Why China’s Local Government Debt Crisis Just Got Worse

If you dig holes and fill them in you're increasing GDP.

If China's real estate crisis triggers a market crash or a financial crisis, it could send shockwaves through the stock markets worldwide. I’m worried about my investment of over $600K stocks. Is this a time to consider diversifying my portfolios?

Another point to make on the local government’s over reliance on infrastructure projects, is not just just that they don’t increase productivity, but that they can actually lower productivity due to maintenance costs. If you spend all your money maintaining bridges that no-one needs to use, you aren’t able to invest in other, more productive areas of the economy.

You mean just telling people to "grow this much" every year doesn't magically allow them to come up with sustainable ways to do so?

Would you say they’ve built a bridge too far? …. I’ll see myself out 😂

Chinese property sector, which accounts for 30% of GDP, is crashing. - Exports and imports, accounting for 37% GDP, are down. - Foreign investment (FDI) is falling over 90%, lowest in 3 decades. - Foreign visitors are down 96% compared to the pre-pandemic level in 2019. - Consumer prices are experiencing deflation. - Youth unemployment hits over 21%, a record. - Its fast-shrinking workforce is 10 years older than neighboring countries. Still, China keeps reporting outrageous GDP numbers. Lol Where does the growth come from?

There are three kinds of lies: lies, damned lies, and GDP.

You're forgetting that if you abruptly stop construction projects, infrastructure projects especially those who have already started construction, this will cause a large ripple effect on the economy. Im not talking about its effect on china's gdp numbers but the construction downstream industry. For example, the steel and cement industry has already programmed future projects that would require more of their material some years ago, abruptly stopping them would cause problems with their liquidity and future loan payments. And what about the construction workers who relied on construction projects for their income. And other support industries who directly and indirectly rely on these projects. Result is many small businesses might close or go bankrupt. Even entire small communities will go bankrupt, unemployement will rise. And add all these up and you worsen deflation and not to mention social unrest

The comment section is filled with strangely defensive and naive comments. Within 20 minutes already

When you reach a point where all your income is only enough to cover the interest rates, you're technically bankrupt...

Financial planning is like navigation. If you know where you are and where you want to go, navigation isn't such a great problem. It's when you don't know the two points that it's difficult

This is a very well put together and informative video. more like this.

It's fascinating how this is both incredibly similar to the debt issue ravaging English local councils with the almost exact output - English councils basically went bankrupt investing in strange business deals or trying to cover costs for lawsuits they lost.

Can't feed your family with a new bridge

In 2023, real China's 🇨🇳 economy shrank -3.5% as opposed to 5.2% expansion as officially announced. - So this year, they will just publish a 5% growth regardless of their economy.

I love two countries, China and Tibet. Greetings from the Japanese Senkaku Islands.

The chinese demographic collapse was always going to spell doom for the housing bubble. Now it's spells doom for infrastructure maintenance, It's GDP and bridges will collapse.

So you’re telling me that China is like your one neighbor that keeps buying new cars even though he has no use for them and ended up in lots of debts.

Great observation. I’ve been beating this drum since the start of the real estate crisis and glad to see others looking at it too. The comment about China need to improve consumption is good in the abstract but not realistic given China’s demographic crisis. Old people don’t buy as much stuff.

One of the best talks on the reason for the building Chinese debt crisis. Well done!