Look at this economic depression happening right now…
The Situation Is Getting Desperate In China
May 8 (King World News) – Gerald Celente: At a 30 April meeting, China’s Politburo—the small group that sets government policies—signaled that mortgage interest rates will be lowered again and that aid would be offered to floundering real estate developers.
The group said national and local governments will issue ultra-long-term bonds to jolt the economy. In the past, such bonds have largely been used to build public infrastructure.
The indications came as part of an announcement of a July date for a long-delayed major policy meeting and are “a fresh sign of rising angst at the very top of China’s government over prospects for the world’s second-largest economy,” The Wall Street Journal said…
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Although the export economy jumped as the year began, it has since weakened along with the services sector. New figures also show factories’ production and profits are slumping.
Tepid measures, including lower interest rates, have so far failed to resolve the property crisis, which has dragged on for almost three years and crushed consumers’ optimism as well as their spending.
Some economists read the Politburo announcement as promising more of the same modest measures, still relying chiefly on growth through exports and public spending while not doing enough to create a self-sustaining consumer economy.
However, Chinese officials see greater consumption as wasteful, the WSJ reported, and diverting focus from its goal of turning the country into a high-tech manufacturing hub.
China has tried to boost its GDP by flooding the world with goods not selling at home, especially electric vehicles and other clean-energy hardware, as we reported.
Nations targeted by that strategy are now threatening new tariffs and other trade barriers to turn back the wave of cheap Chinese goods that endanger companies in their own countries.
Economists have called for not only lower interest rates, but also direct stimulus to the economy if the country is to reach its 5-percent growth target this year.
Analysts also have urged China to adopt market-oriented reforms. In March, the International Monetary Fund told China to completely reconceive its economic philosophy, which we reported.
TREND FORECAST:
Beijing has been promising “bold actions” for months to right the economy. The actions taken so far may have seemed bold to China’s policymakers but they have left consumers and investors yawning.
Analysts largely agree the government’s first step must be to resolve the property crisis, now nearly three years old, that has crashed real estate values and left consumers unwilling to buy not only homes but much of anything else.
And with housing supply far outstripping demand, regardless of actions taken by Beijing, there is no action that can be taken to solve the real estate problem
Second, as a result of the COVID War which China launched in January 2020 on its Lunar New Year, “The Year of the Rat,” and its three years of zero-COVID policy, the lives and livelihoods of hundreds of millions have been destroyed. Thus, there is little incentive for many to speculate in a failing market sector.
Direct payments to households is a brute-force way to do it; Beijing also has tried lowering interest rates to incentivize larger purchases, which has shown a modest effect.
Given officials’ past steps, it is unlikely that they will take any strong measures at their July meeting. If they do not, China’s economy will continue to limp along into the future, although with a slightly firmer step.
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