing a million of these widgets per month,” and it just gets done. There’s obviously all kinds of bad baggage that goes along with that, and yes it’s perhaps ironic that a “communist” country is the go-to place for labor exploitation, but that’s how it is right now.
China may have been guilty of enthusiastic over-investment that got ahead of where their market actually was in areas like real estate. That’s again ironic because that’s exactly one of the weaknesses of market systems.
In the other hand it’s not really ironic because China is actually the apotheosis of state capitalism.
I feel like a lot of people were looking to see China to become the world’s largest economy soon, but it is becoming apparent that China’s economic growth is no longer sustainable.
We also don’t know what a Chinese recession is going to look like. We’re at the collapse of Bear Stearns point in what’s going on in China and it isn’t like China can pump its economy through infrastructure spending.
I know from personal experience that while Chinese factories are great for mass manufacturing, things really start to go out the window once you get into precision engineering. My company put a ban on ordering any parts that need high metal purity (95%+) from China or India because they would just falsify their material test reports constantly.
To be clear, you can at great cost overcome those issues too and maintain a good level of supply chain integrity, however it costs so much doing so only makes sense when manufacturing on a huge scale - tens of millions at least with each item being very valuable. Ie…iPhones.
The vast majority of stuff that people want made in China isn’t nearly that profitable.
A) I’m not sure China has had global dominance over the US, but they definitely have dominance over pretty much every other country depending how you measure it.
B) I’m really really not sure I believe the gloom and doom predictions for China’s economy when the government tightly controls all aspects of the economy. Even if they have reached the end of the boom, I don’t see much of a backslide. They are buying up shipping ports around the world to give themselves preferential rates and access. They are buying up natural resources around the world to give themselves better preferential rates. They are doing what the US did for so long in giving out predatory loans to struggling countries in exchange for preferential trade relations.
I’m pretty anti-China in most things, but I’m realistic about the state of the world.
For your second point, I feel that their declining birth rate is a huge problem that adds to the economic downturn they are facing. After the one child policy they were already facing a generation gap in the workforce, and now that the people are generally against having kids due to financial constraint, they will not be able to keep up with the workforce demand regardless of how much control the government has.
What they are doing now (to my limited understanding of global economics) is just investing to pad their economy and brace for the sudden hit their economy will take at some point.
The catch is China might welcome immigrants to make up the difference in population.
The title is clickbait, but the article itself is worth a read
This seems a little too sensational to be trustworthy. I’d take it with a grain of salt. China, like the US, is an economic superpower. Economies have ups and downs, and China still has a long road ahead.
With RES I used to filter all businessinsider.com posts since they’re just garbage articles. Wish I could do the same here.
As @sik0fewl mentioned. China has a population problem, a huge population problem.
Most of the developed world does but most also have large immigration numbers to offset it. The USA is the same, immigration is the main driver of its population growth and population growth is the main driver of maintaining and expanding a countries GDP.
They scale that china’s population will crash over the next 30 years is hard to grasp.
The number of people they have who are of working age will drop by ~100 million. While at the same time the USA will grow in that range.
That is the difference between the two…
Interesting. I look forward to seeing how the future unfolds.
China has a huge population problem.
The end of China’s economic boom, just means they cannot maintain above 10% economic growth anymore.
China has had that for about 40 years now, which is insane compared to anything I know of regarding economic miracles.
Chances are that China will manage to beat the west again on economic growth, because they invest heavily in infrastructure and education.
The Chinese Communist Party relentlessly pursued economic development over all else
Yes many countries have tried that, but none have had a 40 year long success story like China. It could easily be argued that in the same period the west too have had policies of economic growth, to sustain these societies. Just not as successful as China.
Let’s start with the country’s real-estate market
Yes and contrary to the financial crises where western governments protected the rich mega companies, China does the Opposite, seemingly a lot like Iceland, that during the financial crisis was among the hardest hit, but let the unprofitable institutions collapse, and was among the first to recover.
China’s largest real-estate developer, is on the brink of collapse.
Yes exactly, a company that China may be better off without. As it engages in wild speculative projects that turn sour. So maybe they are better off just letting it collapse? If it collapses, the equipment and projects will probably be split many ways, the rot removed, and the remaining good projects may continue with other contractors. It remains to be seen how China will manage this. But it’s pretty obvious that 40 years of 10% growth will create crazy markets. That may need to be rebalanced and stabilized.
