Kicking and Screaming
This isn’t the first time I’m touching this subject, but the mainstream media – and especially that bold nightmare called Klaus Schwab – continue to overestimate Chinese power and its intelligence in running a country.
No topic is as grossly misreported as China’s future.
For years, and throughout my adult life, I’ve been told the dragon is coming, expanding, and will one day produce everything and consume everything, but these are all vague and crucially false statements.
The Red Dragon is not taking over the world, and it isn’t all-powerful or menacing.
China is a country in a plight, crisis, and state of emergency, but if one is glued to mainstream media, they are likely Sinophobic and believe that they’re here to compete with America.
The comparisons are so erroneous that it’s hard not to laugh at their inaccuracy.
China’s demographics are the world’s greatest clusterf**k, and I don’t say that lightly.
In the past 16 years, the cost of labor in China has gone up by a factor of 7, which means that what used to cost $10 to make will now run you about $80.
Yes, their numbers in overall capacity are still impressive and no one (except India) can come close, but Mexico and virtually all of South America are far cheaper regions!
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China encouraged their population to have many children during Mao’s reign because they were an agricultural economy and children are blessings for parents on farms, so 5-6 decades ago, families were frequently having three or more children, but then the entire agenda changed and was switched upside down with the “one child” policy.
The baby boom was cut, and strict laws were introduced to stop the surge in population as a migration from the fields and rural communities to the new urban centers emerged.
The problem China has is that what worked in its favor between 1980 and 2005 is now in charge of its collapse.
China is trapped.
Its workers are too expensive to compete in manufacturing jobs, and because it didn’t invest in the education of its working class, they have no skills that are required in complicated tasks.
Other economies that reached this point have switched from focusing on the growth of their production capacity to a consumption-based model.
Effectively, the idea is that the population gets smarter, richer, and more valuable to itself.
The U.S., for instance, relies on consumption for 70% of its GDP.
In China, 7/10 people don’t complete 12 years of formal schooling, and because very few want to immigrate, their collapsing population is now considered the most impending disaster of any modern nation.
When I say that Jerome Powell’s decisions may have plenty of short-term effects but don’t really influence where the global economy is headed next, my point is that while interest rates and easy/restrictive monetary policies do play a role in shaping the trajectory of financial activity, losing 200M–300M Chinese people and moving supply chains and factories to other countries are the primary drivers of the inflation, and it can’t be stopped since it’s an issue far bigger and greater than the scope of what the FED controls.
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