The short of it is: China is known for its epic production of housing and infrastructure. A large chunk of their massive GDP is made up of dozens (or is it hundreds?) of 'empty' cities they've built just waiting for people to move there. Where most citizens of the industrial world invest in 'shares' of companies that repay their investment with a share of the profit, the people of China invest in real estate in China. These 'empty' cities are the retirement funds of Chinese workers. Real estate is typically a very sound investment ...but these cities aren't just empty of people. They're also empty of plumbing, sewer, electrical grids, elevators, windows... They're uninhabitable empty concrete structures and roads. People don't live there because people can't live there. They're sculptures being sold as 'apartments.' China scammed its workers bigtime by limiting their investment opportunities to a range of corrupt Chinese real estate developers that spent trillions of investment dollars developing fraudulent real estate, and then China used that real estate to leverage a giant scam on the rest of the world. And the Chinese people -and the world- are starting to figure it out. Investment in these 'apartments' (I say investment, but its very much just a scam) is rapidly dropping, and thus China's GDP shall soon as well. As we all (hopefully) learned in our own 2008 real estate crash, real estate is one of (if not the) cornerstones of the entire economy, and as it goes, so does everything else. China imports (buys) food and raw materials from the rest of the world, and exports 'stuff', finished goods, all the things we buy at the store. The 'money' they use to buy the raw materials their low-wage workers use to make this stuff, and the food they use to feed their low-wage workers, is in part subisidized by the credit representated by their massive infrastructure. To put another way, their purchasing power is created by leveraging their infrastructure in a 'see, we're worth this much' way as a means to reduce the actual cost of that food and materials to undercut the competition (the competition being the workers of the rest of the world). The jig is almost up. Turns out people don't want to invest in pretty pictures of apartment buildings, they want to invest in actual apartments that have actual electrical wiring, plumbing, elevators and windows, you know, infrastructure and habitability. This is going to strangle China's ability to leverage their 'worth' (because that worth is being exposed as a scam) as a means to undercut the competition. Which wouldn't be a very big deal if their competition hadn't largely folded long ago. The problem now is we've become dependent on China to make all of our 'stuff'' (because we thought it was cheaper), and they very soon arent going to be able to make our stuff anymore. Turns out they actually couldn't do it cheaper, they'd just figured out a way to delay some of the cost into the future by building fake cities... I find it highly likely that at least some of the current 'supply chain crisis' is not because the chains have broke, but actually because the supply is dropping off. And its going to get a lot worse. Cathie Wood: China Has Already COLLAPSED! You Just Don't Know It Yet... - YouTube TERRIFYING REALITY 2022 FINANCIAL CRISIS | Has it started? The $62 Trillion Dollar Question - YouTube
China is teetering on the edge of collapse. They did this to themselves. They just needed someone to push them over the edge. China should have invested in real infrastructure, perhaps helped the rural farms and industry, rather than build fancy empty cities. Well, that should buy the USA a few more years as the top superpower.
Agreed. However Im not certain we're a lot better off. We're printing money at record rates and theres a lot of shenanigans going on in our stock market that seem similar to building fake cities, kinda like manufacturing fake companies. Given the tendency for bubble bursting to have a chain reaction, we might end up 'on top', but being on top of a rubbage heap is still just a rubbage heap.
Financial crisis or recession? Yes, but collapse? No. China does I think have an economic reckoning coming but it's recoverable and won't destroy the Chinese rise.
