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Who Will Suffer Most When Chinese Growth Ends?

The property market, accounting for roughly a quarter of economic activity in China, is facing an oversupply of empty apartments on an inconceivably large scale, meaning that all activity in this industry should (but won’t) cease.

The other pillar of China’s economic strategy, export-led growth, is also under severe strain because the rest of the world is simply no longer willing to absorb China’s glut of manufactured goods.

Finally, China is facing a demographic nightmare.  Its population is shrinking and is widely expected to contract by at least one-third by the end of the century. 

Government debt will have to skyrocket over the coming decades to prevent China’s economy from collapsing into a Great Depression, just as Japanese government debt has since Japan’s Economic Bubble popped in 1990.

The grave economic challenges confronting China were discussed in the previous two Macro Watch videos (“China – Coming Off The Rails” and “Is China Turning Japanese?”).

Those doing business in China or selling products to China will find it increasingly difficult to make money there for two reasons.

First, China’s economy is likely to stop growing altogether, as explained in the last two videos.

Second, much of the rest of the world is expected to impose high tariffs on Chinese goods to protect their domestic industries from Chinese dumping.  When that happens, China will retaliate by punishing foreign companies doing business in China.

The rise of China has been the most important driver of global economic growth this century.

The stagnation of China, which could last for decades, is now likely to act as a severe drag on the global economy.

Those who benefited the most from China’s boom are likely to suffer the most from its bust.

This video is 20 minutes long and contains 74 slides that can be downloaded.


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