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CHINA DEFLATED: Bubbles, Shadow Banks, and the Country's Struggling Economy By Evan Anderson
Why Read: The depths of China's current economic woes are far greater than reported. It's not the individual problems with one company or bank or another, but the entire compounding systemic crisis that makes the situation so dangerous. Read on to see why this crisis is so big, how dire the situation is, and the potential ripple effects of ongoing economic collapse in the Chinese system. _____
Over the past 30 years, the powers that be in Beijing have been lauding their new era of prosperity. And at face value, that has seemed to be the case. The country's massive megacities with shining new infrastructure, the transfer of much of the world's manufacturing to Chinese shores, and the rising fortunes of (some) Chinese citizens have all bolstered the assertion.. But under the surface, "something is rotten in the state of Denmark." A common thread in much reporting on China throughout the past few years is the idea that soon, very soon, the Asian nation will replace the United States as the world's largest economy. This will not be happening. The real question is, why not? The answer lies in the arcana that make up the interaction between Chinese Communist Party (CCP) policy (driven almost entirely now by Xi Jinping's personal agenda), the back-and-forth between a state-led vs. "private" (but still government-controlled) model, and the shocks the country has experienced in response to its hyperaggressive InfoMercantilist approach to its global trade relationships. That these factors can't be reconciled is the key point: you cannot have a top-down-controlled, state-led economy that also enjoys all the advantages of the free market while running vampiric trade policy that consistently leads to international backlash. The results of such a system are, inevitably, as follows:
Let's first go through some reasons that the above are true, before analyzing what this means for the future of China, anyone who invests there, and the world at large. As always, the best first step is to discuss the elephant in the room: China's gross domestic product.
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