As another Lame Cherry exclusive in matter anti matter.
The following is not a doomsday assessment of China, but the hard facts of what China was before Coronavirus was released. China had been on a 30 year growth binge of expansion, and like all aging economies, it had produced an economy:
Too rich for production by slave labor.
Too large to respond to small business
Too in debt to have operating cash
China was aging, aging as a population heading toward a 2050 population implosion due to not having children.
The biggest reality is China is not the China it was 20 years ago. China has lost production factories to other Asian markets. It no longer is making a great share of money from outside the country. It instead is making money by it's rich consumers spending, in overturning money. That is a service economy and not a production economy, and that brings inflation and recession.
When Donald Trump kicked the Chinese economy in the guts in a trade war, China thought it could outlast the aging United States. Instead Coronavirus has put China on the death bed.
Back then, consumer spending accounted for only one-fifth of China’s growth, which was much more reliant on factory workers churning out goods for the outside world. Today, with many exporters who had factories in China having fled for cheaper pastures in Southeast Asia, about one-third of China’s economic expansion is powered by consumer spending at home.
While that’s a sign of how much the Chinese economy has developed away from being the world’s factory floor to rely more on its wealthier population, it also means bouncing back from the current outbreak may not be as easy as before. Consumers will hold back spending if the outbreak persists.
When SARS hit China almost 20 years ago, the virus was not a pandemic, and China was producing goods and had money coming in. That is no longer the case. China went into full production shut down over Coronavirus.
The country's economy is growing much more slowly now (GDP growth has recently been about 6%, according to the government, compared with 10% in 2003), and the banking system is far more fragile and laden with debt.
China has been dropping in GDP even with 1.4 billion people buying. It's markets have saturated in one can only sell so many phones to people. This coupled with the paper tiger banking system was always a fraud as it was lending money on goods which did not exist 5 times over.
Last winter, you may recall, it seemed the Chinese economy might come apart at the seams, as credit had dried up for the private sector — which is where most of the country's growth comes from — and consumers dramatically slowed spending.Then in May, Chinese regulators had to bail out a bank, Baoshang Bank, for the first time in decades. A few more bailouts followed, and suddenly banks became scared to lend to each other.
The third leg on this legless chair is the private sector on which China was becoming addicted to, in small businesses. This would be the pirate sales of movies to zero quality control goods dumped onto the American markets.
Chinese state media reported that in 2018, the private sector accounted for 50% of tax revenue, 60% of GDP, and 90% of new jobs and new firms.
That is why China announced last week measures to support SMEs that have nothing to do with the banks, including asking local governments to waive taxes and administrative fees.
"This isn't something the banks can necessarily fix, which is new," McMahon said. "You've got a big part of the economy that's sort of out there on its own."
When one factors in the PLA state run enterprises as Huawei which is tanking for lack of production in the 5G world, China was a nation on the edge of a cliff, and Coronavirus was a kill shot the heart, knocking the dragon over the edge.
This is not to say that China is finished, because China has three cards left to play in gold reserves, American debt and warehouse goods. The problem for China is a thing called spring. Crops have to be planted and Coronavirus is disrupting the process. China has to eat, and that means China will be forced to use cash reserves to buy food. There was only one cargo ship loaded with soybeans for China, and China needs outside beans to raise pork, chicken and people.
There is much talk about a V shaped economic curve in Corona ending production and then China coming roaring back. The problem is the shockwave of Corona, other nations are going to follow China in having shutdowns, so China production will sit idle. World trust in China is shattered. People are not going to travel to China for deals and people are not going to want Chinese people around them for business for years to come. The Chinese are in the same boat in no Chicom wants to hang around other Chinese and get reinfected with Corona.
The world was moving away from China already, and will steadily progress away from China to other production nations, and China will never recover this necessary trade capital. That is why Coronavirus was a kill shot to China. The US State Department was already naming Peking communists as the biggest threat and the Pentagon in ending a war with the Taliban was telling the world that China was next on the war map plan.
This blog has warned that there was not a Chinese economic miracle. China has zero resources, 1.4 billion cancer cells called humans eating itself and the world, and all it had was trade, and trade is now disappearing. China is facing a reality that it will be broken up as it is too large to manage and the world is not going to not demand that China cease being a toxic cesspool, and China will have to answer for a first strike biological weapon which was aimed at America, India and Japan. The world is suffering from Chinese crimes against humanity and the world deserves reparations.
People speak of China surviving, what of Iran and Italy which may cease as peoples, because of what the communists of China unleashed on the world?
The Obama super depression of 2008 never left the world. The world has been in recession as America lingers in the Obama depression, which was not ended by Donald Trump. The world economies are in a slide and this is no longer charting stock markets as Corona is the stock market. Money that China laundered into the United States has stopped as China has stopped. Foreign invest has ceased, and will pull out of China, as the Chinese consumer market is saturated. This will not be a V scenario in economic recovery for China. China and the world will face a 16% degrade in economic status in 2020, and that is if no other major factors as a US stock crash does not appear, and that reality is far more likely with each passing day, without infusions of foreign cash.
The reality is, China will not replace anyone as economic leader. The fact is Europe is poised in that role with African trade. China is on a retrograde slide to return to the rice paddies of a few decades ago. China resembles Japan in her aging economy, but is far more the extinct dinosaur than the dyanamics of the sound Japanese markets.
The only economy which has a V potential is South Korea, as production resumes and nations leave China.
That is the reality of China, based on hard economic data which can not be overcome nor denied.
For the good of the world, China should be bled of all capital wealth, broken into several regions, and as it's population dies, be turned over to rice and millet production to feed itself, as it ends consuming world resources bringing ruin to the world.
China has met it's end, and it is far better for the world that China ends now, rather than marching it's surviving plague population out to try and confiscate the resources of Mideast oil and Afghanistan rare earth elements to attempt to resuscitate it's dead economy.
This is another Lame Cherry exclusive in matter anti matter.
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