The real-estate sector is the most visible sign of China’s fading star,
To be honest, this sounds to me more like wishful thinking, than what we can actually reasonably expect will happen.
I am absolutely not a fan of Xi Jinping, and his authoritarian style and recent power grab. I hope he will be replaced soon, and China can continue on a more humane inclusive and tolerant path.
Fr, Evergrande is dying because China recently cracked down on the over-leveraging and financial fuckery. If they wanted to save Evergrande, all they’d need to do is to give them a break on the new rules, but they aren’t because they reckon it’s worth it to punish Evergrande.
But but but…
We have to throw trillions at them, they are too big to fail, if we don’t give them all our moneys, the global economy will collapse. /s
Also we need to give the CEO’s who caused this huge bonuses, because they need to make at least as much as a 1000 workers.
No amount of “control” will work to fix something that is inherently flawed at a systemic level. The fall of Evergrande Group was merely one high-profile case of the real estate sector’s general collapse. With Beijing’s crackdown on developers’ high reliance on debt for growth, the entire real estate market, and all the companies within it, have been suffering. However, the Chinese government has been trying to resolve the crisis, having set up a financial stability fund through which it raised $9.6 billion in the first round of fundraising.
Assume you can prop up their real-estate sector long enough, which at this juncture is akin to a federal department, and you still have to look at the reality of the real estate itself. The only value in Chinese real estate comes from the volume and location of the plot. Chinese construction teams build with the cheapest materials, regularly to the detriment of the building’s ability to last. While some have touted China’s “disposable cities”, the fact is that they are collapsing on their own and ahead of schedule. The buildings are inherently worthless and trust in the companies that construct them are at an all time low in conjunction with the real estate planning and development groups, leading to a brewing economic crisis.
In addition, China is employing other stopgap measures that indicate a failing economy including massive currency buybacks utilizing agents to inflate the value of their yuan. However, they are not taking meaningful measures to secure the economy in the long term to my knowledge.
flawed at a systemic level
Funny how you considered it fundamentally flawed for having problems after 40 years of continuous growth, when we in the west have regular “corrections” generally every 10 years. Some of them major like the .com bubble and the financial crisis.
Assume you can prop up their real-estate sector long enough,
How exactly do you measure that for an economy that has increased about 50 fold over 40 years? Obviously the growth in that sector would be enormous compared to anything previously seen. Yes it may have heated too much, but avoiding any serious turbulence for as long as they have, is still impressive by any standard.
They may experience a few years of turbulence now, probably because they never expected the decline resulting from COVID. But it’s way to early to tell how they will manage. China probably has one of the most self sufficient economies in the world, I think that will make them less vulnerable than most countries.
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business insider
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They’re literally getting stronger
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No, it isn’t. China is just no longer growing at the unrealistic expectations of US economists.
It isn’t just the unrealistic expectations of US economists, but the Chinese government as well.
It’s official: Click here to find out the 10 facts that Winnie the Pooh doesn’t want you to know about China
This is the best summary I could come up with:
For the past three decades, China has been on the upswing of a supercycle that saw an almost uninterrupted expansion of the country’s capacity to manufacture, appetite to consume, and ability to project power across the world economy.
Chu — who has been called the “rock star” of Chinese debt analysis — told me that this weakness is not just a result of a cyclical downturn; it’s a part of a more permanent shifting of supply chains caused by trade tensions with Europe and the US.
Allowing a property-market correction, bailing out local governments, creating a new funding mechanism for them, developing a social safety net for the people through all this instability — all of it costs money.
When Japan started struggling in 1991 with a similar dynamic — aging population, sky-high debt, and slowing growth — its GDP per capita was more than triple that amount, at $41,266 in today’s dollars.
“What’s really a shame is that China never seized the opportunity on the way up to build a comprehensive social safety net where people feel they don’t have to save a lot of money for a rainy day — for healthcare, education, what have you,” Chu told me.
Earlier this month, the House select committee on China competition held a hearing in New York City, calling on witnesses to describe what risk looks like with a Chinese Communist Party that’s less committed to the free flow of capital and more concerned with flexing its muscles within its region.
The original article contains 2,755 words, the summary contains 251 words. Saved 91%. I’m a bot and I’m open source!
I didn’t even know China was dominating us tbh
oh my god, haven’t we had enough global crises over the last 3 Years? i mean i hate china too, but we’re still dependent on their economy.
