Essay: It's time to be very bearish about China's long-term economy

From Conservapedia
Jump to: navigation, search
It's time to be very bearish about China's long-term economic prospects.

*Japan's Recession Was Bad. China's Will Be So Much Worse.

For more information, please see: Skepticism about China remaining a global power

China's economy is facing a number of serious challenges, including:

  • Chinese real estate crisis (2020–present): A real estate crisis has left developers in ruins, with unsold apartments, failed investments, and huge debts. The property crisis has also affected consumer confidence and local governments' ability to generate funds.
  • Slowing growth: China's economy is slowing down, with GDP growth falling behind the government's target. Measures of consumption, factory output, and investment have all slowed more than expected. China has too many inefficient state-owned enterprises. For privately owned Chinese companies, the marginal productivity of capital is going down.[1] The October 20, 2025 article China’s push for innovation is not lifting productivity​ indicates "The striking conclusion is that China has stopped closing the productivity gap with the global leaders under Xi Jinping and is instead now dropping further behind. The weakness of productivity growth in turn means that economic growth is being powered almost entirely by investment, despite diminishing returns and escalating debt."
  • Consumer confidence: Consumer confidence is sagging, with consumers becoming more frugal.
  • Protectionism - De-risking/De-coupling: Foreign investment is being withdrawn, and companies are diversifying their supply chains away from China. President Xi Jinping has provoked a protectionist response from the United States and other countries.

Many experts believe that China's economic growth is barely growing at all and that the Chinese Communist Party is publishing fictious statistics indicating that it is growing. The government is aiming for economic growth of around 5% for 2024, but many analysts believe this target is unrealistic.

Please read: China's Economy Has Peaked. Can Beijing Redefine its Goals?, September 2024

A number of leading geopolitical/economic analysts are pessimistic about China's remaining a global power and that China has peaked economically and/or will decline economically (See: Skepticism about China remaining a global power).

The company China Beige Book International describes its company thusly:

“ Reliable data on China’s economy are notoriously difficult to come by. Official Chinese government figures exist, but lack transparency and credibility, while the few private indicators that exist are far too limited in size and scope for strategic planning.

We founded China Beige Book International in 2010 to help institutional investors and corporate CEOs navigate China’s notoriously black box economy. Today we operate the largest private in-country data-collection network ever developed to track the Chinese marketplace, gathering real-time economic data from thousands of firms across all of China’s regions, sectors, and 34 discrete industries.

Our flagship platform provides independent data and in-depth analysis on every key component of China’s diverse economy—from growth dynamics to labor market and inflation trends to the world’s only tracker of the credit environment and shadow banking.[2]

”

Due to China's ongoing real estate crisis, there have been many sensationalist doom and gloom forecasts about China's future economic prospects. On the other hand, China's Beige Book International has been very judicious and measured in its economic forecasts. The company previously argued that China's economy hasn't peaked, but it no longer argues this.

In October 2023, Leland Miller, who is the CEO of China Beige Book International, now argues that we are in a new paradigm about China's future economy due to structural problems and "Right now we are in a period where everything is looking pretty bad."[3]

Japan experienced economic malaise from the 1990s to 2010s (see: Japan's lost decades - 1990s to 2010s).

On October 19, 2023, Reuters reported:

“ China’s real estate market is in decline. Debt deflation hangs in the air. The country’s workforce is shrinking and GDP growth is trending downwards. No wonder the International Monetary Fund at its recent shindig in Marrakech warned of slowing economic growth in the People’s Republic, raising the prospect of “Japanisation” – the prolonged economic and financial malaise that afflicted its once high-flying neighbour after an asset bubble imploded three decades ago. The trouble is that China’s economic imbalances are far worse than Japan’s in 1990. And that’s before considering the ruinous economic consequences of President Xi Jinping’s autocratic rule.[4] ”

"Japanification" is a term used to describe a country's economic decline, similar to the big economic decline Japan experienced in the 1980s and 1990s. Some say that China is experiencing "Japanification" due to its weak economic recovery, high debt levels, property crisis, falling/aging population, increasingly difficult trade relations and other similarities. In December 2024, Bloomberg News reported concerning China: "China’s longer-maturity yields recently fell past their Japanese counterparts, a sign that fixed-income investors were positioning for Japanification."[5]

Article:

And while Japan's long prolonged financial malaise was bad, China's will likely be much worse (See: Japan's Recession Was Bad. China's Will Be So Much Worse).

