China is bad news…
China’s biggest problem is a lack of confidence, Standard Chartered CEO says. It is truly an idiotic statement, but like other banks, like HSBC, that are dependent on China and need China’s approval, they would never say anything negative about the Chinese regime. The biggest problem is certainly not confidence, the biggest problem is the political system.
Investors are closely watching China, whose stock market gyrations, deflation problem and property woes are casting a shadow over the growth outlook. The Hong Kong market is down 40% due to Beijing’s increased control. Hong Kong’s stock market is lower today than it was in 1997 when the territory returned to Chinese sovereignty.
Last week, the U.S. government-funded Radio Free Asia closed its Hong Kong operation out of concern for the safety of its staff and reporters, a move that comes after Hong Kong enacted a tough new national security law known locally as Article 23. China will continue to destroy the freedom and entrepreneurship of Hong Kong and its role as a global financial hub.
Maybe China’s good run is over? It would not be surprising. Over 65 million homes, one-firth of the nation’s total, lie vacant and real-estate prices have collapsed. Tens of millions of Chinese plunked down their life savings for an apartment in a high-rise that they will never live in because the builder went bankrupt. China’s youth employment is double-digit and there is a vast capital outflow from China. Chinese people even flee and try to get into the U.S.. In 2023 alone, 37,000 Chinese were apprehended at the U.S. southern border.
Just like the Soviet Union, China’s economy is suffering from policies created by the government. There might have been a period of economic advancement during Deng Xiaoping, but since Xi Jinping assumed office in 2012, the Chinese economy has been off track. His emphasis is political dominance instead of economic growth. Xi might have moved slowly first. He assured China’s wealth creators that he had no problem with people getting rich as long as they served the communist party. Then, to make sure they did, he sent political commissars to watch over them. Every major non-state-owned company in China was ordered to add a party representative to its board.
After a while, government official at all levels began arresting, imprisoning, and executing hundreds of wealthy CEOs. Not surprisingly, the Chinese economy has been on the skids ever since. From a political perspective, Xi has been successful as he has consolidated power. At the same time though, he has and is choking the life out of the economy. The result will be continued economic woes and eventually severe economic problems.
It is sad and corrupt that western banks, companies, and leaders try to show a positive side of China. Bottom line is that the country I run by a thug, who is trying to hold on to power by any means, even if it means running the economy to the ground. China is a dictatorship with no free speech, no religious freedom and increasingly aggressive militarily. The west should not misunderstand the situation. China is not a friend, China cannot be trusted, China has no good intensions. So, stay away if you are an investor because China is bad news…