China will never be number one just like Japan didn‘t when they ran with a similar export model. They have much more massive looming economic challenges than we do. If anything, India will take their spot as the global factory.
I’m sorry, what? China has a mountain of debt and the housing bubble is swallowing up any savings an average household could accumulate. Turns out pouring more concrete in a decade than the USA poured in a century comes at a cost after all. This might be news to some but it shouldn‘t come as a surprise.
What definitely shouldn‘t be news to anyone at this point is China‘s inevitable demographic time bomb that‘s about to go off. China‘s population is aging much more rapidly than any other demographic in the world and soon a huge chunk of their workforce will retire with way too few workers to replace them.
These things will put a strain on China’s economy that makes Japan‘s bubble burst look like a cakewalk.
The aging population threatens the economy but it cannot be used to contain China.
None of this analysis should be taken to imply that specific Chinese borrowers are not overleveraged with respect to external debt. Where risk does exist, it lies primarily with Chinese companies and NBFIs who are net borrowers, as opposed to banks which are net lenders. Taken as a whole, the Chinese economy is not particularly reliant on foreign borrowing, especially when compared to other emerging markets. The Chinese economy is overleveraged in many respects, but the country’s credit boom has been domestic in nature.
A bit outdated but good analysis. After this year’s $1 trillion trade surplus, it can only have improved for China.
The dangerous dept part comes from doing business and is balanced by their currency reserves. Both are in dollar.
The US government would have to default on their obligations while their creditors need the leverage to enforce their dept on China. Is that possible at all?
China will never be number one just like Japan didn‘t when they ran with a similar export model. They have much more massive looming economic challenges than we do. If anything, India will take their spot as the global factory.
Japan was stopped with the power of the dollar. China doesn’t even have the dept to try that on China.
Which challenges does China have and why should India be able to take their spot?
I’m sorry, what? China has a mountain of debt and the housing bubble is swallowing up any savings an average household could accumulate. Turns out pouring more concrete in a decade than the USA poured in a century comes at a cost after all. This might be news to some but it shouldn‘t come as a surprise.
What definitely shouldn‘t be news to anyone at this point is China‘s inevitable demographic time bomb that‘s about to go off. China‘s population is aging much more rapidly than any other demographic in the world and soon a huge chunk of their workforce will retire with way too few workers to replace them.
These things will put a strain on China’s economy that makes Japan‘s bubble burst look like a cakewalk.
The aging population threatens the economy but it cannot be used to contain China.
https://www.seafarerfunds.com/prevailing-winds/2019/01/tracking-chinas-external-debt/
A bit outdated but good analysis. After this year’s $1 trillion trade surplus, it can only have improved for China.
The dangerous dept part comes from doing business and is balanced by their currency reserves. Both are in dollar.
The US government would have to default on their obligations while their creditors need the leverage to enforce their dept on China. Is that possible at all?