I'm not saying China is going the route of late 80's Japan, but there are some similarities in the economic outlooks if we compare the two.
It is going in same route. Just a different flavor of it.
China also has the benefit of seeing the mistakes Japan made but that doesn't guarantee they won't repeat them themselves.
China didn't learn from ANYONE's mistakes. The U.S. government didn't either.
China went on such a tremendous growth trajectory over the past several decades, and one recession does not imply that its over, but they have definite headwinds going forward.
Not a recession. It is in economic depression.
B]China’s Economy Might Look Good on Paper, but It Feels Like a Recession
It does not look good on paper, and it's a depression, not a recession.
[/B]
Official data will likely show solid growth in the most recent quarter, but many say conditions in world’s No. 2 economy are grim
Of course it is. It is currently locked in economic depression, so far lasting 15 years.
Compared with much of the world, China has been reporting solid headline growth in its economy this year.
Economic depression isn't growth. The Chinese government is lying again.
But for many people on the ground, it feels more like a recession.
No. It's economic depression.
Or, at least, an economy that is growing very, very slowly.
It is not growing.
One entrepreneur interviewed by The Wall Street Journal said that one of his businesses, a distributor for LED screens based in Shenzhen, is suffering from widening losses as overseas orders dry up, leading him to slash prices to compete for domestic clients. Having laid off more than 50 out of 120 staff since 2022, he said he is contemplating whether to shut the business this year.
One result of economic depression.
“In many ways, it feels like we are back to 2008 when the global financial crisis hit,” he said. “Like most of my business friends, I’m losing faith in the future of the economy.”
It never really changed since 2008.
China’s economy hasn’t, in fact, entered what is typically categorized as a recession—generally defined by two consecutive quarters of economic contraction.
No. It is economic depression. That is defined as reduced economic activity.
The world’s second-largest economy is expected to report around 7% growth in gross domestic product for the second quarter on Monday, according to the forecasts of economists polled by the Journal.
Economic depression is not growth.
That figure, however, doesn’t reflect the scope of the economic pain in China. Its strength is largely the result of comparisons to a period last year when China’s growth was hammered by Covid-19 lockdowns, including one in Shanghai in April. Quarter-over-quarter growth is expected to be much more modest.
The depression has so far lasted about 15 years.
The negative sentiment among businesses and job seekers may be partly due to the adjustment they are having to make from the country’s years of go-go growth, which had already started to slow. Then came Covid-19, a downturn in the property market and a regulatory crackdown on the nation’s biggest tech companies.
Nope. It was in depression BEFORE Covid.
Now, by many metrics, China’s economy is ailing.
It certainly is.
The country is on the verge of slipping into deflation, with factory-gate prices falling at their fastest pace in more than seven years in June, and consumer inflation largely nonexistent.
No. It is slipping into rapid inflation...a cash crash.
Exports from Chinese factories declined at their steepest annual pace last month since the early days of the pandemic. Youth unemployment has hit a record high, with one in five workers aged 16 to 24 without jobs.
That's a contracting economy, dude.
China’s property sector, which seemed to be recovering in early 2023, is getting worse again, with prices falling in a majority of markets. Home sales by the 100 biggest real-estate developers tumbled 28% from a year earlier in June.
Much earlier than that! The Chinese government has been trying to build their way out of their financial troubles, constructing whole cities with no one to live there.
And investment by private firms, long a driver of job creation in China, dropped in the first five months of the year. That is the first time private investment has turned negative in China for a sustained period in decades, apart from most of 2020 when Covid first emerged.
Nope. It's been going on for fifteen years. Apple is not the only investor.
Some economists have argued recently that even if China isn’t in a recession as it is typically defined, it could be in what is known as a “balance-sheet recession.”
Buzzword fallacy. It is in economic depression.
In that scenario, heavy debts and low confidence among consumers and businesses trap the economy in weak growth and make it hard for policy makers to reignite animal spirits with interest rate cuts, because few people want to borrow.
There is no reason to borrow.
“The big problem is that everyone is worried about the future and no one wants to spend,” said Mark Williams, chief Asia economist at Capital Economics. “There’s a lot more uncertainty about the trajectory of the Chinese economy, including the leadership’s commitment to economic growth.”
Mark made a correct comment here. Velocity is very slow in China. This is the very definition of economic depression.
Global Outlook Dims
A subpar performance of China’s economy spells more trouble for the world,
Not really. Trouble for China, yes. Not for the world. Despite it's size, China largely remains economically isolated from the world.
especially as the U.S. and other Western economies remain at risk of recessions as their central banks keep hiking interest rates to fight inflation.
The U.S. is currently in a state of economic depression. It's been going on for four years now. It was started by Democrats.
China is expected to account for a third of global growth this year, according to the International Monetary Fund. Lackluster Chinese activity will dampen demand for resources from countries like Australia, while hurting the bottom lines of multinational firms that rely on China’s vast domestic market.
They basically don't.
“Our assumption in our guidance is that China will be weak for the entire year 2023,” Matthias Zachert, chief executive of German chemicals company Lanxess, told analysts on a conference call in late June.
Of course it will. The depression has been ongoing in China for fifteen years now.
The company warned that second-quarter and full-year profit would undershoot market expectations, in part because an anticipated pickup in China after reopening wasn’t materializing.
The reason is a simple one. No retirement program in China. People are saving like crazy.
Several things are going wrong at once
China’s economic problems reflect a combination of self-inflicted wounds and unavoidable challenges.
Nope. Just self inflicted wounds.
Weakening demand for consumer goods in the West has hit China’s economy, as have deepening geopolitical tensions, which have contributed to a drop in foreign investment in China.
The more companies realize the the Chinese government is, the more that get out of China. Apple was just particularly slow witted about it.
Households and local governments, having run up large debts in recent years, are finally having to pay some down. An aging population is adding healthcare and other costs, crimping spending.
Nope. No healthcare for seniors. No retirement program in China.
Regulatory clampdowns on property developers and Internet companies have left many private companies unwilling to invest.
That's a duh.
Yet Chinese authorities so far have avoided resorting to large-scale stimulus, instead only dribbling out modest interest rate cuts and other limited measures.
Blatantly wrong. The Chinese government has built whole cities that no one lives in. They've wasted more on government mega projects. ALL of these are direct attempts to stimulus. It won't work because it doesn't address the fundamental issues.
I'll stop here. You are just cut and pasting from a Wall Street Journal article written by someone that has no clue what is causing China's problems.
The population is aging and retiring. There is no retirement program in China. Those still working are saving like crazy so they have something to live on. Velocity is almost nonexistent.
The Chinese government, owning the concrete and steel industries, is trying to build it's way out it's self inflicted problems. It won't work.
