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If China's economy collapses – and it sure looks like it's going to – the entire global economy will go with it

By ethanh // 2024-06-24

The world's second-largest economy "is teetering on the brink of disaster," according to Business Insider (BI). That economy is China's, which is showing major signs of an impending collapse with numerous market-shaking events in recent days. So far this spring, Beijing has: - Canceled initial public offerings (IPOs) - Fined tech companies billions for antitrust violations - Forced the shutdown of China's entire for-profit education industry - Ultimately sent company CEOs "running for the exits to avoid the government's ire" Remember that huge developer Evergrande? They, too, have started missing payments on their more than $300 billion in debt, which, because of the interconnectedness of global markets, is sending shockwaves throughout the financial world. "The convulsions have woken the world up to a startling new possibility – that Beijing may be willing to allow some of its private corporate behemoths to collapse in a bid to reshape the economic model that made China a superpower," BI explains. "The upheaval, spanning multiple industries and vast swaths of the country, is the result of one giant issue: China's inability to borrow or buy its way out of its current economic crisis." (Related: For several years now, economists have been predicting that 2024 will bring the "biggest crash of our lifetime" to U.S. markets.)

China built lots of nice things that nobody can afford to use

For many years, China was rolling in the dough – the fractional reserve debt-based kind, just to be clear. The communist regime was rife with cheap labor, it's government-owned banks handing out debt like candy in order to fuel massive economic growth. That growth resulted in the building of massive apartments, bridges, factories and other projects that started appearing "at lightning speed." The problem, though, is that China does not have people to actually use and pay for all that new infrastructure. It turns out that most Chinese people lack the funds needed to participate in the faux economy that China built for itself to portray "strength" and "success." "As a result, China finds itself stuck with a system that is overbuilt and overindebted," BI warns. "Take the country's $52 trillion property market, of which the Evergrande mess is the poster child. With money easy to borrow, real-estate speculation became a popular way to store and build wealth for China's young middle class. One academic described this model to me colorfully as an 'addiction to real-estate cocaine.' It's also been called a 'treadmill to hell.'" The Chinese government is taking steps to try to deflate its massive real estate bubble, but these efforts are only making things worse. Then there is China's energy crisis fueled by skyrocketing coal prices and an aging population, which is only adding insult to injury. Rather than continue to open its economy to spur growth, the Chinese Communist Party (CCP) is instead closing everything down. Under President Xi Jinping, Chinese socialism is said to be "reverting to a model not seen in decades with tighter state control over much of the economy." This ongoing transition from open markets to state control is sure to be a rocky one, assuming it even works. If the plan fails, and this appears likely, then the entire global financial system is at risk of a full-scale collapse. "In short, Beijing is walking an economic high-wire act, trying to replace its economic model with something unknown," BI warns. "In the process, the weight of its old, debt-ridden system is causing China to wobble. And if the country falls, it could take the rest of the world with it." The latest news about the crumbling global economy can be found at Collapse.news. Sources for this article include: BusinessInsider.com NaturalNews.com

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