Sounds like China is going to try to bail out its economy just like a western, capitalist country would to do, by infusing new money that's borrowed into existence. This often appears to work, at least for a while, but in the end, all it does is kick the can down the road, and the can gets bigger and heavier every time this is done. At some point, it will become so heavy that trying to kick it again results in a broken foot.
There's actually an interesting parallel here with Zero Covid. That too can appear to work, for a while, if done aggressively enough, but it also just delays the inevitable.
China's export engine began to falter some years back, as Chinese labor costs rose to the point where other Asian economies were becoming more attractive as the "low cost" manufacturer. This is why India is starting to make iPhones, while Vietnam has been snagging other manufacturing business from China.
China's response was to promote real estate development as a way to goose the economy--which is how most developers got overleveraged, misspent housing presale funds, and failed to maintain good cash spending discipline to ensure they had the means to complete housing projects.
Along the way China has grotesquely overspent on a variety of infrastructure projects and similar boondoggles, such as the "ghost cities".
Then Xi Jinping decided it was time to rein in the housing developers with his "Three Red Lines".
This prompted a liquidity crisis at Evergrande, Country Garden, and other developers, leading to an overall collapse of the real estate sector in China.
So now Xi is hoping throwing "stimulus" at real estate and infrastructure will goose the economy once again and reinflate China's many bubbles.
Kicking the can down the road, only this time China may have run out of road.
Again, China is something to be admired according to the AOCs & Bernies of the gov’t. But look at what hardcore communism gets you: nothing. And just like that, even Xi realizes that he needs to take the reins off.
Sounds like China is going to try to bail out its economy just like a western, capitalist country would to do, by infusing new money that's borrowed into existence. This often appears to work, at least for a while, but in the end, all it does is kick the can down the road, and the can gets bigger and heavier every time this is done. At some point, it will become so heavy that trying to kick it again results in a broken foot.
There's actually an interesting parallel here with Zero Covid. That too can appear to work, for a while, if done aggressively enough, but it also just delays the inevitable.
Bailout has been China's "go to" for some time.
China's export engine began to falter some years back, as Chinese labor costs rose to the point where other Asian economies were becoming more attractive as the "low cost" manufacturer. This is why India is starting to make iPhones, while Vietnam has been snagging other manufacturing business from China.
China's response was to promote real estate development as a way to goose the economy--which is how most developers got overleveraged, misspent housing presale funds, and failed to maintain good cash spending discipline to ensure they had the means to complete housing projects.
Along the way China has grotesquely overspent on a variety of infrastructure projects and similar boondoggles, such as the "ghost cities".
Then Xi Jinping decided it was time to rein in the housing developers with his "Three Red Lines".
This prompted a liquidity crisis at Evergrande, Country Garden, and other developers, leading to an overall collapse of the real estate sector in China.
So now Xi is hoping throwing "stimulus" at real estate and infrastructure will goose the economy once again and reinflate China's many bubbles.
Kicking the can down the road, only this time China may have run out of road.
Again, China is something to be admired according to the AOCs & Bernies of the gov’t. But look at what hardcore communism gets you: nothing. And just like that, even Xi realizes that he needs to take the reins off.
The emperor has no clothes?
Which reminds me, Putin didn't look bad shirtless on the horse. I doubt Xi could "pull it off," so to speak. Maybe if he rented a Clydesdale?