55
submitted 1 month ago by 0x815@feddit.org to c/world@lemmy.world

cross-posted from: https://feddit.org/post/3202701

China’s problem is essentially that it has too much debt.

The main role of debt is to bring forward demand from the future. [...] China’s stimulus has kept on increasing since 2008, until it peaked with the end of the pandemic.

Now China risks entering a classic ‘debt trap’ where new loans are taken out to repay existing debt – not to create new demand. In other words, the debt is no longer being used to generate growth. In turn, this risks generating a downward spiral.

[...]

The underlying problem, of course, is China’s massive housing bubble. It was probably the largest ever seen. And it has been bursting for some time, with home sales slumping, as the Bloomberg chart shows.

[...]

China needs to urgently boost [domestic] consumption and downsize manufacturing.

[...]

  • Housing is currently unaffordable for most people
  • The real estate market is an outsize risk for the economy – it is 29% of GDP, and 70% of China’s urban wealth
  • Given China’s ageing population, it seems likely [that housing sales] volume could drop at least another 20% before the market bottoms
  • That will mean China will need to import a lot less oil, metals, plastics and everything else connected to the bubble.
you are viewing a single comment's thread
view the rest of the comments
[-] peopleproblems@lemmy.world 12 points 1 month ago

A quick reminder that those with a lot of money in non-cash assets want you to believe that deflation is a bad thing.

If you get paid in cash? Deflation is good for you. Deflation means your $ will have more buying power.

Yes, jobs will be cut, but that is always temporary because all companies need to generate revenue. If they generate revenue through employees they can't axe them and grow.

[-] Syntha@sh.itjust.works 7 points 1 month ago

Why would job cuts be temporary if demand stays low?

load more comments (5 replies)
load more comments (6 replies)
this post was submitted on 26 Sep 2024
55 points (96.6% liked)

World News

39001 readers
2387 users here now

A community for discussing events around the World

Rules:

Similarly, if you see posts along these lines, do not engage. Report them, block them, and live a happier life than they do. We see too many slapfights that boil down to "Mom! He's bugging me!" and "I'm not touching you!" Going forward, slapfights will result in removed comments and temp bans to cool off.

We ask that the users report any comment or post that violate the rules, to use critical thinking when reading, posting or commenting. Users that post off-topic spam, advocate violence, have multiple comments or posts removed, weaponize reports or violate the code of conduct will be banned.

All posts and comments will be reviewed on a case-by-case basis. This means that some content that violates the rules may be allowed, while other content that does not violate the rules may be removed. The moderators retain the right to remove any content and ban users.


Lemmy World Partners

News !news@lemmy.world

Politics !politics@lemmy.world

World Politics !globalpolitics@lemmy.world


Recommendations

For Firefox users, there is media bias / propaganda / fact check plugin.

https://addons.mozilla.org/en-US/firefox/addon/media-bias-fact-check/

founded 1 year ago
MODERATORS