Chinese Dragon on life support

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Yeah, one too long ago where you could go to Forbes or you could go to, you could go to the Wizard of Smarts from the economist, the UK economist, and some of the other

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power of China.

and it’s now China’s economy and China’s gonna run it all. And we just kind of yawned about the entire thing because we knew.

So, Gazy, for years and years and years, we’ve talked about these numbers that China would put out, their economic growth numbers, all of these different things that they would throw out. And I look at these things and I’m saying, you’ve gotta be kidding me, this is the biggest bunch of BS going. And it’s gotten worse instead of better. Couple more stories I wanted to touch on here, because again,

We flip on still a lot of the network television programs out there, they keep banging the Chinese war drums again and again and again. I can, I understand the point. We went over Kyle Bass’s assessment from last week and what they might do and hey, who knows? Who knows? China might invade Taiwan. That might be their distraction. That might be their wagging the dog, so to speak, because their situation is so bad.

but it would seem to me that would make their overall situation much, much worse. But that’s just me. Deepening confrontation, this Wall Street Journal, between the United States and China is eroding trade ties. Goods from China accounting for the smallest percentage of US imports in two decades. Buyers are turning to Mexico.

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Europe and other parts of Asia for wares ranging from computer chips, smartphones, clothing. So all according to recent analysis by the Wall Street Journal, the data was released this past week. China accounted for 13.3% of goods imports during the first six months of this year, below a peak of 21.6% for all of 2017.

It’s the lowest since 12.1% back in 2003, which was two years after China became a part of the World Trade Organization. Again, under the Trump administration, things started to shift. You had tariffs put on a range of Chinese products during the pandemic. All sorts of shortages of myriad of different things and companies started to rethink.

their supply chains, and they slowly but surely cut their reliance on China. It’s now become clear to companies that the conflict on trade and technology and other things between the United States and China is not going to go away. This is Chad Brown, who’s a senior fellow at the Peterson Institute for International Economics, who follows US-China trade. They’ve begun to try to figure out different ways to de-risk.

Again, obvious, this is stuff that we told you was going to happen little by little. And then let’s look at some of the internals that we’ve been warning everyone about. China’s latest property crisis is threatening to spill over into the broader economy, which it has already, has already. Looking at it, they’re saying this could cause a broad sell-off.

The Chinese stocks fell in Hong Kong and mainland China, real estate developers, electric vehicle manufacturers, and other companies, and economically sensitive sectors declining the most. Again, the overall market is down 5% this year. The financial struggles of Country Garden Holdings, China’s top surviving privately run developer.

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have been front and center, it missed interest payments on two US dollar bonds a week ago. They said that trading and 11 of its one denominated domestic bonds has been suspended and it tends to discuss repayment plans with investors. Their shares, which have been relegated to penny stock status last week, fell another 20% today.

China’s property sector is going from being a contributor to the country’s overall growth to a drag on its economy. Now again, see, I told you so. I mean, when it was contributing to such a great degree in the economy, anybody who actually took a look and saw that the type of growth that they were pushing was completely unsustainable, was backed by ridiculous government spending and was due to fall apart.

Chinese banks extended the equivalent of 47.8 billion in new loans in July, down nearly half from the same month a year ago, slowly lowest monthly total in more than a decade. It was a big letdown when it comes to borrowing. Listen, when shoes are dropping all over the place, it’s very difficult for people to get their animal spirits back.

It just, it is what it is. There are so many problems with their overall economy. And again, the number one problem being government involvement.

Government picking and choosing winners and losers, subsidizing certain areas of the economy. It never works. And if it does work, it gives the appearance of it working for a certain period of time until it doesn’t. And again, let’s be honest, it’s the same thing that we went through with Barack Obama’s American Recovery and Reinvestment Act. And we’re dealing with right now with Joe Biden and all of his…

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Green Endeavors and Inflation Reduction Act. I don’t know if you saw this past weekend, he actually backtracked. He said, I wish I didn’t call it the Inflation Reduction Act. You weren’t saying that at the time because inflation was going through the roof and you wanted to sell it as some sort of magic elixir to make inflation go down, but anybody with half a brain should have known better.

But anyway, neither here nor there. Government involvement always causes problems. And I’ve told this story before, it’s the old Milton Friedman story, he’s visiting China back in the 1960s, and he’s watching this massive public works project taking place, and he’s got his government minder there, and he asks his government minder, why in the world are all of these workers digging with shovels? Why don’t you bring in heavy earth moving equipment and all the things that make this project go much, much quicker?

And what did the government minders say? Well, it’s not so much a government works project, but a jobs program. So Milton Freeman, stupidly asked, well, why don’t you have them dig with spoons then?

Yeah, I don’t like to see our country digging with spoons. And unfortunately, with all of this government involvement in all of these areas of the economy, they are. And it’s a problem. There was another story today, talking about the economic losers in the new world order. Giant subsidies and rising protectionism are upending decades of free trade. Smaller countries from the UK to Singapore are getting left behind.

Okay, again, they might be getting left behind. They may not be able to compete with the types of tax credits that we are handing out here in the United States or the European Union for that matter. But don’t worry guys, okay? Just be smart with your money. Because eventually these projects will go by the wayside. They’re not efficient. They don’t make sense. Government doesn’t do a good job in picking and choosing.

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eventually they’ll fail. Again, I mentioned this, Bidenomics is basically very, very similar to what China’s been doing for years. And the sooner we can get these crop of big government types out of Washington, DC, and get them the hell out of the way, the better off we’re all gonna be. Watchdog on wallstreet.com.