China Strapped With Economic Distress

Automatic TRANSCRIPT

Financial Times reports this morning that international investors are selling Chinese debt at a record pace. They also report in the telegraph that the Chinese housing market has for the first time in decades gone backwards that they're not able to interest the average Chinese consumer in a small lot purchase in one of the minor cities, which is the canary in the coal mine there. Are we dealing with a potentially catastrophic economic situation in China, Bill haggerty, because that won't stay in China? China, China has got some major problems. I think part of it goes to the demographic situation there. You know they've got just this massive demographic hole because of their one child policy. And they've got an aging population at birth rate that's below replacement rate right now. And they're going to have a very difficult time maintaining support for the elderly population as it moves forward. You sort of you begin to see that manifest itself in the housing market. But I think it's the other reasons for this too. China is certainly going to this zero COVID policy because they have not vaccinated the mobile vulnerable people in their own population. That's caused massive shutdowns massive economic dislocation. That's very hard to recover from. And their way to recover from it in China is to make more infrastructure investment. Well, many of the Chinese infrastructure investments might be good ego projects for Chinese leadership, but they don't have a real economic value. So I think it's a misallocation of resources within the country. It's demographic problems. It's their reaction to the COVID pandemic, which had things been different in Wuhan, maybe not spread it. We might be in a very different place right now. So China is dealing with it in all fronts.

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