Eurodollar University There’s Only One Way Out for China Now…
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Jan 20, 2026 Explore China's unprecedented economic struggles as retail sales nosedive and capital investment crashes to historic lows. Discover how reliance on exports is the only lifeline keeping the economy afloat amidst looming tariffs from Europe and Mexico. Delve into why Chinese bond yields remain low despite heavy sales and the looming threat of a recession in late 2024. The discussion reveals the potential fallout if China’s export lifeline is severed, painting a stark picture of the consequences.
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China's Economy Now Depends On Exports
- China is teetering on a full recession as consumer spending and investment plunge in 2025.
- Exports are the sole prop keeping GDP afloat and leaving China's fate dependent on foreign markets, especially Europe.
Markets Signal Deep Systemic Risk
- Bond markets price in the systemic risk that China's internal collapse would spread if exports are curtailed.
- Investors thus prefer low yields and government debt as safe assets amid mounting domestic weakness.
Demand, Not Supply, Drives Bond Yields
- Low Chinese bond yields reflect soaring demand for safety and liquidity, not a lack of government bond supply.
- Banks and investors buy more government debt during domestic crisis, keeping yields depressed despite heavy issuance.