PUBLISHER’S NOTE: We have repeatedly provided Trends Journal subscribers with details and facts of China’s economic rise and fall. For over a decade we had forecast that while the 20th century was the American century, the 21st century would be the Chinese century… because the business of China is business while the business of America has been war.

But unexpectedly, in January 2020, on its Lunar New Year, “The Year of the Rat,” China joined the war club by launching the COVID War… and imposing three years of zero-COVID policy that destroyed the lives and livelihoods of hundreds of millions across its nation.

We have reported on China’s youth unemployment which is over 21 percent and how Beijing will not release new numbers that will show it is getting worse; the mass amount of apartment vacancies across the nation; its sinking stock market; contracting manufacturing activity; declining export and import trade.

We also noted that the nation’s economy began its big boom when it joined the World Trade Organization in 2001, and as with all booms—and China’s was unprecedented—there would be a bust.

The bust is seen in the housing market which accounted for some 25 percent of China’s GDP… and now seeing major property developers going under. Country Garden, one of its largest ones left, is on the brink of default.

And as we detail in this and previous Trends Journals, not only are the United States and its allies ramping up war confrontations with China, the trade and investment restrictions they keep putting on Beijing is making a bad situation worse. 

To illustrate just how bad the debt level of the nation is, according to the Bank for International Settlements, total government debt in China is nearly 300 percent. 

And as we note in this Spotlight, a bad Chinese economic situation is getting much worse. 


Consumer spending, factory output, and public and private investment in China all “missed expectations by a wide margin in July,” The Wall Street Journal reported. 

The headline unemployment rate rose for the first time since February, ticking up from 5.2 percent to 5.3. In this year’s second quarter, foreign direct investment crashed to its lowest level “in decades,” the WSJ said.

The statistics bureau said it is no longer releasing figures on youth unemployment, most recently at a record 21.3 percent, while the agency revisits its measurement protocol. The figure was 16.7 percent last December.

Halting the release of key figures raised alarms among analysts and economists. They warn that hiding key data will further undermine confidence, which is already weak, in China’s economy at a time when Beijing is working to lure back skittish foreign investors.

On 15 August, Barclays lowered its full-year outlook for China’s GDP from 4.9 percent to 4.5, citing the country’s scant 0.8-percent growth in the second quarter, a continued poor outlook, and the absence of robust stimulus measures from Beijing.

The predicted GDP is distinctly lower than the government’s official target of 5 percent growth, which was widely seen as conservative as this year began.

The slate of disappointing numbers “shows how difficult it is for China’s economy to sail against the wind, with challenges from almost all dimensions and efficient policy support from few fronts,” Bruce Pang, chief China economist for greater China at Jones Lang LaSalle, a global real estate services firm, said in comments quoted by the WSJ.

TREND FORECAST: China’s economy will not recover in the way investors and officials want without strong intervention by Beijing and structural changes in regulatory structures and government involvement.

That would require an epiphany among the country’s top leaders, which so far shows no sign of occurring. 

Until the government is seen to take strong, unprecedented measures that are targeted to solve specific problems in real estate and the consumer economy, China’s current slump will deepen before it improves.

And considering the trade and investment restrictions being imposed on China by the United States and its allies, a bad situation will become worse. 


After the Chinese government pledged bold stimulus measures earlier this summer to revive the country’s economy, foreign investors bought $7.47 billion worth of China’s stocks and bonds.

Officials had promised plans to ignite consumer spending, solve record youth unemployment, and set the crippled property development sector to rights.

Now, after Beijing has failed to enact or even announce a specific, broad stimulus plan, foreign investors have sold roughly that same amount of bonds and stocks, according to a Financial Times analysis of market data.

The selloff accelerated in August and is likely to gain even more speed now that the central bank has cut its benchmark interest rate. (See “China’s Central Bank Makes Surprise Rate Cut” in this issue.)

“There is increasing frustration and concern from investors about the lack of any solid policy action,” chief Asia strategist Mohammed Apabhai at Citigroup, said to the FT.

The CSI Composite Index has shed almost all of its 5.7-percent gain after July’s politburo meeting where the promise of a forthcoming stimulus plan was made.

In a Bank of America survey earlier this month, 84 percent of fund managers said they believe funds overall are reweighting their portfolios to permanently de-emphasize Chinese stocks.

