By Drieu Godefridi, GATESTONE • September 8, 2023
- [T]he news of the week is most likely the crash of China. Real estate, currency, stock markets, technology, demographics: it all fits together, and what lies ahead for China looks like stagnation at best.
- There are an estimated 80 million unoccupied homes in China — a huge number, even for a giant country. While real estate has driven China’s growth for decades, it is now in danger of wrecking it.
- Then came the marginalization of the Chinese currency, the yuan, presented as destined to replace the dollar. Not quite yet. The yuan may or may not be weak, but above all no one wants it as an international currency because no one trusts the reliability of the Chinese regime in the long run. No one wants to buy Chinese bonds.
- “It is very hard to create a reserve currency, without attractive reserve assets. China has a problem. It wants foreigners to buy bonds but they have been selling since early 2022” — Jens Nordvig, founder and CEO of Exante, Reuters, May 16, 2023.
- Regarding the concept of a dedicated currency for BRICS nations, experts have expressed their skepticism. Danny Bradlow from the University of Pretoria in South Africa, cast doubt on the practicality of reverting to the gold standard — there is not enough of it if everyone wanted it a redemption — or using cryptocurrencies. He questioned their reliability in global trade. There are serious investors who regard cryptocurrencies as essentially a conceit, like the 17th century’s Dutch tulip mania. Even then, at least you had a tulip bulb.
- Chris Weafer, an investment analyst specializing in Russia and Eurasia at Macro-Advisory, labeled the proposition of a BRICS currency a “non-starter.”
- It is likely that Chinese Communist Party Chairman Xi Jinping does not really understand how markets work… Why would anyone want to invest in a stock market that is constantly at the mercy of a communist ‘Prince’ and his subjective whims and predilections?
- According to China’s new “Anti-Sanctions Law,” just about anything can be a crime, and one’s assets seized if the Communist Party leaders want them to be. The raid on the Shanghai headquarters of Bain & Company and the colonization (seizure) of the Hong Kong financial center by China’s imperialists also had the effect, from a strictly financial point of view, of emptying the Chinese market of all reliability.
- There is also the problem that in China there are no private companies: under the Chinese Communist Party’s notion of “civil-military fusion,” all companies belong to the central government and can be raided for information at any time.
- Our contemporaries often forget that the Chinese regime is not the equivalent of a British, American or Dutch democracy. The Chinese regime is a dictatorship in the strict sense, the dictatorship of a single party, and ultimately of a single man, Xi.
- Xi has already told his military to “prepare for war” and “fight and win” it. He has flown spy balloons over America’s most sensitive military sites and sent “hundreds of military-age Chinese men” into the United States through its open southern border — presumably to disrupt a US counter-offensive should he invade Taiwan — to sabotage American airports, electric grids, communications systems, water supplies, bridges, ports, highways, tunnels, and other strategic infrastructure.
- Xi can see that his “window of opportunity” — during a Biden administration that is possibly compromised — is closing, and that the US is being led by a president who shakes hands with the air; says “No comment,” about a town incinerated in Hawaii, and assures Russian President Vladimir Putin that a “minor incursion” into Ukraine would be fine.
- Larry Fink, Chairman of Blackrock, urged investors to “triple their allocations in Chinese assets.” “[W]e are one of 16 asset managers currently offering US index funds investing in Chinese companies,” BlackRock told CNN about a country that is using them displace America and rule the world.
- Jamie Dimon, CEO of J.P. Morgan Chase, said that “he intends to operate in China according to US foreign policy and will plainly stop expansion if US policy dictates.” In other words, investing in the Communist China, a country that openly wants to supplant America as the world’s leading superpower to rule the world, is not illegal. If China attacks Taiwan and starts a war, it is the US that is funding it.
The crash of China: Real estate, currency, stock markets, technology, demographics. It all fits together, and what lies ahead for China looks like stagnation at best. (Image source: iStock)<
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Hardly anyone cares, because it all seems so far away during the summer, but the news of the week is most likely the crash of China. Real estate, currency, stock markets, technology, demographics: it all fits together, and what lies ahead for China looks like stagnation at best.
1. Housing Market Meltdown
The crash of the Chinese housing market: There are an estimated 80 million unoccupied homes in China — a huge number, even for a giant country. While real estate has driven China’s growth for decades, it is now in danger of wrecking it. The major Chinese property development conglomerates are going bankrupt one after the other. There is no fix or solution that will artificially revive China’s “bricks” this time. For years, the Chinese regime artificially stimulated real estate as an economic engine — and it worked! — but sometimes there comes a glut, and in China, that glut is now.
2. Collapse of the Yuan
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This article is right on target about China.