According to Investopedia, "Deflation is not normally bad for an economy, except when it occurs in reaction to previous over-inflation."[6] Unfortunately for China, it has economic bubbles that are bursting in relation to its real estate and stock markets which is causing much economic hardship to many Chinese. Both of these markets had values that were highly inflated relative to their actual economic value. The Empower website notes that deflation "can lead consumers to spend less now, in part because they expect prices to continue to fall; it can push businesses to lower wages or lay off employees to maintain profit levels; and it makes existing debt more expensive for many borrowers.[7]

China's deflation problem:

Video: China Faces Deflation as Economy Stutters

China is no longer set to eclipse the US as the world’s biggest economy soon, and it may never consistently pull ahead to claim the top spot as the nation’s confidence slump becomes more entrenched.

That’s according to Bloomberg Economics, which now forecasts it will take until the mid-2040s for China’s gross domestic product to exceed that of the US — and even then, it will happen by “only a small margin” before “falling back behind.”

Before the pandemic, they expected China to take and hold pole position as early as the start of next decade.[8]

See: Skepticism about China remaining a global power

In addition, please see:

*Chinese real estate crisis (2020–present)

*Chinese stock markets crisis (Since 2021, China’s stock markets have lost about $7 trillion in value.[9])

*Youth unemployment in China

Contents

When will China's overall economic decline become apparent and China will no longer be able to conceal it?

Questions related to China's economy

Questions related to China's economy:

1. Is the USA reindustrializing? If so, what are its prospects in this regard? How fast is the USA expected to reindustrialize?, Grok, September 2024

2. Does the USA reindustrialization make it harder for China to sell its goods to Americans?

3. What is the probability that China will escape the middle-income trap?, 2025: Summary: "Synthesizing these, the probability that China fully escapes the middle-income trap—crossing to high-income status and maintaining above-4% per capita growth through 2035—is roughly 40–60%."

4. Is India economically growing? Is India giving China more and more competition? If India is economically growing and becoming a stronger economic competitor, does this make it harder for China to escape the middle-income trap? If so, percentage-wise, how much does it decrease the odds of China escaping the middle-income trap?: Summary: India’s growth indirectly complicates China’s escape by diverting investment and market share, potentially reducing China’s odds of reaching high-income status by an estimated 10-20%."

5. If China does not escape the middle-income trap, will that make innovation easier or harder for China? If easier, why?

6. How important are services when it comes to an economy escaping the middle-income trap?, 2025

7. Is it true that innovation in one sector of the economy, such as from the services sector, can cross-pollinate into other sectors of the economy? If not, why not?

8. Are economies that are well-diversified more resilient and do they have more opportunities for the aforementioned cross-pollination? If not, why not? See: Essay: Diversified economies, resilience and stability

Please also see: Are economies that are well-diversified more resilient and does this include having a well-developed services sector and do they have more opportunities for innovations in various sectors to spread in the general economy via cross-pollination?, 2025

9. What are China's biggest challenges when it comes to diversifying its economy via developing its service economy? What is the probability that China will overcome these challenges? Consider Xi Jinping's leadership, his chances of being replaced and China's economic challenges.: Summary: "China faces formidable challenges in diversifying its economy through the service sector, including overreliance on manufacturing, a real estate crisis, weak consumption, regulatory hurdles, demographic constraints, and political resistance to reforms. The probability of overcoming these challenges in the next 5–10 years is 30–40%, contingent on significant policy shifts toward consumption-driven growth and market liberalization, which are currently misaligned with Xi’s priorities."

10. Is protectionism increasing in the world or decreasing? How fast is protectionism increasing or decreasing in the world?, 2025

11. How much does protectionism rising in the world affect China's economy?

12. How much does protectionism rising in the world reduce China's chance of escaping the middle-income trap? In terms of probability, how much does protectionism rising in the world reduce China's chance of escaping the middle-income trap?: Summary: "While precise quantification is elusive, it’s reasonable to estimate that protectionism reduces China’s probability of reaching high-income status by 10–20 percentage points, lowering a baseline of 40–50% to approximately 25–40% over the next 10–15 years. To mitigate this, China must accelerate domestic innovation, strengthen regional trade ties, and implement structural reforms to boost productivity."

