China’s Overproduction Crisis: What It Means for the Global Economy
We've already discussed how the Chinese economy is dealing with a severe hangover caused by the bursting of the real estate bubble, Real estate has been by far the largest industry in the country in recent years.
However, as you can see, both housing sales and new construction projects are plummeting, And that's not all. International tensions, the confrontation between Beijing, Brussels, and Washington, and the tech war have caused foreign direct investment in China to nosedive as well. Today, more capital is leaving the country than entering it, It's worth reminding you that investments by multinational companies in China have been a fundamental pillar of the country's economic success.
Logically, these two changes have opened Pandora's box in the Chinese economy. After all, we're talking about two major sectors that generated a lot of employment and money. Therefore, the Chinese government is rushing to try to mitigate or compensate for this profound change. The latest growth data suggests they might succeed, with a study predicting 5.3% economic growth in China in 2024, But is this really the case? What exactly is China doing to achieve this? Why is it said that this could provoke a new global crisis? Is there something we're missing?
In this video, we will seek answers to all these questions.
The world has changed, and what happens with China now can have a significant impact on both the economy and stock markets. Tim Cook praises China's critical role in Apple's business, and the issue is that if the Chinese government achieves its goals, markets like Hong Kong could be on the brink of a historic opportunity.
To understand what might happen, the first thing we need to know is whether things are going well. Today, it won't surprise you to hear that China's biggest problem remains the real estate sector, where loan defaults to developers and mortgages have skyrocketed. Clearly, China needs to change its course, leading us directly to one of the questions we posed earlier: What is the Chinese government doing to compensate for the real estate bust?
