China's economy is very sick. What to prepare for?

[DrBeer]

If China pulls out billions from offshore accounts to save its stock market, it could shake things up globally. Expect some market rollercoaster, affecting not just traditional markets but possibly crypto too. Investors might turn to safe bets like gold or certain cryptocurrencies during the chaos. We should stay tuned and diversify our investments for a bumpy ride

They have enough money to keep the market from falling apart. A major correction in the stock market is not something new in the Chinese market and this can be market manipulation as well. Whatever the real reason the Chinese market is still one of the biggest in the world, and its production is what keeps western countries well fed and their economies thriving. They won't get a cheap market like China anywhere else in the world. So as long as western countries cannot find another production factory for them, the Chinese market will keep minting money for their economy which is the most important thing for them.

If the state could not keep Evergrande afloat, and in fact it is letting an entire industry, and one of the key ones, go under the knife, it is an indicator that they are not doing well with money. At the same time, to save the market, they are even trying to "pull out" almost 300 billion dollars, mostly from the offshore accounts of Chinese state companies....
And millitarization and attempts to show "stability" require HUGE sums of money that will simply dissolve without benefiting the economy.
The outflow of investments, loss of markets (the most profitable ones), internal bankruptcies - this can hardly speak in favor of the phrase "they have money"

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[tygeade]

If the state could not keep Evergrande afloat, and in fact it is letting an entire industry, and one of the key ones, go under the knife, it is an indicator that they are not doing well with money. At the same time, to save the market, they are even trying to "pull out" almost 300 billion dollars, mostly from the offshore accounts of Chinese state companies....
And millitarization and attempts to show "stability" require HUGE sums of money that will simply dissolve without benefiting the economy.
The outflow of investments, loss of markets (the most profitable ones), internal bankruptcies - this can hardly speak in favor of the phrase "they have money"

We are talking about a nation that is ruled by just one person, well not really a person but more like a party, but there is a central power, and they do whatever they want. So if they just print more money, pay the construction workers, and screw the inflation rate, they could actually make all those houses and put people in it. Their money would become worthless overnight, and maybe not zero, like not Argentina levels, they still have a ton of income, but they will lose a lot of value for sure, but they can handle it.

The problem here is not the fact that they can't, they can do it if they want to, but the problem is that it leads to one person making a decision that hurts everyone else. All the people who are not touched by this crisis will get ruined because of it as well.

[WillyAp]

....they will lose a lot of value for sure, but they can handle it.

The problem here is not the fact that they can't, they can do it if they want to, but the problem is that it leads to one person making a decision that hurts everyone else. All the people who are not touched by this crisis will get ruined because of it as well.

Yes and the harm is much less if they let it collapse. Better to a brutal ending than an ending which is harmful long term, better an end with horror than a horror without end Sounds better in In German: besser ein Ende mit Schrecken als ein Schrecken ohne Ende.
All socialist countries behave like social democracies: Too many jobs, too many rules telling people how to live their lifes.

You can't make everyone happy.

[Mauser]

On the one hand, it seems to be the world's second economy, "the world's factory", nominally "the second pole of the bipolar world", on the other hand, it is no longer possible to hide the problems and it is necessary to take such measures.  The question is: since the situation with the Chinese economy is no longer manageable, and we have to take tough and prompt actions to save the economy - how do you think this will affect the global economy, the crypto market, and what to prepare for?

I am not too worried about China and their economy, because it's such a huge country and they are in full control by the communist party. Comparing the Chinese economy to Western country economy like USA or Europe is wrong and needs to be looked at differently. It's definitely true that some Chinese companies are struggling with too much debt and the aftermath of the covid pandemic is still having issues today. But in China there are completely different ways to handle the crisis than it would be possible in western countries. In the west it's all about accountability and trying to look good while doing the right things. Whereas in China it's all about the economy and making sure there is a positive growth rate next quarter. So, the Chinese government will decide which company to save and which to go under. There won't be a large public outcry against bailouts or big protest. This freedom of the communist party is going to make it much easier to fight any big crisis and will let China recover much quicker.

