China’s Economy Is Stalling, So Now They’re Trying THIS
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One of things China’s been, well, they’ve been trying to do this for a very long period of time. They’ve been trying to get their citizens to consume more. Now, with the trade issues that we’re having with China, they’re a full court press when this has taken place. This from the Journal today. Beijing has made bolstering domestic consumption a top policy priority for the first time.
promising efforts to boost household spending. In one initiative this year, the government allocated 300 billion won, equivalent to 42 billion, to expand a program that pays shoppers to trade in old vehicles or electronics for new ones. Holy cash for clunkers. Honestly, and people keep talking about how the leadership in China is so smart. Did you guys see we did that here in the United States and how that worked out?
Yeah, no, no, no good. No good. They’re trying that. Anyway, yeah, you might get a little bit of short term economic activity, but it just pulls everything forward. It’s not going to rebalance the economy. boy. Now, China’s got a lot of issues. They don’t have. They don’t have really any sort of Social Security program. There’s a real social welfare program there.
people basically put money into their homes and bought real estate. There was never any real incentive like we have here for 401ks and IRAs or anything like that. Then all the money’s in real estate and their property bust is massive. That’s slowing growth. You’ve got high youth unemployment within the cities. So wages are stagnating, they’re going backwards. You’ve got some deflation.
that’s taking place there as well. And you’re going to rebalance the economy towards a consumption one? right. I just, I don’t see it happen. I really don’t. It’s from the journal as well. At Maydo Home Appliances, a multi-story retail store in the center of the southern city of Haiku. A red billboard, banners, and colorful streamers outside its entrance recently advertised deals of everything from TVs
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to air conditioners to refrigerators, all products eligible for the government incentives. Now, again, they find somebody, a driver for the, they have a ride hailing app there called Dee Dee, shop for a new washing machine. He isn’t earning much money from Dee Dee these days. So the government subsidies are helping him make big ticket purchases. He planned to buy a new electric scooter to take advantage of the subsidy. It motivates me to spend more. Okay.
You got that guy to spend more. But again, you are pulling these sales forward. The type of consumption that they’re seeing right now is going to fall flat. And many people over there are saying the opposite. They’re saying that, our salaries aren’t going up. I’m concerned about my real estate valuations.
They’re kind of stuck. And again, this goes back to what we were talking before, something I’ve been trying for a long time to basically engineer an economy. You can’t do it. The best thing that Xi Jinping could do, and I’ve said this for some time, is just get out of the way. He has to abandon the policies that he enacted and go back to what under Deng Xiaoping and Hu Jintao worked. Watchdogonwallstreet.com.
