more evergrande fallout or something else?
They’re trying to authoritarian their way out of a massive speculation bubble.
I don’t think it will work, unless you can will away a black hole. Debt is a kind of gravity.
If they’re external creditors, it makes it a lot easier for them to go “nope, not paying that, what are you going to do?” when they’re one massive state-backed monolith.
“Give Taiwan nukes”, if the Dark Brandon memes are any indication.
Taiwan could develop nukes on their own, if necessary. They had a secret nuclear weapons program until the late 1980s:
https://en.wikipedia.org/wiki/Taiwan_and_weapons_of_mass_destruction
They are in the same club as countries like Japan, South Korea, Germany, Italy, etc. - highly developed nations that are fully capable of developing nuclear weapons, but chose not to (or were forced not to).
I think if they started working towards it, China would feel forced to step up their reunification efforts. If a nuclear deterrent is going to be a viable path back to a stable status quo, it will have to be a fait accompli with external help.
I could imagine a return to what Taiwan had until the early '70s, American tactical nuclear bombs stored on the island, in a similar nuclear sharing arrangement like several European nations that don’t have nuclear weapons of their own, but train pilots to drop them.
Sovereign default is a thing. It’s a short term solution that can get a country out of immediate danger, but has very negative long term effects.
that depends on who the creditors are and how they demand payment. a pound of flesh or a dove feather. evergrande went bust at the same time china became the world biggest auto exporter. i think china participation in the global economy demands new economic theories, considering the promiscuity between the public sector and the “private” sector.
China became one of the world’s largest exporters of electric cars because their domestic market for vehicles has crashed. Now their industry is dumping cars in foreign markets to try and stay solvent.
The US has closed its markets to Chinese cars with high tariffs. That has left the EU as a dumping ground for Chinese high end EVs and the rest of the 3rd world for everything else. This is not sustainable, the EU will eventually block Chinese imports to protect their own industry. The third world can only absorb so much inventory especially with flagging economies.
of course adjustments will be made. but one can’t really say that chinese economy is going to crash when no examples of a 1.5 billion people economic power existed before.
and lets not forget that when demand rises for ev’s in western economies, considering the production capacity of the chinese market even high tariffs won’t make a dent on their exports. the eu is not ready to supply demand of ev’s by 2035. unless the state invests directly into car manufacturers just like the chinese gov is doing.
also another thing no one expects is the opening of the 1.5 billion consumer market as a bargaining chip by the chinese gov as a way to consolidate their position on the global market.
imho, the chinese gov has a lot of market solutions they haven’t used but that can be activated and negotiated in record time.
edit: just to add their increased car exports are to russia, which is not that good of a consumer market with everything going on there, but it could teach them a lesson on how to corner non western markets. the complexity of the global economy favours the chinese at this point in time. they have more options than the western world.
China has been dangling their consumer market to Western companies for the last 20 years as a way to encourage investment. It hasn’t turned out well for them and many companies are leaving China. Suddenly reopening already “open markets” is not something the West is going to buy. You only get to pull that trick once.
The Demographics in China are also terrible. They are no longer the most populous nation on Earth. They are also the fastest aging due to the effects of the 1 child policy. The problem today isn’t that they aren’t running out of babies, they did that 20years ago. The problem is they are running out of 20 something’s to replace the older generations.
Add this to the issues with debt and the property market implosion and I don’t see China making it through the 2030s without some kind of fundamental government change.
oh we’ll buy it. we’ll buy it because we are desperate for good consumer markets and china is that. also demographics is way worse in the west.
see this post about raising the retirement age to 71 in the uk. https://slrpnk.net/post/6418235
also demographics is way worse in the west
No. China has a fertility rate of 1.2 right now. That’s worse than the West. EU sits at 1.53, USA 1.64. What’s worse is that this rate has been low for a very long time due to Mao’s One Child Policy.
Evergrande was not a triggering event, it was an inevitable consequence. The CCP’s fiscal policy has driven “growth at all costs” for over 40 years now and they are running out of free runway. Their “private” sector (a bit of a misnomer considering how government-driven basically every company is over there) acquiesced to these government demands for growth, especially in real estate, long after traditional market fundamentals were saying to slow down, and now those “private” companies are saddled with investments without any way to make money off them post-pandemic. And their markets have realized that before the party did.
The party is only just now waking up to the fact that they can’t keep hitting GDP growth targets by pumping stimulus into their businesses and that their economy needs to begin maturing into a more stable form. We will not see a real “collapse” like some doomsday fans love to parrot, but there is a very large correction about to happen to their economic projections, in both GDP and demographics.
It could mirror the economic stagnation of Japan that begun in the 1990s. Very similar set of circumstances.
