CHINA Economy is Imploding as Exports & Profits Crash, Producer Prices Fall & Chinese Retail Slow

Video Summary

The Chinese economy is showing worrying signs, particularly in its industrial profits. While the overall figures may seem good, with a 4.3% growth in the first quarter of 2024, a deeper look reveals a concerning trend. In the first two months of 2024, industrial profits were up by over 10%, but in March, they were down by 3.5%. This is a significant decline, as it implies that many Chinese businesses are struggling to make a profit.

The major issue is the slowdown in exports, which fell by 7.5% in March. This is devastating for China, as the country relies heavily on exports to drive its economy. Additionally, the Chinese market is not providing a reliable source of revenue, with retail sales up and down over the past 12 months and now down below the critical 5% target set by the government. Furthermore, producer prices have been falling, and factory gate prices have been down consistently over the past 18 months, making it difficult for businesses to absorb cost increases and maintain profitability.

The situation is critical, and experts, including Fitch, have downgraded their outlook for China’s long-term foreign currency issue to negative from stable, citing concerns over fiscal deficits, rising government debt, and the country’s ability to manage its high levels of leverage. With this dire outlook, it seems unlikely that China will meet its 5% growth target for 2024, which will have serious repercussions for the Chinese economy.

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