Sitting Duck.

Yikes! AI based on Xi Jinping Thought.

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1. China’s economic miracle is ending, leaving President Xi Jinping with a challenge none of his predecessors faced: how to govern after the boom. For four decades, China’s 1.4 billion population experienced unparalleled gains in income and wealth. But recently the blows have just kept coming. Real estate prices, trade war with the US, a crackdown on entrepreneurs, and extended Covid lockdowns have stalled the prosperity engine. Chinese incomes are still rising, but under Xi gains have been the slowest since the late 1980s. The property crisis is hammering household wealth. And the cautious opening-up of China’s society has gone into reverse too. For many people across the country, it feels like a different world. (Source: bloomberg.com)

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2. With the announcement of a Rmb300 billion ($41 billion) fund to support government purchases of unsold housing, the Chinese government last week appeared to finally unleash major firepower to tackle a three-year slowdown in the country’s real estate market. But while the new measures may mark a turning point in a crisis that has weighed heavily on China’s economy, analysts and economists said the hundreds of billions of renminbi was nowhere near enough. “This is a drop in the ocean given the scale of unsold stock,” said Harry Murphy Cruise, an economist at Moody’s Analytics. Goldman Sachs estimated last week that, based on cost, China has Rmb30 trillion ($4.185 trillion) of unsold housing inventory, spanning land and completed apartments — equivalent to 10 times the amount sold last year. (Source: ft.com, italics mine)

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3. China’s leaders are trying to fix a problem that has dogged the country for decades: how to spread its wealth more evenly. GDP per person in the west and north-east, which make up most of China’s landmass and hold a third of its population, is 70,870 yuan ($9,800) and 60,400 yuan, respectively. Along the coast it is 124,800 yuan. China’s richest provincial-level unit, Beijing, is four times wealthier than its poorest, Gansu. And day by day the richest areas are pulling further ahead. China is hardly the only country struggling with regional inequality, but its leaders have unique concerns. They worry about the security and stability of the hinterland, which contains most of China’s natural resources. And they are embarrassed that such gaping inequality exists in their socialist country. Mr Xi, after all, has promised to create a more egalitarian society under the banner of “common prosperity”. (Source: economist.com)

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4. Ambrose Evans-Pritchard:

An open world economy cannot coexist under normal trade patterns with a deformed Chinese economy that accounts for 13 percent of global consumption but produces 31 percent of global manufactured goods. This imbalance is not the result of natural trade flows. Nor is it simply “a reflection of the vitality and creativity of China’s economy” as the People’s Daily told us last week.

It is the mechanical consequence of a hyper-investment strategy directed by the Communist Party. China’s trade surplus has ballooned to 5 percent of GDP. Capital Economics estimates that it is twice as large a share of world output as it was before the Lehman crisis in 2008, when it was already causing trouble.

This excess capacity can be absorbed only by hollowing out the industrial cores of America, India, and Europe. The first two are defending themselves. India has just imposed a de facto ban on the use of Chinese-made solar panels in projects that receive public subsidies. Europe is the last big sitting duck. (Source: telegraph.co.uk)

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