China’s economy is currently in shambles and they only have themselves for what is taking place. The economic results are in from the first two months of the year. As you may have expected, they are not exactly positive. The economic impact of the coronavirus pandemic has been laid painfully bare.
Dramatic collapses are occurring across the board in China. Manufacturing operations are experiencing widespread shutdowns, leading to a major decrease in industrial production. Utilities, mining and manufacturing have all taken a major hit in recent months.
This is China’s first recorded decline. While the data is released on a monthly basis, there have been no notable declines in the past. China’s numbers even came in below the projections, which had already accounted for a decrease. The initial projection called for a 3 percent decrease but the final count blew past those numbers.
Peter Zeihan is a China expert who made a recent appearance on FOX’s Watters World. The commentary that he had to offer when it comes to their current situation was definitely surprising. He believes that the United States is responsible for China’s continued survival. Zeihan also views this period as the beginning of the end for this country.
Since China does not have the necessary military might to protect their trade routes, he does not see a way out for them. China and the United States are not technically “at war” yet but the Cold War has most certainly begun. It’s only a matter of time before tensions begin to worsen. The United States is already digging our way out of the issues that the disease they unleashed on the rest of the world have caused.
China’s currency could be become devalued, causing them to push more out. The war that is about to be fought will not take place among soldiers, it will take place in the trade market. This gives the United States a perfect chance to reorient supply chains, thus reducing our level of reliance on foreign countries during times of distress.
There are a number of other reasons for China to be worried. Their real estate market is very precarious and could lead to the same sort of issues that the US experienced 12 years ago. There are a number of massive complexes that lay empty. The people who reside in these areas cannot afford to live in them. This could be a major element of their eventual downfall.
China’s long term debt continues to rise and worst of all? No one knows just how large the bill actually is. Developers continue to send the debt skyrocketing even higher, with no end in sight. S&P estimates place the level of debt at over $6 trillion. As a result, their risk of default is massive.
The government could be forced to take over the debts as a result. Default risks are surging rapidly. A spectacular blow-up may be imminent. Companies can see the writing on the wall, abandoning China in droves. Corporate bond defaults reached their highest level last year and the GDP growth rate is believed to be negative as well.
If the GDP growth rate was not negative before, it is going to be now. The coronavirus has come along and changed the way that China approaches its own future. From the looks of things, their economy was already in serious peril before the COVID-19 outbreak forced the world to press the pause button. Other territories are also suffering as a direct result of the mistakes that were made by the Chinese government.
Hong Kong’s once robust airport has settled down to a crawl. This is not the only airport within China’s control that has experienced the same sort of pattern. The number of international flights that are coming to and from this area has significantly decreased. There is no end to this issue in sight. Most experts expect things to continue in the same manner for the remainder of the calendar year.
Can you believe that the Obama administration once tried to make us believe that we needed to worry about China becoming the new global superpower? If only he could see what is happening now. His old comments about China passing the United States in the GDP category seem pretty funny now.
We do not even know if the Chinese economy is going to remain functional over the next few years. All of the talks about the supposed rise in their GDP now seem a tad premature. Maybe communism is simply not the cure-all that some leftists would like to pretend it is? Food for thought.