The year-on-year economic data published today from China in October show an interesting picture: on the one hand, industrial production rose by 5.3%, private consumption by 4.8% and at the same time real estate prices continued to fall dramatically. They fell by 5.9% in October YoY. This is a deflationary death spiral that the fiat money system and the lending banks cannot afford. So we can continue to expect big stimulus packages and bailouts for the banks in China!
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0 sats \ 0 replies \ @Solomonsatoshi 15 Nov 2024
China has a population who have for decades now mostly been enjoying increasing incomes - this is not a bad problem to have!
Chinese culture values wealth accumulation where peoples growing incomes will not all be spent...they want to invest for future security.
So it looks like a lot of peoples savings had been pouring into real estate (as is a global phenomenon) but that this got out of control. We have all heard about the brand new cities where nobody actually lives!
Closing down this boom in speculative real estate is clearly messy but if managed carefully could lead to a better outcome- the problem is where can Chinese invest their surplus incomes? - there are strict limits on most Chinese people moving their wealth outside of China and share markets may not be as well regulated or trusted as in western countries.
Chinese citizens might well envy western citizens who can legally invest in Bitcoin.
Looking at the 5.3% increase in industrial production is there any liberal western democracy that has achieved even half that on a consistent basis?
So Chinas problem here is how to enable its citizens to invest their growing savings other than via non productive speculative real estate investments - this might force an opening of options where investors can trust the vehicles into which they invest and again is a potent potential avenue for further growth in productive investment and overall wealth of the economy.
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