In my recent video, eight signs the Chinese economy is terminally sick, another viewer left a very common type of comment. The viewer basically said, “China won’t collapse. You know, people have been saying the same old since 2018. Uh, use unemployment is a global issue. The Chinese government purposely weakened real estate to avoid a lean moment. US burst rates are falling too. It’s all about global inflation and trade wars, not China itself. Now, I really welcome these comments, but today I’m going to show you point by point why this argument misses the big picture. And let’s break it down.
First, China is going to collapse any second now. People have been saying this since 2018. I don’t say that this channel doesn’t predict instant collapse. What I have been saying and what many serious analysts say is this. China’s growth model is fundamentally broken and the country is entering a period of long structural stagnation just like Japan in the 1990s but even worse demographics and debt.
Stagnation is not a one-day event. It is a slow erosion. And that erosion has been very visible. Real estate completely frozen. Consumer confidence depressed, capital flight accelerating, deflation pressures growing. Just because China hasn’t collapsed in some Hollywood moment doesn’t mean this isn’t a very real and very serious economic decline. Next, the viewer said youth unemployment is a global issue. Sure, but context matters. In the US, youth unemployment is about 9% with a highly flexible and dynamic labor market.
In China, it was over 20% before the government stopped publishing the data. And even after changing the methodology and massaging the data, it remains far worse than in the US. And a bigger issue is quality of of employment. In the US, mobility and wages are still rising. In China, graduates are taking low quality or mismatched jobs or dropping out of labor market entirely. This is not the same problem. This is a much deeper mismatch, a structural risk for China’s economy.
Third, Chinese real estate was purposely weakened to avoid a Lehman Brothers moment. This is similar to another viewer’s comment where I already addressed uh in detail in this video. Yes, Beijing wanted to control the bubble. Uh they introduced the three red lines to reduce leverage, but the result they triggered a balance sheet recession. Developers defaulting left and right. Local governments starved of land sales revenue. Household wealth evaporating since property was the number one store of value for Chinese families.
No demon moment fine but instead China got Japan style stagnation and that is still unfolding with no clear way out. And remember, real estate and its related sectors accounted for nearly 40% of GDP. You can’t shrink a sector of that size without major long-term consequences. Fourth, US birth rate has declined since 2008. Correct. But again, context matters. The US offsets its lower birth rate with immigration which it still embraces with open arms uh as long as it’s legal uh immigration and the US remains one of the world’s top destinations for skilled immigrants including Chinese immigrants. China does not.
Meanwhile, China’s fertility rate is one of the lowest in the world below 1.1. The population is already shrinking. the labor force is already shanking. The US has a challenge whereas China has a full-blown democratic demographic um crisis with no realistic fix on the horizon. Finally, the viewer said a lot of this is about global inflation and trade wars. Uh no, it’s no not in China. China’s biggest problem today is not inflation, it’s deflation. Producer prices PPI have been negative for more than a year. Consumer prices CPI are flat to negative.
Private sector demand is weak. Household spending is collapsing. This this is not about global inflation. This is about domestic demand collapse. a result of structural problems inside China’s economy and that is why Beijing is struggling to stimulate growth because the problem isn’t global, it’s internal. So to the viewer who left that comment, thank you. I uh welcome this debate. But let’s be clear, comparing China’s problems to global trends doesn’t explain what is happening in China.
Saying collapse hasn’t happened yet ignores the very real structural decline now playing out. Pretending China’s stagnation is just about trade war or inflation misses the point entirely. China is facing a broken growth model, a crippled property market, a shrinking population and weakening consumer demand all at the same time. That is why the next decade will be another lost decade for China. If you enjoyed this breakdown, uh you will also enjoy this video where I address another China bulls comment. And on this channel, I will keep showing you exactly why China is in deep trouble. Because the China story is only just