[franky1]

If the state could not keep Evergrande afloat, and in fact it is letting an entire industry, and one of the key ones, go under the knife, it is an indicator that they are not doing well with money.

china (beijing) dont want or need to bail out evergrande because evergrandes  HQ is in hong kong. and there is a great divide of politics between mainland and hong kong

evergrande HQ is in hong kong, but most properties are on the mainland

so beijing is not going to bail out evergrande, but take over the properties on the mainland and finance new developers or evergrands mainland subcontractors to finish off unfinished properties and sell them

china can fund the projects. they just dont need to give money to a management company in a different economic zone, they instead realise they can do things more direct with those involved in the property development ON the mainland

hong kong courts decided that evergrande should liquidate its business

...
imagine it this way
facebook have offices in ireland(europe)
imagine facebook had financial issues that caused office workers in ireland to stop working.
its not europes job to fund facebook HQ in america.. but ireland/europe would try to help irish office workers get back to work

[martinex]

hong kong courts decided that evergrande should liquidate its business

A direct intervention, but if we pay attention to whether this decision provides the best alternative solution, the impact will potentially be loss of jobs and market instability, even though at first glance this is an important step to overcome this turmoil.

[DrBeer]

If the state could not keep Evergrande afloat, and in fact it is letting an entire industry, and one of the key ones, go under the knife, it is an indicator that they are not doing well with money. At the same time, to save the market, they are even trying to "pull out" almost 300 billion dollars, mostly from the offshore accounts of Chinese state companies....
And millitarization and attempts to show "stability" require HUGE sums of money that will simply dissolve without benefiting the economy.
The outflow of investments, loss of markets (the most profitable ones), internal bankruptcies - this can hardly speak in favor of the phrase "they have money"

We are talking about a nation that is ruled by just one person, well not really a person but more like a party, but there is a central power, and they do whatever they want. So if they just print more money, pay the construction workers, and screw the inflation rate, they could actually make all those houses and put people in it. Their money would become worthless overnight, and maybe not zero, like not Argentina levels, they still have a ton of income, but they will lose a lot of value for sure, but they can handle it.

The problem here is not the fact that they can't, they can do it if they want to, but the problem is that it leads to one person making a decision that hurts everyone else. All the people who are not touched by this crisis will get ruined because of it as well.

I probably wouldn’t focus on the totalitarian vector of the Chinese Communist Party now; this is more a consequence of the problem than a cause. The main reason is the manipulation and falsification of China's real economic indicators. I highly recommend writing information about “statistics from China”; you will understand perfectly well that the problem arose much earlier than we began to notice its manifestations. As they say, no matter how much you lie, the truth will still appear. Now it seems that the time has come in China when it has become impossible to further manipulate the data of a “super efficient economy”, and the only option is to tighten control (media, economy, citizens), and... search for internal, and of course, external enemies, to “clarify” the truth seeping out from all corners.

[DrBeer]

This week, by order of the country's leadership, all Chinese media were PROHIBITED from publishing any negative information about the state of the stock market.
The reason is banal - this week, the Chinese stock market lost as much as 6% (!!!!). Along with these data, many other economic indicators of the Chinese economy were suppressed or distorted.
As I understand it, the next step is to write across all media about the indescribable growth and recovery of the Chinese economy, thanks to the wise reign of our dear comrade Shinjipin...

PS I was studying information about the Chinese economy - the question is, can anyone confirm or refute (with arguments, of course), the information that the real estate sector (in its entirety) accounts for about 30% of the entire Chinese economy?

[tygeade]

This week, by order of the country's leadership, all Chinese media were PROHIBITED from publishing any negative information about the state of the stock market.
The reason is banal - this week, the Chinese stock market lost as much as 6% (!!!!). Along with these data, many other economic indicators of the Chinese economy were suppressed or distorted.
As I understand it, the next step is to write across all media about the indescribable growth and recovery of the Chinese economy, thanks to the wise reign of our dear comrade Shinjipin...

PS I was studying information about the Chinese economy - the question is, can anyone confirm or refute (with arguments, of course), the information that the real estate sector (in its entirety) accounts for about 30% of the entire Chinese economy?

Honestly, when you are doing business with a nation that has dictatorship, you do not really look at the data and think that it is real. Even the 6% drop is probably not that much, it is probably more, so they are banning the news about the fake news that they created.

