Yasch22 wrote: The situation in China right now is an even bigger threat to the world's economy than the Russo-Ukraine war.
1. Demographic time bomb. It's worse in China than in Russia. Basically, China is entering a period where they'll have serious labour issues. The senior & retired population is growing massively, but the lower age-ranks (millennials, etc.) are thinning bars.
-- Sidenote: most countries that successfully industrializated following WW2 have experienced population declines. People move from farms (where having lots of kids means lots of free workers who are easier to feed because farms produce food) to factory and services jobs in cities, which leads to smaller families.
2. Real estate bubble. China has a massive crisis on its hands. Basically, about 20 huge companies (led by EverGrande) have been operating what amounted to Ponzi schemes. They build massive housing complexes with prepayments from investors, but needed to start new apartment buildings with new prepayments to complete the old projects. Then Covid and a couple of other macroeconomic issues pricked the bubble. Thousands of projects remain unbuilt or only partially built. Millions of Chinese are justifiably refusing to pay their montly mortgage payments for units that were supposed to be finished a year or more ago.
3. The Chinese government is facing a $1 trillion funding gap.
Link. Revenue is way down, partly because of Covid shutdowns, which includes a worldwide economic slowdown. But it's also because a huge percentage of state revenue depends on land sales and real estate developments. See Point #2!
4. Foreign debt: China has been lending huge amounts of money to scores of countries as part of its grand "Belt and Road" project. Basically, China is trying to become economically intertwined with countries producing key raw materials (Africa, especially) or key transportation hubs (the big port in Sri Lanka). Since Covid, however, all those arrangements are in serious trouble, with lots of countries threatening to renege. The country that has loaned more money than any other country or UN facility (like the IMF)? China -- at nearly $1 trillion.
(Sarcasm alert:
I suppose Xi Xinping's "neocon handlers" are responsible for this too!) 5. China imports more than 65% of its energy. That's despite the fact that they've built out more than half of the world's wind and solar projects for the past 3 years, despite large coal reserves + coal-fired power plants, and despite the hydroelectric from massive projects like 3 Gorges. China is a paper tiger beside the world's fossil fuel giants. If they start attacking in the same way Putin has, they'll suffer even more than Russia.
6. China also has relatively poor soil compared to regions of the world like the "food bowls" of Russia-Poland-Belarus-Moldova-Ukraine or the North American prairies. That means that they're also hostage to fertilizer imports. The might of Chinese agriculture depends on inputs from heavyweights like Canada, the US, and Russia.
7. China's power is bound at the hip with American willingness to do business with them. If the US removes protection for Chinese exports on the high seas, China is scuppered. China has historically been fragile because of its lack of mining + prime agricultural land, and also because neighbouring countries in the South China Sea, etc. (Korea, Japan, Philippines, Indonesia) aren't particularly friendly to them.
8. The era of globalization is basically over and done with. All the conditions that made it possible from 1945 to 2015 are basically disappearing. A huge amount of the previously outsourced manufactories will be coming back to home countries, or home continents, as in the case of the North American free trade deal.
-- Sidenote: BB-QNX is obviously affected here, but will do just fine no matter where the world's cars are made. If Chinese EVs can't gain market share in America, they'll still be big in China and most of the rest of the world.
9. Political situation: China is a basket case of crypto-communist totalitarianism with a crippling cult of personality centred on Xi Xinping. According to Peter Zeihan (plenty of entries on YouTube), every bureaucrat in the nation fears doing something that goes against the will of Xi -- which is how Xi wants it -- but a country of 1.4 billion people can't be effectively run that way.
In short, China is in big trouble, and it's headed for bigger trouble.