And if they use those to strengthen the Yuan, exports crater even more. The point is not that China lacks policy options, it’s that it has multiple, mutual exclusive goals, which can’t be met because of the unbalanced way they chose to develop.
China’s economy is vastly over concentrated in manufacturing for export, and real estate as the prime domestic savings and investment vehicle. China’s people don’t consume, they save, because their is no old age safety net, and the population is aging rapidly. If China raises interest rate to protect the Yuan, borrowers get crushed and the economy goes into recession. If they stimulate the economy the currency collapses.
Stan Konwiser
8 months ago
Policy is prescription.
Xi used the Western World trade imbalance to fund industrial growth for 30 years (Gleefully supplied by the Davos crowd to increase profits). Unfortunately, his policies misdirected that growth putting it into real estate and away from internal consumption by keeping wages too low. Now he is losing Western funding needed to finish the internal consumption goal.
In the West, decarbonization is being forced before the technology can support the transition (Gleefully encouraged by the Davos crowd to increase profits). Unfortunately, the debt required to force this transition and the attendant misallocated investments put a drag on the economy that threatens the global power of the dollar denominated world.
Misguided policies are prescribing failure for both major economies.
I don’t think you should tell Philip Pilkington or Thomas Fazi – they will be utterly devastated.
I don’t think you should tell Philip Pilkington or Thomas Fazi – they will be utterly devastated.
China has dollar reserves of $3204 billions, as of July 2023. They must be shaking in their shoes now.
And if they use those to strengthen the Yuan, exports crater even more. The point is not that China lacks policy options, it’s that it has multiple, mutual exclusive goals, which can’t be met because of the unbalanced way they chose to develop.
China’s economy is vastly over concentrated in manufacturing for export, and real estate as the prime domestic savings and investment vehicle. China’s people don’t consume, they save, because their is no old age safety net, and the population is aging rapidly. If China raises interest rate to protect the Yuan, borrowers get crushed and the economy goes into recession. If they stimulate the economy the currency collapses.
Policy is prescription.
Xi used the Western World trade imbalance to fund industrial growth for 30 years (Gleefully supplied by the Davos crowd to increase profits). Unfortunately, his policies misdirected that growth putting it into real estate and away from internal consumption by keeping wages too low. Now he is losing Western funding needed to finish the internal consumption goal.
In the West, decarbonization is being forced before the technology can support the transition (Gleefully encouraged by the Davos crowd to increase profits). Unfortunately, the debt required to force this transition and the attendant misallocated investments put a drag on the economy that threatens the global power of the dollar denominated world.
Misguided policies are prescribing failure for both major economies.