It is critical to understand how the balance of payments works with regards to international trade to explain what is going on.
We can already see the impact China's slowdown has had in the price of raw materials. The massive drop in luxury goods consumption & Macau gambling revenue has been attributed by the press to Xi Jinping's corruption crackdown. I didn't buy that explanation. It is plausible that the economic engine which carried them for the past 20 years ran out of steam a while ago.
Contractions are good, for both public economies and private companies. They force the removal of waste and expose accounting frauds. The big question now is how much of China's economy is dependent on questionable things? Perhaps outright fraud, maybe business models that work only during sustained growth, or just stuff that requires the continued successful implementation of particular government policies (subsidizing interest rates, keeping exchange rates low.)
It is critical to understand how the balance of payments works with regards to international trade to explain what is going on.
We can already see the impact China's slowdown has had in the price of raw materials. The massive drop in luxury goods consumption & Macau gambling revenue has been attributed by the press to Xi Jinping's corruption crackdown. I didn't buy that explanation. It is plausible that the economic engine which carried them for the past 20 years ran out of steam a while ago.
Contractions are good, for both public economies and private companies. They force the removal of waste and expose accounting frauds. The big question now is how much of China's economy is dependent on questionable things? Perhaps outright fraud, maybe business models that work only during sustained growth, or just stuff that requires the continued successful implementation of particular government policies (subsidizing interest rates, keeping exchange rates low.)