Doom loop over China is accelerating. Just in the last week we have corruption crackdown on pharmas and hospitals. Every doctor and hospital take bribes in China. So it’s just an excuse to selectively throw people in jail.
Then a new rule on phone apps dropped. Developers are now required to get approval from the government censors before they can publish any apps on app stores. What little freedom in the most vibrant sector of Chinese economy is being taken away.
Also a big campaign to hunt down foreign spies is underway. Lots of rumors on some big name finance companies with a lot of political connections are under stress. One of the biggest private real estate developers defaulted on their loans. Chinese regulators have been talking about stimulus for months but nothing came out.
China is in a deflation trap and nobody seems to care.
A very informative pod on China’s deflation. Too bad it’s in Chinese only.
Xu is a professor at Stanford. He said the best parallel to China’s current economic problem is not the obvious Japan that everyone is talking about, but Soviet Union in the 70s. The economic model is at the end of its road and will likely collapse under its own weight in 10 to 20 years.
Xu brought up an excellent point that I first learned from Pettis. As China’s growth slows down, it will paradoxically prioritize and rely on its state-owned companies more, at the expense of its private enterprises. Because only the state-owned companies can be ordered to invest at bad times. Private companies are under hard budget constraints. They can’t afford to invest in crappy projects to serve political purposes. They will go bankrupt. But state-owned companies don’t have that concern. They will never go under.
So China will go back to its Soviet economic model more and more as its economic problems deepen. And finally meets the same fate as the Soviet Union.
Just saw Xu had another interview out on VOA. Again too bad it’s in Chinese only. Xu has an unique analytical angle that I have not seen in any English media.
Contrary to prior reports, the latest release did not break down unemployment by age. The age 16 to 24 category has seen unemployment far above the overall jobless rate, reaching a record high of 21.3% in June.
A spokesperson for the National Bureau of Statistics said the bureau is suspending the youth unemployment number release due to economic and social changes, and is reassessing its methodology.
Ban all the bad news, all news will become good news.
This is the real kicker:
On a year-to-date basis, real estate investment fell by 8.5% from a year ago as of July, a greater decline than as of June.
RE is 1/3 of Chinese economy. Bubble is popping and dragging down the whole Chinese economy.
China’s Abandoned, Obsolete Electric Cars Are Piling Up in Cities
A subsidy-fueled boom helped build China into an electric-car giant but left weed-infested lots across the nation brimming with unwanted battery-powered vehicles.