TREND FORECAST: Even if and when the government launches its promised strong stimulus plan, foreign investors are not only concerned with a Chinese economic downturn, but also punishment by the United States and its allies that are discouraging and/or banning investment in various sectors. 

That will continue to deprive China of an important share of the capital it needs to make the recovery work.

As a result, the stimulus measures, however bold, will not be effective enough quickly enough unless Beijing reverses a long-held practice and pours a significant amount of money into the economy—a move opposed by many high-level officials because China’s public debt already is three times greater than the country’s GDP.

There are scant reasons to believe that China’s recovery will come easily or soon.


Two years after first defaulting on its foreign bond payments, Chinese property developer Evergrande has declared bankruptcy in the U.S. The company reported more than $335 billion in liabilities, including about $19 billion in bonds owed outside of China.

The company had presold 720,000 apartments it was unable to complete as of the end of 2022.

Evergrande was the most flamboyant of China’s high-flying property developers, building apartment blocks as fast as it could borrow until COVID came along. It also has become “the world’s most indebted developer,” according to the Financial Times

The company sustained $81 billion in losses through 2021 and 2022, the FT noted.

Its default presaged a series of missed payments and defaults by dozens of other overleveraged developers, paralyzing China’s housing market and culminating earlier this month when Country Garden, the last developer to have survived the mess intact, warned that it lacked the cash to cover $200 billion in bond payments now due.

Country Garden has said its losses this year could amount to as much as $7.6 billion.

The COVID War and three years of anti-COVID lockdowns have left Chinese consumers unwilling to spend, factories with sharply fewer export orders, and foreign investors—who once eagerly bought Evergrande’s bonds—without confidence in China’s housing market, government, or overall economy.

Beijing has promised bold stimulus measures to revive the housing market and consumer spending but so far has delivered nothing that either has responded to.

TREND FORECAST: In China, it is customary to begin making mortgage payments on a home while it is still being built. The residential real estate industry’s collapse has left hundreds of thousands of households owing mortgage payments on homes they remain unable to move into.

The frustration of those buyers spilled into street protests in 2022, an event startling for its rarity.

China’s central bank has cut mortgage interest rates but that will not convince gun-shy households that real estate is a safe investment. The residential real estate industry has lost the confidence of two generations of Chinese. It will take years to earn it back.


Zhongrong International Trust may be the canary in China’s financial coal mine.

The trust manages a variety of what The Wall Street Journal called “esoteric financial products” and had the equivalent of $1.08 billion under its control at the end of last year.

Now four of the trust’s investment products have together missed $14 million in principal and interest payments to three publicly traded Chinese companies.

The trust, like many other Chinese financial institutions, made loans to property developers while the real estate market was soaring. That market now has crashed, as we report in “Evergrande Files For Bankruptcy” and “China’s Housing Crisis Continues” in this issue.

The trust is a part of Zhongzhi Enterprise Group, the owner of a range of asset management services and products. If the trust’s problems spread more widely through the larger organization, the difficulties could ripple out across the country’s financial sector. That, in turn, could imperil other industries.

However, “Zhongzhi is a black box,” Gavekal Research analyst Xiaoxi Zhang explained in a WSJ interview. “It’s a private company, they don’t have public disclosures, and some investors don’t know what kinds of assets they’re investing in.”

China’s economic woes are making U.S. officials nervous. U.S. treasury Secretary Janet Yellen called China’s mess a “risk factor” for the American economy.

In a recent note, Zhang wrote that “the worry is that a ‘Lehman moment’ beckons, threatening the solvency of China’s financial system.” She was referring to the collapse of investment bank Lehman Brothers that tipped the world into the Great Recession. 

Beijing’s “regulatory vigilance” makes that unlikely, she added.


As the rift between China and the U.S. deepens and companies seek to “reshore” their supply lines, manufacturers and retailers are shifting their purchases from China to Canada and Mexico and other parts of Asia, according to trade data released by the U.S. census bureau.

During the first half of this year, Chinese goods accounted for 13.3 percent of U.S. imports, the lowest for any such period since 2003, The Wall Street Journal reported. Mexican goods made up 15.7 percent and Canada’s totaled 15.4 percent.

For the 12 months ending 30 June, China made up 14.9 percent of all U.S. imports, while India, Thailand, and Vietnam totaled 24.6 percent.

In June this year, Mexico’s shipments into the U.S. equaled those from China. In dollar terms, Mexico is now the U.S.’s top trading partner, the WSJ said. Canada is second, knocking China into third place.