China's major economic crisis are signs of major deflationary pressures

According to Investopedia, "Deflation is not normally bad for an economy, except when it occurs in reaction to previous over-inflation."[10] Unfortunately for China, it has economic bubbles that are bursting in relation to its real estate and stock markets which is causing much economic hardship to many Chinese. Both of these markets had values that were highly inflated relative to their actual economic value. The Empower website notes that deflation "can lead consumers to spend less now, in part because they expect prices to continue to fall; it can push businesses to lower wages or lay off employees to maintain profit levels; and it makes existing debt more expensive for many borrowers.[11]

Please read: China’s Deflationary Spiral Is Now Entering Dangerous New Stage, Bloomberg UK, September 9, 2024

Presently, communist China is facing multiple crisis with the three major crisis below being signs of growing deflationary pressures on their economy:

Chinese real estate crisis (2020–present)

Map of China

See also: Chinese real estate crisis (2020–present)

After China's real estate developer giant Evergrande defaulted on its offshore debt in December 2021, it sent shockwaves through the Chinese economy.[13]

On February 6, 2023, Yahoo Finance said concerning the Chinese real estate crisis (2020–present):

“ China's overreliance on real estate has sent its economy tumbling toward 2008-era financial conditions, Kyle Bass told CNBC on Tuesday.

"This is just like the US financial crisis on steroids," the Hayman Capital founder said. "They have three and a half times more banking leverage than we did going into the crisis. And they've only been at this banking thing for a couple of decades."

The years of double-digit growth China enjoyed prior to the pandemic were made possible by an unregulated real estate market, Bass noted, which leaned too heavily on debt to expand.

With defaults now plaguing the industry, this spells massive trouble for the country's broader economy. The real estate sector makes up around a quarter of the country's GDP and 70% of household wealth.

"The basic architecture of the Chinese economy is broken," Bass summarized.[14]

”

In December 2023, Nikkei Asia reported:

“ If the Chinese real estate bubble bursts and triggers a financial crisis, the nation's economic growth will be stuck at around 1%, jeopardizing its goal of doubling gross domestic product by 2035, the Japan Center for Economic Research says in a new report.

The report projects GDP growth for 18 Asia-Pacific countries and regions through 2035, with annual updates made to reflect the latest policies and economic conditions. The JCER released a summary of this year's report Monday.

China's economy has been dragged down by property market woes for more than two years. The government's plans to strengthen financial support for real estate companies could place an excessive burden on the financial system.

Mishandling the response could wreak havoc. Sluggish condominium sales and plunging prices could significantly push up defaults on bank loans, resulting in widespread financial woes at small and midsize banks.[15]

”

Articles and videos: Chinese real estate crisis (2020–present)

Videos:

Chinese stock market meltdown starting in 2021

Since 2021, China’s stock markets have lost about $7 trillion in value.[16]

See also: Chinese stock markets

Since 2021, China’s stock markets have lost about $7 trillion in value.[17]

Videos of Chinese stock market meltdown:

Youth unemployment in China

See also: Youth unemployment in China

China is experiencing high youth unemployment.[18]

On February 14, 2023, Yahoo Finance reported about youth unemployment in China:

“ China's youth unemployment rate is once again available to the world, after a six-month blackout period where no new figures were published. Joblessness looks to have dropped considerably since the data was last released in June.

But the new figure isn't exactly comparable to previous months — it now excludes full-time students from the calculation. On its face value, youth unemployment in December stood at 14.9%, whereas it touched 21.3% in the summer.

Back then, the high-flying number was a focal point for economists, highlighting emerging challenges resulting from China's slowing economy. As fresh graduates poured into the nation's workforce, they faced stagnating industries with a weaker demand for labor.

These realities may still hold true, even if the revised methodology provides a smaller number, Nicole Goldin, a nonresident senior fellow at the Atlantic Council, wrote.

"The lower result though, is still about three times the overall unemployment rate in China (5.1 percent) and reflects the quandary facing young people there. (For comparison, the OECD average is 10.5 percent.)," she wrote in a Friday post.

While headwinds to youth unemployment aren't exclusive to China, the country is mired in broader economic turmoil, from slowing consumption, a debt-burdened property sector, and a stock market in free-fall.[19]

”

On January 19, 2024, the Wall Street Journal reported:

“ Economists said a revised youth jobless rate for a single month likely wouldn’t sufficiently reassure the public about improved job-market conditions or erase longstanding doubts about the accuracy of the country’s official statistics.

“Adjusting how they calculate the figures at this moment may even exacerbate the public’s distrust in official data,” said Dan Wang, chief economist at Hang Seng Bank China. The release of the new figure comes as Chinese leaders have sought to rally the nation in recent weeks to view the economy more positively. Earlier this month, a senior Communist Party official urged the country’s propaganda chiefs to “promote the bright prospects of China’s economy,” echoing a message from a party conference that Chinese leader Xi Jinping presided over last month.

China’s National Bureau of Statistics said the calculation of the youth unemployment rate now excludes nearly 62 million students between 16 and 24 years old studying full-time on campuses. This, the bureau said, is in an effort to focus on those with “actual demand for jobs,” such as those who have finished education or those who are only studying part-time.

