Debt and overcapacity in China
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- čas přidán 9. 06. 2024
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To maintain its high levels of GDP growth in the wake of the global financial crisis, China instigated a huge financial stimulus. That money was meant to go on infrastructure but in reality, most of the spending went on industrial capacity. CLSA's China strategist Francis Cheung tells the FT's Josh Noble that the problem of excess capacity is only going to get worse
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China needs to speed up its transition from an export lead economy to a consumer driven economy to avoid wasting resources on overcapacity.
lmao no
Since these videos were made in 2013, the stock market has crashed in 2015 and massive capital outflow occurred in 2016 causing the central bank of China to lose approximately 1 trillion USD in foreign exchange reserves to bail out the country. When the economy was rising through 2014, there was an insane amount of cash in China and it was oozing out of China into other countries retail and real estate markets. But now the consequences of the massive stimulus has created a problem that no accountant can seem to solve and while they seem to have stabilized things in 2017 and through 2018 so far after bailing out several markets that would have crashed in the last few years, you can't help but expect it to happen again a few years down the line because the credit to actual GDP ratio is still bad and has gotten worse, so its just a matter of time before the central bank has to use quite a bit of cash to keep it all from crashing again.
Those who defend the PRC economic system and criticize Western media as being something that always makes negative predictions are not taking into account what has been happening since 2008 and why it may have been nice to start with, but even a one party state may not have enough measures to keep bailing out a super hot economy it felt compelled to build up due to a world wide slow down in 2008 for its export driven economy.
Another crash in the US like in 2008 could result in a very serious crash in the PRC as much of its exports goes into the US, so we'll see.
there are also good side of that, for example cheaper housing
Aged pretty badly here
A lot of the well-paying manufacturing jobs in the US and other Western countries have shifted to China. The jobs that replaced them are warehouse jobs for storing containers of products shipped back from China. These are usually low-paying and non-unionized. While the standard of living in China is rising, the standard of living in the West is falling.
All due to the fact that the world's hegemon, the US, is no longer a democracy (not even classified as such by top universities all over the world) and is now a complete oligarchy. It is really quite a pity...
Watched video good
Welcome to the party china
I wanna know why China wanna buy US debt.....and which nation have a minus of debt?
Since WWII, the US tries to maintain a global dominance. While Europe & Japan suffered major damage during the War, the US came out as the wealthiest nation. Since then the size of the US military also grew to maintain the role as world policeman. The cost of the war in Iraq and Afghanistan isn't cheap. At the same time well paying jobs in manufacturing including toys, electronics, clothing have shifted to other places like S-E Asian and China. The Chinese economy boomed and created many low-wage manufacturing jobs. The products they produce are shipped back to Western countries like the US and Canada. If there is a collapse in the US economy, it wold send panic across the world and start a global recession. This would throw millions of Chinese workers out of their jobs.
Basically, China is buying up US debt to keep the economy from going under and the government pay its bills (schools roads and other infrastructure spending). The US just keep borrowing from China to keep the economy stable so that Americans can keep buying the goods that come out of Chinese factories. It is like someone who has thousands of dollars in credit card debt and may never be able to repay his bill. The card company turns around and raise the credit limit so that he can keep on spending. If 1 day, the credit card company stops lending him money and ask him to repay the debt, the man may default and the card company may lose the whole amount of the money owed. The same scenario between China and the US. The Chinese is acting like a bank and the US like the borrower. The minute the Chinese stops lending, the US may default and they may not be able to collect a cent...
shk00design Quite well put.
However, the US is self sufficient enough in debt to not be dependent on China. Considering how the dollar still is, somehow, the world's currency, the US can continue on with quantitative easing to erase or at least pay off some of its debts, because the inflation would be spread throughout all of the world, instead of just throughout the US economy.
Likewise, the Chinese government would not simply be able to withdraw all of its loans and force the US government to pay back, as happened to Germany during the Great Recession. This is due to certain restrictions placed on the selling of American debt. And even if China could, the US would simply print off all the money required to cover its debts, surviving by not having to tank all the damage itself, but being able to spread it around to other of the world's economies.
you wanna know why china buys American debt....just think about it this way....would you like to be a landlord or the tenant...china is the landlord and America pays china billions of interest.
Ordinary Mevaker Edwin My country is a creditor nation, unlike the US and most of Europe which are debtor nations.
keep building more ghost cities china
All economies will eventually collapse.
Ok joe Biden