In the year ending 30 June, China’s shipments of machinery to the U.S. fell by $16.6 billion. American imports of Chinese electronics shrank $13.4 billion during the period.

“It’s now become clear to companies that the conflict on trade and technology is not going to go away,” Chad Bown, a senior fellow at the Peterson Institute for International Economics, told the WSJ. “They have begun to figure out ways to de-risk.”

The U.S. transition to other suppliers began in 2018 when the Trump administration imposed a wide slate of tariffs on Chinese imports. In 2019, China’s share of America’s imports from Asia slipped below the total from 25 other Asian countries.

TRENDPOST: China’s exports boomed in the early years of the COVID War when U.S. consumers, given free money by Washington, went on a spending spree. 

And with our forecast for an economic slowdown in the U.S. and Europe, China’s export numbers will continue to decline. 

With exports down, it will cause a reshuffling of the country’s economy. Among the moves will be Beijing’s push for a self-sustaining economy.

TREND FORECAST: Barring an unexpected shock, the current slump in China’s factory orders for export has become more or less permanent… as we detail in this and previous Trends Journals.

China’s economic vision depends on a “dual circulation” of a robust export industry and thriving consumer economy. To shore up that vision, China will invest more heavily in the sectors in which it leads the world—electric vehicles and green energy technologies.

This will reorder the world’s manufacturing economy, distributing it more widely among developing countries such as Mexico and Vietnam, spreading prosperity more widely and diminishing China’s economic influence to some degree.


After a short rebound earlier this year, China’s housing market has slumped again as potential buyers wait for prices to fall even further, leaving developers short of cash and government officials scrambling to find a way to revive it.

Besides further price cuts, buyers also are expecting lower mortgage interest rates and home-buyer subsidies from local governments, brokers and analysts told The Wall Street Journal.

The dearth of buyers worsens developers’ cash flow crisis. Several major builders defaulted in late 2021 and early 2022; Country Garden, the last big builder to skirt default, announced earlier this month that it was short of cash after posting four straight months of declining apartment sales.

That also puts a significant dent in the country’s hopes for economic recovery: real estate has accounted for 20 to as much as 30 percent of China’s GDP in recent years. 

Since early 2022, the real estate market has been in the doldrums. Last month, China’s 100 largest developers sold just $49 billion worth of homes, the lowest monthly volume since mid-2020, according to data service China Real Estate Information. July’s sales were a third below June’s.

Mortgage lenders recently have cut their interest rates below prime in an attempt to revive sales.

Still, China’s housing demand has fallen to between nine and ten million units a year, compared to a peak of 14 million in 2021. 


Hong Kong’s Hang Seng stock index fell into a bear market on 18 August, dropping 21 percent from its peak on 27 January.

A bear market is defined as a decline of 20 percent or more from the most recent high.

The index, which includes mostly companies on the Chinese mainland, has been dragged down by the crisis in the country’s real estate industry, which remains unresolved after more than two years.

However, consumer spending and foreign investment also are suffering and factory orders for export are among the fewest in more than a decade.

The real estate crisis began in 2021 when Evergrande, the country’s largest developer, defaulted on foreign bond payments. That was rapidly followed by a series of missed payments and defaults by other builders. Fitch Ratings declared Evergrande in default in December 2021. The company filed for bankruptcy in the U.S. this month, as we detail in “Evergrande Files for Bankruptcy” in this issue.

The Hang Seng and other Chinese equity markets shot up early this year after Beijing lifted three years of anti-COVID measures. However, after a brief spurt of pent-up spending, consumers resumed their habit of saving instead of shopping.

At the same time, a slowing world economy and a global shift in consumer spending from goods to services cut foreign orders to China’s factories.

While Beijing has promised bold stimulus measures to bring back home-buying and consumer spending, only mild measures have been implemented, so far to little effect.

“Markets are being hit by the perfect storm,” Barclays analysts wrote in a recent note.

Adding to the difficulties: for years, local governments have funded much of their budgets by selling public land to developers. With the property market paralyzed, municipal and provincial governments are in a budget crisis of their own.

The Hang Seng’s plop is a symptom of a larger ailment. The mainland’s benchmark CSI Composite index is halfway to a bear market of its own, down 10 percent from its February 1 high.

The slide might be contagious.

