A surprise rate cut by China may point to further government action to support the stuttering economy and allay concerns over the property sector – Copyright AFP STR
Global markets went down as China’s “disappointing” economic figures emerged earlier this week. After decades of riding on the back of China’s almost impossible annual growth, Santa didn’t come up with the numbers. The markets are pouting.
Oh, dear.
The current news about China is actually pretty normal. China has had many hefty economic problems that have been in plain sight for years or in some cases decades. Suddenly this common knowledge is a big deal?
The well-known Chinese property market problems, self-inflicted or otherwise, definitely aren’t current news. Exports tend to go up and down, also not news. The American moves to get out of China are not news. The Great Chip Shortage is hardly news. The failure of the Belt and Road initiative also isn’t exactly hot gossip.
…So why the sudden hysteria? Why wipe out investors for the sake of extremely old news? These are the “reasons” for this global hypochondria in the markets. The genius-led markets never overstate or overrate anything, as we know. So whatever it is now, it must be awful.
It can’t possibly be just the obvious getting a mention and a few numbers to back up the obvious. So there!
Geopolitics, the gargoyle of human history, has been doing a lot of the damage. The US vs China issues could be written on any macro by a particularly uninspired cockroach. Those issues are pretty much the same as ever.
What’s changed is the degree of emphasis on direct confrontation of any and every issue. The degree of hypocrisy in trade is also an issue. Both countries have been making billions or more probably trillions out of doing business.
Do you seriously think an iPhone costs thousands of dollars to make? Does Amazon and everyone on Amazon make a few cents here or there out of pure luck?
Come off it. Without a massive reliable production base, none of that could happen.
Nor is the hypocrisy confined to geopolitics. Obviously, there couldn’t possibly be anything wrong with the West’s own nutcase core economics. Making life unaffordable for as many people as possible is the only way to maintain growth, according to some. Artificially generated inflation is obviously the intelligent way to deal with the nuking of consumer buying power and torpedoing demand. Credit is now also much more expensive due to all this brilliance. How could a little thing like that possibly affect the markets for Chinese exports?
Of course, Chinese growth is affected by both local and international conditions. How could it possibly not be affected? Trade numbers aren’t set in stone.
…Leading somehow by strange logics and weird insights to a question:
Are you out of your minds? I mean, more than usual?
China, the EU, and America have nothing to gain from this situation. Economic stagnation and misdirection aren’t DIY things. Nor is there much geopolitical advantage for either nation.
Even if America can convince itself that China getting stuck in an economic go-nowhere quagmire is a somehow long-term strategic win, there’s a big price to pay. Imagine what might happen if the global trade model of the last 30 years stops working. America’s money is glued to the global economy.
China is a “command economy”, remember? That means that someone is likely to get penalized and abrupt changes are guaranteed. A lot of iffy credit can be written down or written off. Chinese imports can source elsewhere. Chinese imports actually dropped last month. Exports may be simply responding to the West’s inspired inflation.
In global economics, what goes around insists on also coming around whether anyone likes it or not.