However, it also makes a lot of companies love them for it, because it is a dictatorship, Nike or whatever American company like Apple or something ends up paying peanuts, USA likes to hate on China for communist and dictatorship reasons (I do too) but then they turn around and move all their manufacturing there to make shoes for a dollar and sell them for hundred bucks back at USA, not like that is actually a smart move politically if anything goes wrong with them.

[DrBeer]

This week, by order of the country's leadership, all Chinese media were PROHIBITED from publishing any negative information about the state of the stock market.
The reason is banal - this week, the Chinese stock market lost as much as 6% (!!!!). Along with these data, many other economic indicators of the Chinese economy were suppressed or distorted.
As I understand it, the next step is to write across all media about the indescribable growth and recovery of the Chinese economy, thanks to the wise reign of our dear comrade Shinjipin...

PS I was studying information about the Chinese economy - the question is, can anyone confirm or refute (with arguments, of course), the information that the real estate sector (in its entirety) accounts for about 30% of the entire Chinese economy?

Honestly, when you are doing business with a nation that has dictatorship, you do not really look at the data and think that it is real. Even the 6% drop is probably not that much, it is probably more, so they are banning the news about the fake news that they created.

However, it also makes a lot of companies love them for it, because it is a dictatorship, Nike or whatever American company like Apple or something ends up paying peanuts, USA likes to hate on China for communist and dictatorship reasons (I do too) but then they turn around and move all their manufacturing there to make shoes for a dollar and sell them for hundred bucks back at USA, not like that is actually a smart move politically if anything goes wrong with them.

6% is a VERY big deal, even over six months.... Especially in a couple weeks !

I will partially agree about totalitarianism, but I will add - when investments went into China, it was still a communist regime with a capitalist face. totalitarianism appeared a couple of years ago, and by the way, as you know - Western companies, like Apple, started leaving China immediately.
PS It was cheap there not because of totalitarianism, but because of the low standard of living, which has changed a lot now.

[tyz]

Why do you think that the situation with the Chinese economy is no longer manageable? I think that the situation is manageable and China still has a decent amount of assets and currency reserves, which can be used to cover some loses and to pump the economy.

China's biggest assets are US bonds. They could throw a part of them on the market but it would weaken the US-Dollar and strengthen the Yuan what is not in their interest. China has a lot of problems, one of the biggest is the demographic change. Last year 9 million babies were born, 15 years earlier they were 17 million new borns. I recently read an interesting article where a Economic researcher said: "China becomes old (in terms of their people) before it gets rich".

[stompix]

This week, by order of the country's leadership, all Chinese media were PROHIBITED from publishing any negative information about the state of the stock market.
The reason is banal - this week, the Chinese stock market lost as much as 6% (!!!!). Along with these data, many other economic indicators of the Chinese economy were suppressed or distorted.

The rout is definetly there and probably even the CCP has pissed his pants:
https://fortune.com/asia/2024/02/06/china-stock-rout-regulators-xi-jinping-brief-plans-rescue-markets/

Some $7 trillion of value has been wiped off Hong Kong and China equities since their peaks in 2021 and piecemeal approaches to support the economy and stabilize markets have so far failed to lift sentiment.

But of course, eveything is fine:

Signaling the growing alarm, China abruptly ousted its market chief Yi Huiman on Wednesday, rolling out another hallmark of the near decade-old blueprint to boost stocks.

China's biggest assets are US bonds. They could throw a part of them on the market but it would weaken the US-Dollar and strengthen the Yuan what is not in their interest.

Throwing bonds on the market, hoping for a crash so that the US could buy its debt at 50 cents for 1$ doesn't really sound like a plan on "weakening" your adversary.

[naikturun]

I think China really has to take extra steps in this regard, considering that this news has been seen and known by almost the whole world, whether the economy that has been growing for 45 years will just disappear, I don't think Jinping will just stay silent.

[Argoo]

Why do you think that the situation with the Chinese economy is no longer manageable? I think that the situation is manageable and China still has a decent amount of assets and currency reserves, which can be used to cover some loses and to pump the economy.