“The U.S. economy remains strong while China continues disappointing…and global investors are becoming increasingly concerned,” Bank of America economist Claudio Irigoyen wrote in a recent report. The “decoupling” of the two could eventually lead to a slump in global markets, he warned.


On 15 August, the People’s Bank of China made an unannounced rate cut of 0.15 of a percentage point to its benchmark one-year loan rate in an attempt to spur feeble consumer spending and a paralyzed housing market.

Tuesday’s cut was the bank’s largest since 2020 during the COVID War.

A shorter term rate was cut by a tenth of a point.

The cut preceded a spate of bad news showing consumer spending and the housing market weakening last month and youth unemployment on the rise. See “New Bad News for China’s Economy” in this issue.

Also in July, banks made the fewest loans in 14 years, the National Bureau of Statistics reported.

“China’s data show the economy skidding into the second half of the year—clear reason for the swift and unusually large rate cut,” Bloomberg analysts wrote in a note. “The readings on production, investment and consumption all undershot expectations, showing June’s rate cut didn’t move the dial.”

The new rates lifted bond prices, with the 10-year yield slipping 0.07 of a point, its lowest in three years. Yields fall as bond prices rise.

However, the rate changes dinged the value of the domestic yuan, dropping by 0.23 percent to 7.2744 to the dollar. The yuan closed 22 August’s trading at 7.21. 

The value of China’s currency is expected to slide further as the country’s economic malaise continues into the second half of this year.

The spread between yields on the 10-year U.S. and Chinese government bonds rose above 1.6 percentage points last week, the widest since 2007. That makes dollars far more appealing than the yuan as an investment medium.

TREND FORECAST: Monday’s rate cut was considered a zero move by The Street. Indeed, as The Wall Street Journal reported, “Hong Kong’s Hang Seng Index, which is dominated by mainland Chinese stocks, fell 1.8% after falling into a bear market last week. The mainland CSI 300 Index also fell, retreating 1.4%. And China’s currency weakened, with the offshore yuan trading at around 7.32 per U.S. dollar.”

Thus, as we detail in this and previous Trends Journal’s China’s economy is going down and the deeper recessions hit the globe the further China’s economy will fall… especially as manufacturers are leaving to find cheaper labor markets to manufacture their products. 


Since 2021, Chinese government agencies have seized about 170,000 hectares of land, or roughly 420,000 acres, and torn down businesses to open more land for farming.

Some of the land had already been set aside for previous priorities. For example, in 2017 farmland in Chengdu province had been converted to parks as a tourist draw. Now local authorities have reclaimed 6,700 acres for crops, shutting down businesses including a popular restaurant that located there because of tourists.

The seizures are part of Beijing’s plan to permanently set aside 120 million hectares—almost 300 million acres—as farmland, the amount the government has calculated it needs for China to be able to feed its people without imports.

“China must be able to feed its people on our own,” president Xi Jinping said in a speech last year. “We will fall under others’ control if we can’t hold our rice bowl steady.”

China’s exuberant growth as a manufacturing powerhouse that spawned a blooming middle class in recent decades has paved over and built on millions of acres.

The country imports 75 percent of the soybeans it consumes from Brazil and the U.S. China imported 7 percent of its corn in 2022, compared to less than 1 percent in 2012, the Financial Times reported.

Now “China is preparing for the worst-case scenario in which it couldn’t buy any food from abroad,” Yu Xiaohua, an agricultural economist at Germany’s University of Gottingen, said to the FT.

Because young people have little interest in a farming career that pays a pittance compared to factory wages, officials are having to import older farmers from nearby districts to work the new fields.

“I would come to the field every day to make sure the crop grows well if this was my farm,” a 65-year-old farmer named Li told the FT. Instead, he makes a two-hour bus trip to the field twice a month.

“Now I come here only when my boss asks me to and I don’t care what the output will be,” he added.

In more than a dozen Chengdu fields the FT visited, “crops were often sparsely scattered and weeds were everywhere,” it noted.

“We reclaim these plots to send a signal that we care about food security,” a Chendu official said to the FT’s reporter. “Output is not a priority.”

“The benefits of a shopping mall far outweigh a few hundred [pounds] of corn that does little in achieving food self-reliance,” a local resident named Wang said to the FT.

TREND FORECAST: As we have detailed, China, as with Russia, realizes the limits of globalization and will both move toward becoming self-sufficient economies. These are some of our previous forecasts that China would move toward self-sufficiency: 

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