Three Reasons China's Economy is Shrinking - TLDR News

China's economy has been growing at a wild rate over the last few decades, but things are seemingly slowing. So in this video we discuss three reasons the Chinese economy is actually shrinking - housing, foreign investment & COVID

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[giantWario]

Even if Chinese citizens were fully vaccinated, the Chinese vaccine is by far the most inefficient one on the market with only a 50% efficacy rate at preventing Covid and an abysmal 30% efficacy rate at preventing serious illnesses and death for those who do catch it. Sputnik, even though it was so rushed, actually turned out to be a lot more efficient.

[neon]

A small correction: You mentioned that three red lines was implemented "September last year", it was done in September 2020.

[komocity]

"lowering mortgage requirements"... If 2008 taught us something... Then that's that those mortgages may become timebombs for the economy

[ZombieSexmachine]

Sounds like West Taiwan is really in for some hard times

[jamez]

It's almost as if authoritarianism is economically advantageous initially, but eventually leads to economic collapse later on or something like that... 🤔

[Lonesometea]

The fact TDLR are taking any stats coming from the CCP at face value is disappointing. I know sometimes infomation sources are limited, but Li Keqiang himself admitted in 2007 china's GDP data was "man made"

[greenredblue]

The good news is that we can trust an organization like the CCP - with its absolute insistence on crude yet preposterous success metrics, unshakable belief in its own infallibility, refusal to allow any third party evaluation of its performance, decades-long history of lies and repression, and utter contempt for the opinions and even wellbeing of the Chinese people - to handle this with all the care and skill it deserves.

With love from Hong Kong: buckle up, y'all! :)

[RafaelW]

Everyone who knows something about economics can tell you that infinite growth is unsustainable. At some point, a recession has to come.

[OtherWorldExplorers]

The CCP also has been manipulating their stock market. And seeing that kind of meddling that's part of what's making people shy to do investments.

[bikkiikun]

There are several reasons... For once, you can only build so many ghost cities. And "real-estate" (in quotes, because it is just a 70 year lease) prices are beyond ridiulous... with flats in third tier regional cities in the middle of nowhere costing more than a place in downtown Tokyo, have massively inflated GDP.
Then there is of COVID, that unsurprisingly is out of control, even with a brutal "Zero COVID" strategy.

And then there is a (western) world that is more and more reconsidering the outsourcing of sensitive manufacturing.

And that doesn't even touch the extreme corruption...

[matthewslentz]

There is another reason for China's economic recession and decline. An incredibly low birthrate. There aren't any young people anymore, and a massive elderly population, putting a massive strain on the economy.

[Cunnysmythe]

Good video but I think you may be giving China's official COVID figures too much credit

[Protont]

China: *looks at clocks* Ahhh shit, its that time again*starts to collapse*

[vorsichtig]

5:03 I saw so many videos about China misunderstanding that the skyrocketing house price is a bubble. No, it's not a bubble. Most of the time, the economic bubble is purely driven by its market atmosphere while what happened in China is the artificial scarcity of the real-estate sectors.

Somewhere in the 90s, China made a tax reform to boost the finance of the central government, that later known as "分税制改革(Tax-Sharing Reform of China in 1994)". This reform caused a huge deficit at the local government's level. So the local government has to find a new source of income to boost their finance. They introduced a mode called the "Hongkong model" later known as 土地财政(land finance), which auctions residential land for their financial income.

Since the residential property is extremely inelastic, which means that demand won't change much no matter how prices fluctuate. The local government starting to limit the land auctioned for residential purposes, capping the supply of residential property so the prices can rise. The higher price of the residential property, the more the government earned from the land auction. The ratio between tax income and land auction income of local government is called the index of land finance dependency(土地财政依赖度).

If you ever checked the index of land finance dependency, you would find that most of the Chinese cities are way above 50%, which means the land auction financed a huge part of local government. What makes it worse is most of the local governments are full of debt since they are the ones responsible for infrastructure construction at local levels. They simply cannot let the house price drop or they will be facing bankruptcy.

If you really understand what I mean above, then you should understand that the "three red lines" policy is not just targeting real-estate companies but also the local governments behind them. And all of this tragedy is caused by an outdated tax/fiscal system that has never been actually reformed since 1994.

[Steven-fvxw]

corruption and mismanagement are the two reasons

[verstapp]

3 reasons. 1. pooh bear. 2. pooh bear. 3. pooh bear.

[Nabium]

China started the financial decline when Winnie the Pooh took office.

I don't mean they have been declining since then, I'm saying since then they've implemented policies which ultimately would hit the economy. Oftentimes it takes a long time before policy affects economy, and what we're seeing now is a result of Chinese policies which Xi started almost ten years ago. Increased nationalism, propaganda in schools and tighter grip on media, social credit score, hostility towards foreigners in and outside of China, as well as the Uighur crisis. All of these things are not directly linked to the economy, but they all affect investment. Add on this a tighter control over Chinese capitalists/businessmen and nothing done about the vast corruption then you just can't have a booming economy in the long run.

These covid restrictions as well are a result of Xi Jinping's thought. Increased control over the population with insane methods.

Nothing can be done about the future of China until they get rid of Xi Jinping. He values power over economic development, he values control over increased quality of life. He's much like Putin in that he sees his country's influence and power as the most important thing, and not the people in the country. Human lives are just important if they are useful.

[oisinquinn]

One thing here that seems really naive. Referring to the fact China RECORDED(self reported information) fewer deaths per capita. They didn't test as much and covered up deaths. The funeral homes/crematorium were extremely busy.

[taterkaze]

A) 80% of Chinese household wealth is tied up in property.
B) Property/construction is 25% of China's GDP.
C) Property sales falling.
D) Property values crashing.
E) Too many homes have been built (ghost cities).
F) Property developers overleveraged.
G) Local governments over-rely on property sales.
H) Local government revenue falling significantly.

China's best hope is a severe recession. The current situation sets up a possible great depression scenario, with supply and financial shock implications for the rest of the world, whose economies are already burdened by covid, climate-driven disruptions in food supply, ongoing supply chain issues, and Russia's unprovoked war in Ukraine

[Miamcoline]

Great plug. You guys are the ones that convinced be to get on Nebula and Curiosity Stream. I'm glad its helping your great content!