#218 China’s Headed For an Economic Black Hole | Christopher Balding
Sep 4, 2023
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Christopher Balding, Senior Fellow at the Henry Jackson Society and founder of New Kite Data Labs, discusses China's economy, the overvaluation of real estate, the comparison of China's bailout with the US's, increasing debt and unsustainable infrastructure model, the impact of higher education investment, and the environmental impact of Chinese electric vehicles.
China's economy is facing a choice between a very bad outcome or a catastrophic one.
The real estate market in China is overvalued, leaving many individuals unable to recover their investments.
Unemployment among government-sponsored university graduates in China is leading to a lack of productivity and limited job prospects.
Deep dives
China's Economy Reaching Escape Velocity
China's economy has reached a point where it cannot go back and reform its economy to correct its issues. They are now faced with a choice between a very bad outcome or a catastrophic one.
Wildly Overvalued Real Estate in China
Real estate in China is wildly overvalued, with home values in China approximately 25 times higher than the average income. The lack of market activity in China has led to problems with selling homes, leaving many individuals unable to recover their investments.
China's Economic Pressures and Limited Options
China's economic model is facing various challenges, including declining population, poor productivity growth, and asset overbuilding. The government's control over the economy is increasingly limited, and the options for stimulating growth are becoming more constrained. Tightening controls and exerting even more government influence is likely the path China will take in managing its economic issues.
The Impact of Unemployment for Chinese University Graduates
Millions of government-sponsored university graduates in China are facing unemployment, resulting in a lack of productivity. This has led to limited job prospects and a highly competitive job market. The Chinese university process is known for being highly competitive and an opportunity where everyone is on a level playing field. However, with a lack of jobs, university graduates are forced to find alternative opportunities, such as opening noodle stands, and are unable to compete in the job market.
The Challenges Faced by Small Businesses in China
Small businesses in China are facing significant challenges, including limited access to funding and support from the government. COVID-19 and government policies have negatively impacted small businesses, leading to closures and bankruptcy. State-run companies are receiving more support, while small businesses struggle to survive. The reliance on state-run enterprises and the lack of support for small businesses are hindering the growth and innovation in the Chinese economy.
China's economy is headed toward an economic black hole, and there's nothing the Chinese Communist Party can do to make it a soft landing. In this episode of China Unscripted, we discuss the comatose state of China's real estate market, whether China's green tech revolution can sustain itself, and how China could hack into your car. Joining us in this episode is Christopher Balding, a Senior Fellow at the Henry Jackson Society and founder of New Kite Data Labs.
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