Eurodollar University The $45 TRILLION Chinese Bubble Is BURSTING
Dec 17, 2025
China's economy is facing a major downturn, with investment and consumer spending crashing dramatically. Retail sales plunged by nearly 0.5% in November, signaling deeper issues in household lending and bank credit. The country is stuck in a troubling cycle of deflation and ineffective stimulus, leading to production cuts that threaten job security. Meanwhile, falling oil prices and weak global demand suggest a broader economic malaise. As housing prices plummet, the labor market shows distress, with rising unemployment concerns looming large.
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Demand, Not Supply, Is Driving The Crash
- China's November retail and investment collapse shows demand, not supply, is the core problem.
- This demand shock explains falling energy prices and renewed contango in oil markets.
Oil Contango Signals Global Downturn
- Oil has dropped to nearly five-year lows and the futures curve is returning to contango.
- That contango signals excess near-term supply expectations tied to weakening global demand.
China's Policy Dilemma Since Midyear
- China shifted course around May and has been in deflationary, demand-led weakness since 2023.
- Beijing's failed stimulus left only painful choices: accept deeper deflation or cut production and risk job losses.