10 NEW Signs Of China Imminent Economic Collapse 2019 China’s Yuan CRASH!
I have been warning for years that the greatest and final bubble to burst in this century of bubbles would be China now that cracks in the Great Red Dragons economy are widening it’s time to prepare for the worst China has a unique state-driven model of capitalism that clueless economists have hailed as the new model for economic success but I say China’s model and economy will fail drastically proving once and for all that government planned economies do not work as well as free market capitalism balanced by democracy china has massively over built everything industrial capacity housing offices malls infrastructure you name it it’s over built twice as much and for twice as long as any other government driven emerging economy ever has in fact the last government driven over investment spree occurred in Southeast Asia and it resulted in a financial crisis between late 1997 and late 2002 and China has made that situation look puny by comparison there is no way this can end anyway rather than very very badly the question is when will an economic collapse come the answer is sadly sooner than you’d like here are the 10 that signs the end is near sign number 1 recently a large Chinese property developer decided for the first time to discount condos by 60% when sales stalled the thing is this is a shocking step to taking China it’s just not done the affluent chinese line up to buy over belt empty condos at insanely overpriced levels they don’t rent them out because there is no rental culture in the country 90% of homes are owned they simply buy the property and let it stand empty so when a developer cuts prices and thus D values their investment they get busily angry there are people who bought multiple homes who are now trying to sell one to pay off the mortgage on another said brand youngji a property agent one of his clients bought an apartment last year for two hundred and thirty thousand dollars to find a buyer now the client would have to drop the price by 60% meanwhile in a true concerning demonstration of what will happen when the bubble finally bursts last November we reported that angry homeowners who paid full price for units at the hosts in how mansion residential project in shangri-la at act the country garden sales office in eastern genchi province after finding out it had offered discounts to new buyers up to 30% but this discounting trend is likely to spread rapidly now as more developers are forced to discount prices just to raise cash and avoid bankruptcy signed number two Chinese stocks have lost more than 27 percent of their value since the start of 2018 fears of a slowing economy rising debts and the impact of US President Donald Trump’s trade war have all played a role in pushing the Chinese market lower however a wave of forced selling of company shares could see the market drop even more in China hundreds of companies used their shares as collateral for loans but when share prices for they are forced to sell in order to maintain a certain level of balance in brokerage accounts used to lend the company’s money according to Bloomberg about four point one eight trillion won that’s six hundred and three billion dollars worth of shares have been put out by company founders and other major investors as collateral for loans accounting for about eleven percent of the country stock market capitalization based on calculations using China securities depository and clearing corporation data the South China Morning Post citing a report by Changfeng securities said earlier in the week that more than 600 company stocks had fallen to levels we’re forced sales may kick in it’s a vicious cycle share drops lead to liquidation and liquidation leads to further share drops Wang Xing chief investment officer at Jinxy investment management told to South China Morning Post analysts believe this trend is likely to exacerbate the major declines already seen in Chinese markets this year signed number three fifty percent of Chinese millionaires are considering moving overseas because they don’t trust government or the bubble pollution levels are getting intolerable and they want to get their kids in english-speaking education signed number four super wealthy investors who paid billion u.s.
Dollars for the center in the world’s most expensive real estate transaction ever have mostly been spinning their wheels over the last six months trying to sell it off floor by floor that tells me the smart money is leaving before the bubble bursts sign number five a number of major developers have gone bankrupt these developers are highly leveraged and posed the greatest and threat to the banking system which has grown more through shadow banking and subprime lending in the last few years than anything sustainable developers are heavily weighted down with debt much of it short term many are paying out 7 to 8% bond yields with debt to equity ratios of around three hundred and eighty percent encouraging them to rent out their housing surplus thus drives a money losing trade developers rent to consumers to make a 1.5% yield while paying a combined debt and equity cost of capital of almost 10 percent that eight point five percent negative yield multiplied by millions of units and mounts to an enormous subsidy for renters but it significantly worsens developers dead problems sign number six bad loans are rising fast in China the 35 five trillion dollar pile of public and private debt is an explosive threat to the global economy in 2008 China’s total debt was about 141 percent of its gross domestic product by mid 2018 that number had risen to 300% countries that take on such a large amount of debt in such a short period typically face our hard landing that’s why everyone academics private banks the International Monetary Fund the organisation of Economic Cooperation and Development the Bank for International Settlements and the People’s Bank of China governor zou coo CA Choo on is sounding the alarm sign number seven consumer leverage has risen to worrisome levels with our consumer share of GDP of 39 percent it is obvious that in the long run growth has to be led by the consumer the problem is that after Norway China has had a bigger increase in household debt to GDP than any other country while it may come as a surprise to some the debt to disposable income ratio is above that of the u.s.
