China’s Looming Crises | CNBC Marathon

Introduction (0s)

• China's population has declined for the first time in decades, marking the end of rapid growth and cheap labor.
• Ghost cities, unfinished residential buildings, and lack of demand have become visual metaphors for the ongoing crisis.
• Urban youth unemployment rate has risen to 21%, with 6 million people still looking for jobs.
• China's real estate market is in crisis, with many unfinished residential buildings and empty cities.
• Demand for housing has declined due to lack of trust among buyers, leading to a downward adjustment of prices.
• The crisis has caused a decline in economic growth and increased unemployment.
• China's population is aging rapidly, with a shrinking labor force and a growing number of retirees.
• The one-child policy has contributed to the demographic crisis, as it has led to a decline in the birth rate.
• The government is trying to encourage people to have more children, but it is unclear if these efforts will be successful.

Why Youth Unemployment Is Surging In China (Published September 2023) (48s)

• China is facing economic challenges, including a real estate crisis, semiconductor bans, labor market issues, and high youth unemployment, which reached a record 20.8% in May.
• The economic slowdown, coupled with the zero-Covid policy, has led to a decline in investment in real estate, a drop in consumer confidence, and a decrease in imports and exports.
• Despite deflationary pressures, Chinese consumers are not spending domestically or abroad, prompting the government to cut interest rates to contain market volatility.
• The housing market has experienced significant growth in the past 10-15 years, particularly in first-tier cities, leading to increased wealth for many families.
• The "lying flat" phenomenon refers to young people taking breaks from intense competition and rat race culture to pursue more relaxed lifestyles.
• China's policy focus has shifted towards long-term economic security, leading to increased investment in technologies like artificial intelligence (AI).
• Traditional career paths for young people in China, such as real estate, education, and tech companies, may not be as promising in the future.

What China's Shrinking Population Means For The Global Economy (Published March 2023) (12m32s)

• China's population has declined for the first time in over 60 years, ending rapid growth and the era of cheap labor.
• The one-child policy, implemented from 1980 to 2015, has resulted in a gender imbalance, affecting future population growth.
• High living costs, especially in urban areas, make it difficult for the younger generation to afford housing and raise children, further contributing to the low birth rate.
• The strict zero-Covid policy in 2022 exacerbated the low birth rate due to inconveniences and job losses.
• China's aging population strains productivity, increases welfare spending, shrinks the tax base, and leads to a budget deficit.
• The disruption of China's integration into global supply chains due to the Covid pandemic causes bottlenecks and shortages, impacting global trade and consumer spending.
• India is set to surpass China as the global economic leader, driven by its growing population, the largest working-age population, and a young, educated workforce.
• India's demographic advantage requires infrastructure development, gender equality, and economic reforms to fully capitalize on its potential.
• China's population decline and aging are largely irreversible, necessitating reforms in pension, healthcare, and social welfare systems, as well as productivity enhancements and education reforms.
• As China's labor supply diminishes, the government may import cheaper labor from other countries to maintain its comparative advantage, benefiting those countries with cheaper labor.
• Foreign companies and governments are reevaluating their business models and considering diversifying manufacturing and consumption sources outside of China.

Will China's Real Estate Crisis Hit The Global Economy? (Published October 2023) (21m21s)

• China's real estate industry is experiencing a crisis marked by unfinished residential buildings, declining demand, and a loss of trust among home buyers.
• The rapid expansion of the property sector without adequate regulations has contributed to the crisis, leading to a significant decline in commercial real estate sales.
• Major developers like Evergrande and Country Garden have defaulted on their debts, causing ripple effects throughout the economy and stock market, impacting China's overall post-Covid economic recovery.
• The real estate and related industries contribute significantly to China's GDP, making the housing sector's struggles a major concern.
• Unlike the 2014 housing market slowdown, the current crisis involves widespread developer defaults and a large number of indebted households.
• Developers' reliance on offshore debt markets and local government financing has raised concerns about underlying issues.
• The government's deliberate policy to curb the property bubble by restricting financing has resulted in a depressed property market.
• The crisis has a significant impact on China's economy and the global economy due to reduced demand for commodities and heavy industrial products.
• Offshore defaults in China's property sector surged to a record $54 billion in 2022, with the default rate tripling compared to 2015.
• China's growth is expected to slow down, but a deep recession is unlikely.
• The property market is not expected to stabilize immediately, and there are ongoing debates about when it will bottom out.
• China faces a long-term challenge of declining demand for apartments due to slowing urbanization, declining demographics, and an aging population.
• The lack of transparency and limited information about China's economy contributes to growing uncertainties.