The NBS didn’t provide complete details of its new methodology or how it compares with the old one. One key puzzle is that the NBS previously indicated it didn’t count most students anyway: Before it stopped publishing the old data, the agency said in June there were around 96 million people in the 16 to 24 age group in total, but only 33 million either in work or looking for a job, leaving some 63 million outside the labor force definition.[20]

”

China's "full-time children" phenomena

On February 17, 2024, the South China Morning Post reported that China’s young adults choose to be ‘full-time children’, paid by their parents to do chores amid record-high youth unemployment.[21][22] The Chinese phrase "full-time children" refers to young people who give up working and just live off their parents (See the video: China’s ‘full-time’ children).[23][24]

Article

China's brain drain and loss of high income individuals

In 2023, The South China Morning Post's article China’s millionaires keep leaving, but now outflows may be ‘more damaging than usual’ states:

“ Advisory firm Henley & Partners estimates that mainland China will lose 13,500 high-net-worth individuals – those with investable wealth totalling more than US$1 million – followed by India’s 6,500. The UK, in third, will lose 3,200 such individuals, predicts the London-based investment migration consultancy.

In 2022, China lost 10,800 high-net-worth individuals, followed by Russia’s 8,500 and India’s 7,500, according to data in the “Henley Private Wealth Migration Report 2023” released on Tuesday...

The US’ start-up and employment visa programmes, including “national interest waivers” (NIWs) under the green-card application process, are also popular among Chinese tech, medical and academic professionals and researchers, especially those impacted by the downturn in China’s tech sector, Liu said. “They pay attention to opportunities for skilled immigration from Singapore and the United States,” Liu explained...[25]

”

China cannot export its way out of its economic troubles. China hit with tariffs in 2024 and more tariffs are likely. Also, if Trump is elected in 2024 he said he will raises tariffs on Chinese imports up to as much as 60%

Read: China’s Economy Cannot Export Its Problems Away, Project Syndicate, 2024

United States

Donald Trump

If Trump is elected in 2024 he said he will raise tariffs on Chinese imports up to as much as 60%

See also: Donald Trump, who is favored to win the 2024 presidential election, wants to hammer China with high tariffs

Donald Trump on the issue of tariffs on China: "As a candidate this year, he has floated tariffs of 60% or higher on all Chinese goods and a 10% across-the-board tariffs on goods from all points of origin." - Reuters, 2024, Trump says US China tariffs needed on other vehicles, products

Europe and tariffs on China

Mexico and tariffs on China

Donald Trump's tarrifs and increased USA trade negotiation bargaining leverage

Considering the widespread existence of tariffs in the world, does Trump's tariffs give the USA more bargaining leverage to negotiate better trade terms for the USA? If so, how much does it increase the probability that the USA will increase overall trade for the USA?, 2025:

Summary: "Trump’s tariffs significantly enhance U.S. bargaining leverage by exploiting economic asymmetries and pressuring trading partners to negotiate better terms, as evidenced by deals with the UK, Japan, and others. However, the probability of increasing overall U.S. trade is tempered by retaliatory tariffs, economic costs, and global disruptions. I estimate a 30-50% probability of increasing total trade in the short term, rising to 50-70% in the long term if negotiations succeed and reshoring materializes. The outcome hinges on the administration’s ability to secure deals without triggering prolonged trade wars or domestic backlash."

China has peaked and is now in decline

Articles:

The January 23, 2024 South China Morning Post article China claims ‘biggest corruption in statistical sphere’ amid fake data crackdown indicates: "The accuracy of China's economic data has long been questioned, as many feel there is a gap between reality on the ground and the official figures, and Beijing has intensified efforts to crack down on data fraud in recent years amid efforts to dispel doubts."

With the above in mind, as can be seen by the below articles and videos, there is an abundant amount of evidence indicating that China's economy has likely peaked.


Videos:

China’s Bold Stimulus Measures Won’t Save Its Flagging Economy

It's time to be very bearish about the BRICS’ New Development Bank in Shanghai, China

See also: The 2023 BRICS Summit was a bunch of hoopla. We still don't live in a multipolar world.

According to Investopedia, BRICS refers to certain emerging market countries—Brazil, Russia, India, China, South Africa, and more—that seek to establish deeper ties between member nations and cooperate on economic expansion, including trade. The countries act as a counterbalance to traditional Western influence.[26]

The BRICS’ New Development Bank headquarters is in Shanghai, China.

BRICS’ New Development Bank headquarters in Shanghai, China.

