CHINA Businesses Imploding as 30% Make Losses as Overcapacity Drives Down Prices & Profits

Video Summary

Title: China’s Overcapacity Crisis: Can it Affect the Global Economy?

China’s manufacturing sector has been growing rapidly, but it appears to have reached a critical point of overcapacity. With production far outpacing demand, prices are plummeting, and many companies are struggling to stay afloat. This crisis has significant implications for not only the Chinese economy but also the global market.

One of the key industries affected is electric vehicles, where China’s BYD took the top spot as the world’s largest electric car manufacturer in the fourth quarter of 2023. However, this growth has come at a cost, with many Chinese companies hemorrhaging money. To stay afloat, they are relying on subsidies and cheap debt from the state, which could keep them in business but also lead to the collapse of other companies in the industry.

Another sector affected is the solar panel industry, where China dominates the global market, accounting for around 80% of all solar panels manufactured. The same pattern is seen in lithium-ion batteries, where China supplies around 75% of global demand.

The crisis is not limited to these industries; many Chinese companies are now posting losses, and the state is backing them up with cheap debt and subsidies. This is causing concerns globally, as it could lead to a flood of cheap products, making it hard for companies in other countries to compete, potentially triggering a recession.

The Chinese government is also trying to support the economy by pumping more liquidity into the system, but this could have unintended consequences, such as inflation and asset bubbles. As the crisis unfolds, it will be crucial to keep an eye on the situation, as it could have far-reaching implications for the global economy.

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