Coffee Space

Chinese Economic Collapse

I think that the Chinese economy is bordering upon collapse and has entered a death spiral. As the BBC states, Trump’s victory may have made any hope of their recovery impossible. Their main issue is that their debt to GDP requires their economy to continue on a certain growth trajectory of ~5%, but they have failed to meet this target, which was an eventuality anyway as there is only so much GDP a country can have.

Some predictions based on their collapse:

• There is quite likely to be a knock-on effect to Western markers. The US for example is speculated to have $1.3 trillion of stock and bond holdings as of 2023, and $600 billion by the EU in 2022. German automotive companies for example have a massive export into China, and we recently saw as the Chinese economy slowed down Volkswagen had to downsize their staff and manufacturing.
• China still makes a lot of the core components that we use to build larger products. Whilst specialist manufacturing already left China, generic parts are still largely made there. A collapse in the Chinese market would put enormous pressure on other non-Chinese manufacturing capabilities.
• There are a lot of unemployed men in China currently without a hope for work. It has been believed that Chinese mercenaries have been operating in Ukraine, whilst China props up Russia’s military with military equipment and weapons. I can see a scenario where the central government sends young men (likely by force) to serve in Ukraine and be paid by Russia. It solves two problems, employment, and an excess of mouths to feed.
• As mentioned before, due to corruption, China is likely still holding a lot of empty reserves. In 2020 it was realised that $2 billion in loads was backed by fake gold. I’ve heard stories that China’s strategic food reserves, such as grain, were instead replaced by something and sold off due to corruption. There were similar stories in the USSR where strategic fuel reserves were also replaced with water. I think that if they were to test those reserves, they might be in far more trouble than they would expect.
• China is unlikely to have enough resources to invade Taiwan, but there could be political will to distract people from internal affairs. I think it would be highly embarrassing for China if they did and would likely lead to a USSR-like collapse. Hopefully the West would then help them install a Democratic government, instead of allowing China to follow Russia after the USSR collapse.

Wars Simmer Down

For ongoing wars, I see the following:

• Trump is able to stop the Israel conflict relatively easily. A threat made to Hamas could be carried out to destroy them. Iran will also fall in-line, knowing that Trump is very serious about trade tariffs, etc. I could also see Trump arming Israel much more effectively making a war with them much more difficult.
• Russia in Ukraine will be a harder challenge. So far it keeps dragging new soldiers in, including Belarus, North Korea, China, maybe more. Other than mercenaries, it is quite likely that Western soldiers are already operating in Ukraine in a support role. It has all of the possibility to expand further. Putin has put too much energy into this to back down, so the only way out I can think of is to hand land to Russia. It’s not satisfactory, but Ukraine is better off smaller than gone entirely, or stuck in an endless conflict. Make no mistake, Ukraine would happily bring the rest of the world into their conflict though.
• Unfortunately I see a world-war on the horizon. If not one of the existing conflicts, another will likely arise. You have a perfect storm of a failing Western global police mostly due to the EU becoming completely disarmed and the US being the major serious military, which is wavering. For me it’s about being fighting-fit both physically and mentally.

Hopefully I am wrong and everything will be okay.