Nothing Else Is Secondary
Excerpts:
"The deflationary pressure in China is getting more entrenched," Michelle Lam, Greater China economist at Societe Generale, cautioned, foreseeing "a downward price-wage spiral".
Premier Jinping faces the daunting task of injecting up to $1.4 trillion to combat deflation, but this means increasing the nation's debt even further. The exact scale of China's debt remains a mystery due to questionable official figures, yet estimates suggest it could be around 360 percent of its GDP.
This debt level dwarfs that of the heavily indebted US by threefold. An escalating trade conflict with Western nations is denting Chinese exports. Additionally, China's vast population is beginning to shrink rapidly as birth rates fall, signaling fewer workers, reduced consumption, and stunted economic growth.
Chinese companies continue to produce goods, but domestic demand is dwindling. The surplus product will likely be offloaded onto Western markets, driving down prices here. Initially, falling prices might seem like a good thing. But it could lead us into a deflationary spiral, wreaking havoc on jobs, wages, and businesses.
That part won't be enjoyable. The process has already started. Soon, the crisis in China will become our crisis too.