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OFFLINE: China headed for depression if Xi stays in power

A closer look at China may partially explain its aggressive actions in the West Philippine Sea. Its economy is actually in shambles now, and there are strong indications that not only will the country enter a recession, it may go so far as spiral into a full-blown depression in the very near future.

All the signs are present that China’s economy as a whole is in the worst shape it has ever been since the 1950s, when then Chairman Mao Zedung (formerly spelled Mao Tse Tsung) launched his Great Leap Forward, that resulted in millions of Chinese dying of starvation.

Reports coming out of China are quite worrisome. More than a million restaurants, big and small, have closed down since the pandemic, and those that are still in operation are selling food at bargain basement prices.

Malls in the biggest cities are empty, with so many stores closing down rather than staying open when there are few, if any, shoppers.

The ‘salvation’ that China was expecting with the arrival of the Chinese New Year did not pan out.

Unlike in the past when a store shut down and another would instantly take its place, no new players are coming in.

One of the saddest sights on China’s malls was where a local shopper showed a video that had all the stores in one floor shuttered, leaving only one sad McDonald’s remaining open. Even then, there were only a handful of customers in the global burger chain.

Meanwhile, Chinese who remain employed, especially in the government bureaucracy, have been told that they will not be getting their full salaries, while some of their peers have been forced to go on extended leaves of absence.

Have any friends who have been to Hong Kong lately?  Ask them what’s happened there. That semi-independent state which was once a favorite shopping haven of bargain-hunting Pinoys is facing an economic downturn that became apparent in the recent Chinese Lunar New Year.

What should have been the best of times became the worst of times.

The term being used to describe what’s happening all over China now is deflation, or the opposite of inflation. This means prices are going down instead of the usual up, and in many ways it’s even worse.

Despite the sinking prices, however, the economy remains in  the doldrums.

The simplest definition of deflation is “reduction of the general level of prices in an economy.” This usually occurs during times of high unemployment.

One would think that when fewer consumers are buying, sellers would necessarily raise their prices in order to pay for such necessary expenses as rent, payroll, and stocks to sell.

In fact, the opposite is true. When consumers are not buying because they prefer to keep their cash in their wallets, sellers entice them by bringing down the prices of their goods or services to the barest minimum. Those that can afford it can go so far as to sell at a loss.

Sometimes it works, other times it doesn’t. In China and Hong Kong, it is the latter that is happening.

(And as proof that the Taiwanese leadership is far superior to Xi and his cohorts, the ‘rogue’ state is still doing well, thank  you very much.)

It’s actually much worse in some big cities in the mainland. Countless high-rise condos remain unoccupied/unsold because the Chinese have no interest in buying new residences, preferring to instead hold on to what money they have.

And no, they no longer keep their money in banks following instances when customers were only allowed to withdraw portions of their savings for the simple reason that many banks were short on cash.

This, too, is documented with numerous videos on the internet showing a people whose anger at their leaders is positively seething.

Very lately, the government .as been forced to act to save the dying real estate industry. The biggest developer was ready to declare bankruptcy, but this has been deferred via a lifeline from the government.

It remains to be seen if it will work.

China’s largest property developer is Evergrande, and it defaulted on its loans late last year. This spurred a liquidity crisis in the sector, and no less than 50 big developers also defaulted in their debts.

Imagine the effect this will have on the banks, which were the primary source of funds used by the developers for their mega projects.

As a result, tens of thousands of Chinese working men and women suddenly found themselves jobless;

The property downturn is on its third year now, and there is no end in sight. The real estate bubble has burst, and it will take years before it can recover. And this is based on a number of ifs.

It’s been said that the millions of Chinese who had joined the mighty middle class in recent decades due to the economic miracle that was the People’s Republic of China have been pushed back to poverty, while the tens of thousands  — even hundreds of thousands  — who had attained millionaire status been humbled back to a middle class state.

It is no wonder then that the still-rich Chinese who are able to opt to leave for the West, to such places as the US and Canada.

There are some indications that some have gone to the Philippines, where it is easier for them to join the population owing to the countless Chinoys nationwide.

They shouldn’t be unwelcome if only they were to invest in legit businesses, but some preferred to go into semi-legal or even outright illegal (and immoral) business like POGOs, or Philippine overseas gaming operations.

These damn POGOs are most unwelcome, but have stuck like leeches in many cities that welcomed them. Many lawmakers and government officials have called for the forcible closure of the POGOs, but they have enough politicians in their pockets to remain in operation.

Business is business, they say. For some, this justifies Chinese businessmen seeking their fortunes in the Philippines by providing work for Filipinos, even if the companies they set up are very incidentally involved in prostitution, human slavery, and illegal gambling.

I do not present myself as an expert in economics, but I have suddenly become fascinated with the economies of our next door neighbors.

China’s current problems did not begin with Xi, nor will they end when he eventually exits.

As one very important example, China and even Japan and to a lesser extent South Korea are having problems with their ageing population and a slowing down of their national birth rate.

This means that a decade or so down the road, these powerful economies will not have the manpower needed to achieve continued growth.

At least this is not a problem in our motherland. Our young men and women still know how to make babies, and are not in any mood to have very small families. 

I can predict that China will eventually open its doors to as many foreigners as possible, and allow them to inter-marry with their locals.

But first they have to take care of business. This means ridding their country of a megalomaniac leader who fancies himself a modern day emperor. If they don’t, their total collapse is assured.

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