The proper term for the country we call China is, “The World’s Danger Zone”:
The so-called “China Miracle” is just growth funded by out of control government debt in their economy. Unsustainable actions continue until they do not. This chronic house of cards will fail and the economic impact will be felt globally, the only question is when.
There are two terms you need to add to your vocabulary:
- LGFV (Local Government Financing Vehicles). These are part of China’s shadow banking system. Typical of Communist countries, LFGV investments were made because of central government instructions, not because they were good investments.
- FACE – Finally, a leader of the western world stood up to the Chinese and called them out for their illegal and constant theft of intellectual property, as well as many other unfair trade practices. Given the fact that the Chinese have to “Save Face”, Dictator for Life Xi, is in a really bad spot. If he makes a deal with the U.S.A., he will “Lose Face”. If he does not make a deal with the U.S.A., the Chinese economy will crater.
To me, the highest probability is that Xi will be deposed and a new Chinese leader makes a deal with the U.S.A. The question then becomes, will the Chinese line up to our agreement? If so, it will be the first time.
Because of the size of China’s economy, turmoil there ripples around the globe.