In this conversation, Alexander Stahel, founder and CIO of Burggraben Holding AG, provides an insightful analysis of China’s evolving economy. He discusses the troubling real estate crisis which he likens to a Ponzi scheme, affecting both domestic and global markets. Stahel argues that China is undergoing a balance sheet recession, questioning the credibility of official debt figures. He also highlights the implications of Xi Jinping's policies on economic growth, warning that misallocated capital may lead to a rise in 'zombie companies'.
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insights INSIGHT
China's Misunderstood Economy
Most Western observers misunderstand China's current economic situation.
They fail to recognize the seismic structural changes and the end of China's free-market aspirations.
insights INSIGHT
China's Economic State
China's economy is hurting due to excessive debt and an unsustainable investment-led growth model.
Overcapacity across various sectors, including technology and manufacturing, leads to bad debt and inefficient capital allocation.
question_answer ANECDOTE
China's Real Estate Bubble
Chinese households hold 70% of their wealth in property, primarily due to a lack of investment alternatives.
The Chinese real estate market operates differently, with upfront payments and land concessions impacting ownership.
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We’ve heard a lot about the compelling bull case for China recently on Talking Markets... but our job here is to bring you the smartest, most nuanced takes from both “sides.” In this special Talking Markets episode, Maggie Lake chats with Alexander Stahel, founder, chairman, and CIO at Burggraben Holding AG, and author of The Commodity Compass Substack, about the China bear case. Up for discussion: the troubled real estate market and what it might do to the commodities complex, why Alex believes China is in “a balance sheet recession,” why the official debt figures may be significantly lower than reality, and a ton more. Recorded: March 4, 2025You can follow Alex on Substack here: https://www.thecommoditycompass.com/Don't miss out on future episodes - get on the list here: https://maggielake.markets/notify-meConnect with me on Twitter: https://x.com/maggielakeConnect with me on Substack: https://maggielake.substack.comChapters:00:00 - China’s Real Estate Collapse: A Hidden Crisis00:25 - The Biggest Balance Sheet Recession in History01:03 - Introduction: Maggie Lake & Alexander Stahel01:31 - The West’s Misunderstanding of China’s Economy03:07 - Xi Jinping’s Economic Vision: More Control, Less Growth05:50 - The End of Free Market Aspirations in China07:04 - Is China’s Economy Strong or on the Brink?13:29 - China’s Real Estate Ponzi Scheme Exposed19:31 - How China’s Real Estate Collapse Will Impact the World22:48 - The Myth of China “Working Through” Its Debt Crisis30:00 - China’s True Debt Levels: What Investors Miss33:49 - Is China Entering a Deflationary Death Spiral?36:00 - How China’s Economic Struggles Could Impact Global Growth40:16 - Trump, Tariffs, & The Future of US-China Trade44:21 - Copper, Oil, & The Future of Chinese Demand46:38 - The Death of the Chinese Economic Miracle49:04 - Final Thoughts & Where to Follow the DiscussionWe know you get this, but gotta say it anyway - this show is for informational purposes only and is not financial advice.
Maggie Lake Talking Markets