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Here’s a chart showing 30-year government bond yields in China vs Japan. As China cuts interest rates, Japan is raising interest rates. Not even the 2008 Financial Crisis saw Japanese yields rise above Chinese yields. China is now facing “Japanification” of its economy. Investors in China’s $11 trillion government bond market have never been so pessimistic about the world’s 2nd largest economy. As a result, we are now seeing the largest gap in US/Chinese bond yields in HISTORY. China’s $11 TRILLION bond market is flashing warning signs. China has had 6-straight quarters of deflation for the first time since 1999. Population dynamics are shifting and the real estate collapse is worse than 2008. This is similar to what Japan saw in the 1990s. 25+ years later and Japan has still not recovered from this. Population dynamics are one of China’s largest similarities to Japan in the 1990s. In 2050, the proportion of Chinese over retirement age will be 39% of the total population. 45% of people will be aged 65 or older, up from 13% in 2010. This is due to the one-child policy. This has led to a collapse in Chinese real estate. Since 2021, China’s real estate collapse has destroyed $18 TRILLION of Chinese household wealth. If you adjust 2008 losses in the US for inflation, it equals ~$17 trillion today. China’s 2008 is happening as we speak. So, why aren’t markets around the world crashing? After all, China is the world’s 2nd largest economy, behind the US. Wouldn’t a 2008-like event in China have ripple effects around the world? For now, China and the US are in polar opposite situations. Deflation vs inflation. Now, consumer confidence has COLLAPSED in China and not even stimulus is helping. Over the last 3 years, consumer confidence in China is down ~ 50 points, to a near 30-year low. Such a drop in consumer assessment of the Chinese economy has almost never been seen before. This has led to the RAPID weakening of the Chinese Yuan, another crisis within a crisis. The Chinese Yuan is nearing its weakest level against the US Dollar since 2007! Currency markets are, in fact, trading like China is in their own modern-day 2008 real estate collapse. Suddenly, it all makes sense why China is stocking up on gold reserves. China’s central bank resumed gold purchases in November. They now hold a record ~73 million fine troy ounces of gold. China’s central bank knows exactly what is happening; it’s a crisis. submitted by /u/XGramatik |
Ask a trader about their predictions for the next year
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