Just curious if anyone else has been following events in China over the last year or so and is starting to worry about it (or has another take on things). Here is what I’ve seen.
Recently, China has had another season of heavy rains and flooding. This is actually still going on, especially in the North. Last year was another unusual year for heavy rains and flooding. They have had a number of small dams collapse, though that in and of itself isn’t that unusual (China has, IIRC, the most dams of any nation on Earth…something like 90,000…and a lot of them are older construction). Currently, they are also having issues in their real estate sector which is seriously worrying, as this has been a known bubble/issue for a long time now. Predictions of this bubble bursting have been being touted in some circles for decades, certainly in the last decade. The first dominos of that might have fallen with Evergrande, as this could have a cascading effect on the whole sector. You also have the recent uptick in aggressive behavior in the South China Sea, East China Sea, and of course the Straight of Taiwan. Plus, there is a little-reported but potentially scary continuing confrontation on the border with India. This was supposed to have been or was being resolved peacefully, but China seems to keep upping the ante on this by moving more troops in (when they say and were supposed to be moving troops out to de-escalate the situation). India is also moving troops in, so it’s a tit for tat response. Then there is the series of crackdowns going on. Crackdowns in their tech sector, crackdowns on their rich business personalities, crackdowns in their entertainment sector, social media personalities crackdowns, etc etc.
Then there is what’s worrying me most right now. China is going through a major power crisis. Now, a lot of this is self-inflicted (as are seemingly most problems in China these days). The CCP is in a spat with Australia, one of their major suppliers of coal. With the trade tariffs and other measures the CCP has put in place, Australia has rightfully found new markets for its goods. The trouble is China is having a lot of issues finding other suppliers. And they have drawn down their own coal reserves to dangerous levels. They tried to kick start their own coal production into high gear, but they ran into that rain issue mentioned above. Long story short, they have had major power outages in some regions, including power outages or rationing of power in some of their industrial areas. This has meant they have shut down or slowed down a lot of their manufacturing and factories. I understand they are back to trying to buy Australian coal again, though it’s going to be at a substantially higher price than they were paying before…and you don’t just go out and buy coal and expect it to arrive tomorrow, especially after the disruption in supply that had happened. This is the most worrying to me for a few reasons. Mainly, it’s going to cause yet more disruptions to the global supply chain with unpredictable results. We have no idea what downstream products or businesses might or will be affected. Secondly, winter is coming (and the white walkers are on the prowl…) and China is having a lot of issues getting power to large numbers of people. That could be a humanitarian crisis right there. Oh, and due to those rains mentioned earlier, there has been an impact on their crop production (though, as with last year, the CCP says it’s another bumper year for crops, so nothing to worry about)…which probably means that prices are going up for the average Chinese household on not only power but food as well. Perhaps substantially.
All of this has me a bit concerned. Does anyone else watching this stuff have another take on it, or thinking about it? IMHO it’s something to keep an eye on and it will have a direct impact on the US and pretty much around the world, depending on if there is anything here, or if I’m just worrying about nothing.