At 118 percent versus 104 percent in the u.s. the debt service ratio has also increased significantly in recent years and is likely to increase further given that consumers are incurring more expensive forms of borrowing in other words via credit cards or short-term loans credit card debt to GDP now is about 7 percent as a result credit suisse economists argue that growth of nominal disposable income net of debt services in other words income available for consumption has dropped to 2 percent sign number 8 a further escalation of the trade war between Washington and Beijing to include sanctions on financial products or transactions could trigger a financial crisis in China researchers warned in their report the study released by Renmin University’s national academy of development and strategy looked at a series of possible or retaliatory steps the US could take in the trade wall do constrain or even try to directly destroy China’s financial markets financial assets and its currency the trade war could cut China’s export growth by almost half in 2019 putting around million jobs at risk The Economist wrote signed number 9 China’s growing unemployment crisis the growing downward pressure on China’s domestic economy has made the employment situation particularly grim the internet industry is experiencing a downturn at the moment Baidu Alibaba and 10 cent often collectively referred to as ba t or bat China’s Internet giant’s are a desirable place for job seekers but since September the news of Alibaba scaling back its campus recruitment program has caused an uproar on the Internet at the same time news spread that Baidu and JD comm have stopped social recruitment and that $will lay off about 6,000 of its staff as one would expect the companies have denied the rumors however research data from the human resources industry tells a different story according to data from a recruitment platform in the third quarter of 2018 the number of jobs advertised in the IT internet industry decreased by 51 percent compared for the same period of last year it was the second consecutive quarter of negative growth in demand and the contraction of jobs was much higher than the national average the layoffs in the Internet industry are visible but the mass job losses in the manufacturing industry have not attracted enough attention China’s manufacturing industry is sending out a series of worrying employment signals Foxconn the contract manufacturing giant is reportedly set to cut three hundred and forty thousand jobs worldwide and cut 20 billion rmp around three billion dollars in spending in 2019 the employment situation in other industries is not optimistic either the semi-annual report of the brokerage industry showed that nine brokers have laid off 4,186 workers and as new college graduates flocked to the job market the pressure on total employment will also increase judging from the recent developments the risk of unemployment in China is increasing and the unemployment rate is approaching a dangerous level sign number 10 the Chinese economy is slowing faster than expected the worst is yet to come analysts say the economy slows to its lowest growth rate in 28 years in 2018 with gross domestic product expanding percent down percentage points from the previous year and that’s according to data by the country’s National Bureau of Statistics the last time economic growth was so tepid was 1990 when the economy slumped in the aftermath of the Chinaman’s square incident if you think 2018 has been challenging for China’s economy this year maybe worse to me it is crystal clear that China are in much worse condition than they were just prior to the last economic crisis and now things are setting up for the next great economic crisis unfortunately most Chinese are totally clueless about what is going on and the vast majority are completely and totally unprepared for what is coming I expect major problems in China likely by the summer or fall when China blows there won’t be an effective stimulus policy from the US Europe or Japan to counter such a shock it’ll make the US subprime crisis look like a Sunday afternoon picnic or could it be possible that I am wrong whether you agree or disagree with me please feel free to add to the discussion why ding a comment below thank you you
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