China Post Pandemic Economy - Not Good

[taiwan_girl]

"There are other signs that China's economic reboot is faltering, too:

• Factory activity is shrinking, according to the manufacturing Purchasing Managers' Index, which has shown output contracting three months in a row.
• Data released Thursday also showed exports falling 12.4% from a year ago, badly underperforming economists' expectations. Making goods and then sending them abroad is a huge engine for Chinese growth.
• Earlier this week, China also announced that its inflation rate was 0% – meaning it's now teetering on the edge of deflation. That could mean people start to spend less, holding off on buying things with the expectation that they'll soon become cheaper.
• Foreign direct investment in China has also dried up, with spending from outside China dropping by $20 billion, or a sixth, year-on-year, per data from the Wall Street Journal.

It's a growing list of concerns that makes grim reading for Beijing, whose dreams of a smooth revival have quickly turned nightmarish."

https://www.businessinsider.com/china-economy-crash-inflation-deflation-trade-exports-growth-global-recession-2023-7

[taiwan_girl]

https://www.bbc.com/news/business-66506132

China has stopped releasing youth unemployment figures, which were seen by some as a key indication of the country's slowdown.
The decision is due to changes in the world's second largest economy and its society, a government spokesman said.
In June, China's jobless rate for 16 to 24 year olds in urban areas hit a record high of more than 20%.

[jon-nyc]

That should make the problem go away.

They must have learned that from the anti-standardized test folks here.

[Axtremus]

https://www.cnn.com/2023/08/18/investing/china-evergrande-bankruptcy-explained/index.html

Evergrande, one of China's largest real estate developers, filed for Chapter 15 bankruptcy.

[Renauda]

Was listening to BBC WS in the truck last week. There was a special report on the sad state of China’s economy at the moment. The report said that deflation is setting in across the economy.

[taiwan_girl]

China isn't Japan in the 1990's. How Its Economic Meltdown Is Different.

PS. The article can be read using "reader view"

[taiwan_girl]

Another concern

"China's colossal hidden-debt problem.

This mainly refers to a mountain of liabilities accumulated by the country's local governments, mostly to fund regional infrastructure projects such as building roads and bridges. An analysis by the Chinese media outlet Caixin Global estimated the outstanding obligations of the so-called local government financing vehicles, or LGFVs, at close to a staggering $10 trillion."

"For months, China's local administrations have struggled to turn their financing vehicles profitable – increasing pressure on the national government to prop up the ailing sector via costly interventions.

As risks tied to the sector mount, banks are unwilling to lend more, investors are turning their backs on bonds, and viable projects are harder to come by, according to several anonymous employees interviewed by Bloomberg.

As a result, the local governments have been struggling to generate enough income or raise funding to meet the costs of servicing their debt."

https://asia.nikkei.com/Spotlight/Caixin/China-s-effort-to-cut-10tn-of-hidden-debt-faces-uphill-climb

[taiwan_girl]

https://explainingfinance.com/news/plunging-pork-prices-tip-china-back-into-deflation/

Consumer prices in China fell more than expected last month, sliding the country back into deflation and renewing concerns about the strength of the world’s second largest economy.

The country’s National Bureau of Statistics (NBS) said Thursday that the consumer price index (CPI) edged down 0.2% in October compared to the same month a year ago. The decline exceeded the 0.1% fall forecast by a Reuters poll of analysts.

The drop was mainly attributed to falling food prices, particularly pork, which has been sliding for months and is down 30% compared to a year ago, according to Goldman Sachs analysts.

Maybe we should sell them some US beef. LOL

[Jolly]

They couldn't afford it.

[taiwan_girl]

@Jolly LOL

The interesting thing is that the data came from internal Chinese statistics, so in real, it is probably worse!!

[Axtremus]

@Axtremus said in China Post Pandemic Economy - Not Good:

https://www.cnn.com/2023/08/18/investing/china-evergrande-bankruptcy-explained/index.html

Evergrande, one of China's largest real estate developers, filed for Chapter 15 bankruptcy.

https://www.nytimes.com/2024/01/28/business/china-evergrande.html

Court decision:

Evergrande Will Be Dismantled, a ‘Big Bang’ End to Years of Stumbles
After multiple delays and even a few faint glimmers of hope, a Hong Kong court has sounded the death knell for what was once China’s biggest real estate firm.

[George K]

@Axtremus said in China Post Pandemic Economy - Not Good:

Court decision:

Evergrande Will Be Dismantled, a ‘Big Bang’ End to Years of Stumbles
After multiple delays and even a few faint glimmers of hope, a Hong Kong court has sounded the death knell for what was once China’s biggest real estate firm.

Saw that earlier. What are the global ramifications?

[Mik]

I think it’s fairly contained to China. I’m not aware that foreign banks are involved, but I could be wrong about that.

[taiwan_girl]

@George-K Just from my opinion, not super major issue. Evergrande was pretty much a domestic only company in China.

But, it may make foreign companies reduce their investment in China if they see concern about the continuing domestic economic problems there.

So, it may "spiral" domestically.

[xenon]

I wonder how much the political stability of China is linked to the state of the economy.

The Chinese seem to weight real estate heavily in their savings portfolios.

[taiwan_girl]

Some more bad news for China economy. The below article looks at how small/medium size exporters are really hurting.

https://www.reuters.com/world/china/chinas-tumbling-prices-push-some-exporters-brink-2024-02-04/

[Mik]

They're coming here through Mexico.

https://www.cbsnews.com/news/us-border-mexico-chinese-migrants-60-minutes/

[Axtremus]

@taiwan_girl said in China Post Pandemic Economy - Not Good:

https://www.reuters.com/world/china/chinas-tumbling-prices-push-some-exporters-brink-2024-02-04/

From the article:

About 180 million people work in export-related jobs, commerce ministry data from 2022 shows.

That's more than half the size of the US population including children and retirees!

[Axtremus]

https://www.cnn.com/2024/02/06/investing/china-stocks-rally-government-stimulus/index.html

Chinese stocks staged their biggest rally in years Tuesday, after the country’s sovereign wealth fund said it would step up buying shares as officials scramble to draw a line under a three-year market rout.

Not surprised that the CCP intervened, it's a matter of time and intensity.

[Axtremus]

Deflation in China

https://www.nytimes.com/2024/02/08/business/china-deflation.html?unlocked_article_code=1.T00.lDmZ.SrPVzDatq3a4

China Deflation Alarms Raised by Falling Prices for Food and Cars
In addition to consumer price declines in January, wholesale prices fell last month, and have been down in every month since October 2022.