China's skyscraper boom is officially over.[27]

China has likely peaked and economic trouble is heading its way. See: China has likely peaked arguments

2023 BRICS Summit was a bunch of hoopla. The BRICS are a farce.

Videos

Articles

The fragility of an economy run by communists that has the cult of personality surrounding Xi Jinping

See also: Is there anything more fragile than an economy run by communists - especially one that has the cult of personality surrounding Xi Jinping?

"The underpinnings of China’s growth seem fragile from historical and analytical perspectives. Even if no crises materialize, unfavorable demographics, high debt levels, and an inefficient financial system will constrain China’s growth."[28]

Is there anything more fragile than an economy run by communists - especially one that has the cult of personality surrounding Xi Jinping?

Question: Are Chinese vases less fragile than Xi Jinping's inept leadership?



Authoritarian regimes, like China, are strong (Various means to repress population and/or to limit other political options), but at the same time they are brittle. The former Soviet Union is an example of this principle.

In modern history, corrupt, one-party regimes are not known for their great longevity such as lasting over 100 years and China has one-party rule - namely the Chinese Communist Party.[29] Mint News reported that "Chinese President Xi Jinping is expressing concerns about the potential collapse of the Communist Party of China (CCP) as millions worldwide are renouncing their affiliation with the party."[30]

The Chinese Communist Party could lose power if China continues its downward path in terms of economic strength (See: Scenario of a collapse of the CCP, Taipei Times, 2023).

Essays on China

See also

User:Conservative's essays

External links

References

  1. ↑ Economy: How Bad Is It?. Center for Strategic & International Studies, September 9, 2025
  2. ↑ China Beige Book International - About page
  3. ↑ China's tepid economic recovery represents a policy 'narrative shift', says China Beige Book CEO
  4. ↑ China’s leaders speed towards Japanisation, Reuters, October 19, 2023
  5. ↑ China One-Year Yield Sinks to 1% for First Time Since 2009, Bloomberg News, December 20, 2024
  6. ↑ Why Is Deflation Bad for the Economy?, Investopedia
  7. ↑ What is deflation?, Empower website
  8. ↑ China Slowdown Means It May Never Overtake US Economy, Forecast Shows, Bloomberg News, September 5, 2023
  9. ↑ What’s going on with China’s stock market?, MarketPlace.org
  10. ↑ Why Is Deflation Bad for the Economy?, Investopedia
  11. ↑ What is deflation?, Empower website
  12. ↑ What’s going on with China’s stock market?, MarketPlace.org
  13. ↑ this the end of Evergrande? Here’s what may happen next, CNN, 2024
  14. ↑ China is facing the US financial crisis 'on steroids' as the real estate market collapses, famed hedge fund boss says, Yahoo Finance, February 6, 2023
  15. ↑ China real estate crash would threaten goal of doubling GDP: report, Nikkei Asia, 2023
  16. ↑ What’s going on with China’s stock market?, MarketPlace.org
  17. ↑ What’s going on with China’s stock market?, MarketPlace.org
  18. ↑ China rolled out a new measure of youth unemployment. It shows the nation's labor market is still a mess, think tank says
  19. ↑ China rolled out a new measure of youth unemployment. It shows the nation's labor market is still a mess, think tank says
  20. ↑ China Has a New Youth Jobless Rate. Some Economists Are Ignoring It., Wall Street Journal, January 19, 2024
  21. ↑ China’s young adults choose to be ‘full-time children’, paid by their parents to do chores amid record-high youth unemployment, South China Morning Post, February 17, 2024
  22. ↑ China’s ‘full-time’ children, video
  23. ↑ China’s young adults choose to be ‘full-time children’, paid by their parents to do chores amid record-high youth unemployment, South China Morning Post, February 17, 2024
  24. ↑ China’s ‘full-time’ children, video
  25. ↑ China’s millionaires keep leaving, but now outflows may be ‘more damaging than usual’, The South China Morning Post, 2023
  26. ↑ BRICS: Acronym for Brazil, Russia, India, China, and South Africa, Investopedia
  27. ↑ China's skyscraper boom is over
  28. ↑ China Stumbles, but it is Unlikely to Fall by Eswar S. Prasad, December 2023
  29. ↑ China's Communist Party is at a fatal age for one-party regimes. How much longer can it survive?, Australian Broadcasting Corporation, 2020
  30. ↑ Xi Jinping raises concerns over potential collapse of Chinese Communist Party: Report, Mint News, 2023
Retrieved from "https://conservapedia.com/index.php?title=Essay:_It%27s_time_to_be_very_bearish_about_China%27s_long-term_economy&oldid=2186821"