I don't understand what is happening right now in China.
It's the result of a lot of factors that at first glance seemed like of no major long term concern, so let me make a quick list of it
- the hukou system, great in theory, bad in practice over a long period of time showing its effect, making it impossible of a lot of internal migrant workforce to actually get involved in sectors where it's needed desperately now
- the single child policy, no need for an explanation here
- different mentality though generations, unlike Western elders in a lot of eastern countries are not inclined to spend, when this population starts becoming dominant you're in a lot of trouble, see the deflation Japan is experiencing.
- the lockdowns, which basically showed every single company that it's not a great idea to import iron from Australia, ball bearings from Germany, chips from Taiwan, and rubber from Malaysia to a factory in China to make the product that will be shipped for assembly in Mexico before entering the US market for a 3-5% in cost reduction so, way better to make it all closer to home.
https://www.axios.com/2023/07/12/us-top-trading-partner-mexico-china- the Russian war, again has shown companies it's not a great idea to have a ton of business in countries where the next day you get everything seized by a madman
https://asia.nikkei.com/Economy/Foreign-investment-in-China-falls-to-lowest-level-on-record- the final factor is that China, well, as one economist said, became old before becoming rich, being heavily dependent on cheap labor for its economic expansion it hasn't managed to replace that other than a real estate bubble, so now it doesn't have cheap manufacturing, it doesn't have the consumer spending, no investors and little tourism compared to its size, all is powered by state spending, which can't go indefinitely
Of course, it doesn't mean China will collapse or anything else, neither the Great Depression nor the 2008 crisis has proven fatal to any country, but if it enters a solid recession we're all going to feel it, and it's not going to be pretty. Worse for them of course than for us but still!