If you listened to the China apologists in the MSM and Democrat Party you would think China has already emerged from the virus crisis and their economy is heating up. Not so fast! The beauty of socialism/communism is the economic flaws that ensure its failure in the long run. Sad part is it can fool the young and uninformed long enough to take over a nation. The cracks in their system are once again being exposed. Central planning even if it is over the top incentives for banks to loan for home ownership usually back fire and that is the case in China. Nearly 20 percent of family units are currently vacant yet the low interest rates and incentive programs continue a building boom. This is compounded by the fact that the average Chinese worker is saddled with a high degree of debt and little savings with a propensity to spend every disposable dollar on variable cost living expenses. The WSJ called it the Bubble that hasn't burst. It eventually will. |
More trouble has rolled through Chinese banking. I routinely have pointed out banking failures there and we have another round of them. Nine banks this time and most linked to a Canadian National who seems to have disappeared on mainland China in 2017.
Hong Kong will not have as devastating effect immediately as some thought. As I pointed out a year ago the amount of capital flowing to Chinese markets via Hong Kong had been reduced significantly over the years. They can weather that storm BUT the EU moving to sanctioning China over Hong Kong puts two of the major end markets for China at risk----the EU and US.
My sources have been difficult to reach recently but the two I have talked to that still do business on the mainland say there is a palpable sense that some personal sacrifice may be ahead for the Chinese people. The downside from our perspective is that they believe the psyche of the population is used to that and likely undeterred. The key on regime change remains how the 90 million who are CCP members are affected.
Hong Kong will not have as devastating effect immediately as some thought. As I pointed out a year ago the amount of capital flowing to Chinese markets via Hong Kong had been reduced significantly over the years. They can weather that storm BUT the EU moving to sanctioning China over Hong Kong puts two of the major end markets for China at risk----the EU and US.
My sources have been difficult to reach recently but the two I have talked to that still do business on the mainland say there is a palpable sense that some personal sacrifice may be ahead for the Chinese people. The downside from our perspective is that they believe the psyche of the population is used to that and likely undeterred. The key on regime change remains how the 90 million who are CCP members are affected.