China’s real estate market is in decline. Debt deflation hangs in the air. The country’s workforce is shrinking and GDP growth is trending downwards.
No wonder the International Monetary Fund at its recent shindig in Marrakech warned of slowing economic growth in the People’s Republic, raising the prospect of “Japanisation” – the prolonged economic and financial malaise that afflicted its once high-flying neighbour after an asset bubble imploded three decades ago.
The trouble is that China’s economic imbalances are far worse than Japan’s in 1990. And that’s before considering the ruinous economic consequences of President Xi Jinping’s autocratic rule.
Deflation is the worst. Why buy something this month when you know it’s going to be cheaper next
Because I need it now? I don’t postpone stuff like food, water and medicine. And even other stuff that bring comfort like travel or hobbies.
This old trope
In fact tech has always been a very deflationary sector (as in the longer you wait, the more you get for your money) yet it’s pretty profitable. Nobody would ever get a phone by that logic
You only get more if you wait and buy that spec. Latest spec is always more and subject to inflationary shocks like covid supply chain disruption with semis.
Which is probably why they are terrified that the newer specs are not growing at the rates that make it required to get.
If you can’t sell them on the newest chip at 4% faster then it starts to just roll back into deflationary and you need more people to buy it, like buly pushing an AI boom.
I don’t think that’s a realistic comparison. Deflation is just about money whereas technology has actual usage and each iteration is more powerful. Money is exactly the same now and ever, a mean to exchange value.
This is the best summary I could come up with:
What’s known as the Asian Development Model involves high levels of investment financed from domestic savings, relatively depressed household consumption and strong export growth.
Chinese private sector credit reached 227% of GDP at the start of this year, according to the Bank for International Settlements, some 13 percentage points higher than Japan’s 1993 peak level.
Huang, who teaches at the MIT Sloan School of Management, fears that Xi is resurrecting the bureaucratic mode of government that stifled China’s economic development for centuries in the imperial era.
The following year, authorities cracked down on private tutoring companies, and tech giant Tencent (0700.HK) agreed to pay $15 billion to aid the government’s wealth distribution efforts.
But the engines of the country’s growth – the private sector, globalisation and the decision-making autonomy of regional governments – have been impaired by Xi’s actions, says Huang.
This week, Beijing ordered state-owned banks to roll over local government debt with longer terms at lower interest rates.
The original article contains 1,068 words, the summary contains 160 words. Saved 85%. I’m a bot and I’m open source!
Bbbbut Hexbear said glorious china was strong 😩😩😩
Maybe build even more ghost towns Xi? To pump those numbers up.