China's biggest assets are US bonds. They could throw a part of them on the market but it would weaken the US-Dollar and strengthen the Yuan what is not in their interest. China has a lot of problems, one of the biggest is the demographic change. Last year 9 million babies were born, 15 years earlier they were 17 million new borns. I recently read an interesting article where a Economic researcher said: "China becomes old (in terms of their people) before it gets rich".

When internal contradictions intensify in a country with a totalitarian regime of government, often the authoritarian leaders of such countries try to divert the attention of their citizens to external problems, and often this situation leads to a search for external enemies and military actions against other countries. There appears to be an additional threat looming over Taiwan. Moreover, Xi Jinping has already given the command to prepare for war and the Chinese armed forces are now rearming, taking into account the experience of the Russian-Ukrainian war.
Of course, the situation is constantly changing, but overall tension in the world is growing due to Putin's military ambitions and a growing sense of impunity for attacks on other states.

[DrBeer]

Looks like China is losing another strongest trump card. We are talking about rare earth metals, where China "rules the market". That was the case until today...

"In the United States found the largest deposit of rare earth elements. Now the country can become the world leader in their production. American Rare Earths Inc announced the discovery of reserves of more than 2.34 billion metric tons of rare minerals, which is many times larger than the existing reserves in China. The amount of rare earth minerals discovered has already exceeded the original forecast by 64%. This is despite the fact that geologists have only had time to explore a quarter of the area.
By now, they have found oxides of neodymium, praseodymium, samarium, dysprosium and terbium."

[slapper]

China's economic problems are a time bomb for them and us. Their hurried withdrawal of 2 trillion yuan shows weaknesses in their mask. They misjudged the consequences of their U.S. economic disputes and real estate disaster. This is about global market ripples, not just a falling stock market. Sneezing by China spreads a cold worldwide. Their economic stabilization will affect commodities pricing and trade dynamics. Expect crypto market volatility. Cryptocurrency, a shelter in economic instability, may see a boom in demand, but it's a double-edged sword

So, what to expect? Prepare for market turmoil. Diversify your investments and watch emerging markets that may profit from China's economic reset. Remember, upheaval brings opportunity. But you must be flexible, informed, and ready to turn. Now is the time for strategy, not terror

[WillyAp]

China's economic problems are a time bomb for them and us.

An economic downturn is not a disaster. And if you look at the so-called developed nations it does not look much better. The debt of those states make an all out war much more possible. Forward Flight so to say, if you have issues at home create a situation elsewhere.

[DrBeer]

China's economic problems are a time bomb for them and us.

An economic downturn is not a disaster. And if you look at the so-called developed nations it does not look much better. The debt of those states make an all out war much more possible. Forward Flight so to say, if you have issues at home create a situation elsewhere.

The recession is a temporary process that does not entail the collapse of entire sectors of the economy, and problems in the financial sphere. Now in China it is not a recession but a protracted severe crisis, which may develop into a global crisis, with the real destruction of the economy. And the economy is not self-sufficient, but highly dependent on foreign markets and many factors, which China cannot influence.

[WillyAp]

The recession is a temporary process that does not entail the collapse of entire sectors of the economy, and problems in the financial sphere. Now in China it is not a recession but a protracted severe crisis, which may develop into a global crisis, with the real destruction of the economy. And the economy is not self-sufficient, but highly dependent on foreign markets and many factors, which China cannot influence.

The recession hits mostly employed people, specially those in day to day jobs.
As there are winners and losers it's time for people receiving a salary to open their eyes.
IMHO salaries are mostly dead in many parts of the world already, partly through ignorant company owners.  

[FanEagle]

Instead of arguing, we could just help each other. If China is having issues with liquidity, that means they need cash. What can they do to get cash? More sales, the more they sell, the more cash they get.

What to they have that we don't? Cheap resources and cheap labour (not as cheap as it used to be but could drop again).

So what could we do in this case, the whole world could get near free levels of products, very cheap compared to anywhere else, and very good material as well, and in return pay China. China would be like some guy who does garage sale, gets rid of unwanted stuff, and makes money along the way. This is why I think it could be benefiting everyone, both the buyers, and China at the same time.