> Exports are less important to GDP than real estate construction and infrastructure development (subways, high speed rail, bridges, etc).
Exports have stopped mattering several years ago. Manufacturing is increasingly being moved to Viet Nam, India, and Africa. Countries with cheaper labour costs and that don't steal your IP and lock you out of their domestic market as part of the manufacturing deal.
You forgot the ghost cities, the buildings that crumble before they are ever populated, and the roads that fall apart within a year of being built. The backbone of the Chinese realestate economy.
The chinese real-estate investment bubble is a bomb and the trade war is rapidly counting the timer down to 0. Is it a bubble? Yes it is, the Chinese government has had to put in multiple controls over the last 5 years to slow its growth and try to prevent it from bursting[1]. They're in a difficult position. Letting it keep growing will guarantee it bursts. Stopping it entirely will cease only source of the economic growth that's kept the population placated with the authoritative government.
The more wealthy and smarter Chinese have been investing overseas. That investment has fallen exponentially since the start of the trade war[2]. This bubble isn't going to hold up for more than 2 more years, assuming the trade war continues. And if it bursts, it'll hit the world economy pretty hard.
Recently the Chinese government has also put in tight controls on who can move money out of the country and how much. This was in response to everyone trying to move all their assets overseas as the trade war ramped up. They're even going after party members now[3].
tl;dr: China's economy is large, but most of it is a house of cards built on a bluff. That bluff has been called during a downturn that the CCP didn't know how to address in the first place. Anyone with the means to do so is folding, cashing out, and leaving the country or at least sending their children overseas[4].
>The more wealthy and smarter Chinese have been investing overseas. That investment has fallen exponentially since the start of the trade war[2].
I’ve been around the world enough to see this first hand. Empty brand new offices in Malaysia, Taiwan, Indonesia. Big apartment investments in small cities in USA and Europe. Lots of both in the southern half of Africa.
Perhaps the most interesting were the giant empty office buildings in Asia. Brand new, but seemingly falling apart, elevator shafts open with wires hangout of control panel locations. Ready to fix up for the right client, but I wonder who that is and when they are coming?
Crucially, if the so-called house of cards in China does crumble, we're likely to see residential and commercial real-estate suffer worldwide. This is the consequence of years of capital flight coming out of the country.
The luxury market in Seattle (Bellevue) crumbled after the Chinese foreign asset taxes went into place. Empty homes that were Chinese owned, are still largely Chinese owned, but suffering from deflation of market value. Home construction plans have slowed or stopped and luxury vehicle, jewelry, etc stores have folded up.
Exports have stopped mattering several years ago. Manufacturing is increasingly being moved to Viet Nam, India, and Africa. Countries with cheaper labour costs and that don't steal your IP and lock you out of their domestic market as part of the manufacturing deal.
You forgot the ghost cities, the buildings that crumble before they are ever populated, and the roads that fall apart within a year of being built. The backbone of the Chinese realestate economy.
The chinese real-estate investment bubble is a bomb and the trade war is rapidly counting the timer down to 0. Is it a bubble? Yes it is, the Chinese government has had to put in multiple controls over the last 5 years to slow its growth and try to prevent it from bursting[1]. They're in a difficult position. Letting it keep growing will guarantee it bursts. Stopping it entirely will cease only source of the economic growth that's kept the population placated with the authoritative government.
The more wealthy and smarter Chinese have been investing overseas. That investment has fallen exponentially since the start of the trade war[2]. This bubble isn't going to hold up for more than 2 more years, assuming the trade war continues. And if it bursts, it'll hit the world economy pretty hard.
Recently the Chinese government has also put in tight controls on who can move money out of the country and how much. This was in response to everyone trying to move all their assets overseas as the trade war ramped up. They're even going after party members now[3].
tl;dr: China's economy is large, but most of it is a house of cards built on a bluff. That bluff has been called during a downturn that the CCP didn't know how to address in the first place. Anyone with the means to do so is folding, cashing out, and leaving the country or at least sending their children overseas[4].
[1] https://www.scmp.com/property/article/2080470/more-mainland-...
[2] https://www.abc.net.au/news/2019-04-08/chinese-investment-in...
[3] https://www.scmp.com/economy/china-economy/article/2167731/d...
[4] https://www.cnbc.com/2018/07/05/more-than-a-third-of-chinese...