Author Topic: The Chinese Slowdown: Much More Than Covid  (Read 71 times)

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Offline Ptarmigan

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The Chinese Slowdown: Much More Than Covid
« on: May 11, 2022, 06:55:05 PM »
The Chinese Slowdown: Much More Than Covid
https://mises.org/wire/chinese-slowdown-much-more-covid

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The most recent macroeconomic figures show that the Chinese slowdown is much more severe than expected and not only attributable to the covid-19 lockdowns.

The lockdowns have an enormous impact. Twenty-six of 31 China mainland provinces have rising covid cases and the fear of a Shanghai-style lockdown is enormous. The information coming from Shanghai proves that these drastic lockdowns create an enormous damage to the population. Millions of citizens without food or medicine and rising suicides have shown that the infamous “zero covid” policy often disguises mass population control and repression.

It is easy to use the covid-19 lockdowns as the reason for the weakening of the Chinese economy but that would be a gross simplification. The problem is deeper.

China is going through a severe slowdown caused by the burst of the enormous real estate bubble and the crackdown on the private sector, which has led to a cut in investment growth.

China's economy is weakening. It goes beyond COVID. They have a real estate bubble.

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The collapse of the real estate bubble is the biggest problem. A research paper by Kenneth Rogoff and Yuanchen Yang estimated that the real estate sector accounts for around 29 percent of China’s GDP. It is impossible for the Chinese government to offset the impact of such a massive part of the economy with other high-growth sectors. Furthermore, real estate’s impact on the job market is hard to substitute. Economist George Magnus warned that the impact of the real estate collapse would last for years.

To add to a difficult real estate problem, the government crackdown on the private sector makes it even more difficult to boost growth in other industries and businesses. The fear of constant political intervention is leading to a massive slowdown in foreign direct investment growth as well as fear of deploying capital and taking risks in the Chinese economy only to suffer grave penalties from the authorities when profits arrive.

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Offline Eupher

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Re: The Chinese Slowdown: Much More Than Covid
« Reply #1 on: May 11, 2022, 07:46:28 PM »
Note to manufacturers:

This is what happens when you put all your eggs in the China basket. You get tanked.

But the run was good while it lasted, eh?  :whatever:

Dickheads.
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