Death and Despair in China's Rustbelt
I have been pointing to the problems in the Chinese economy for quite a while. Watching it disintegrate, nearly instantaneously, is disturbing. The US underwent a very slow disintegration of our rust belt over many decades. China seems to be undergoing the same problem much more quickly, and the nation is far less wealthy, and capable of handling the decline.
China has many problems, but it will have to find a solution to this one and quick. If it does not, it could find itself in dire straits. China may have foreign currency today to address this situation, but it seems preoccupied with currency manipulation, this will not achieve the desired effect.
While many seem to believe an economically destabilized China could destabilize the world, I disagree. It could push the world, or the Asian region into a recession, and I believe it is doing this. I is also creating real problems with commodity suppliers. The fallout from this problems will be serious, and recessionary, but only temporary. The problem in China itself is much more serious, and the way out is unclear.
One great change is that China is much more integrated today then back in 1989. Any serious crackdown, or aggressive military action to suppress groups within China is likely to be met with wide spread protest, which could quickly slide into revolt. The last thing the CCP needs is for a large and widespread group of the people to openly revolt.
I expect this to create a significant flight to security towards the US dollar, US equities, and US government, and corporate debt.
Now would be a good time to pray for the Chinese, they are likely to need it.