China’s “2008 Recession” resurgence – The Collapsing Chinese Government

Social unrest has erupted in China after nearly $6 Billion worth of deposits have been frozen. Thousands of Chinese homebuyers have refused to pay up their mortgages worth up to $300 Billion. Mortgage payments have stopped on nearly 300+ projects in nearly 90+ cities, sounds similar, doesn’t it?

Recently 400,000 people protested when their bank deposits had been frozen, this bank freeze was a result of a massive fraudulent scheme played out for over a decade. Viral clips showcase the Chinese public protesting, despite the CCP (Chinese Communist Party) trying to censor as much of it as possible.

Although the bank freeze only occurred in 5 different major banks, this could ripple down to 100s of other banks according to the Chinese government.

Founder of Huawei, China’s largest private company said, “this collapse will cause pain to the whole world in the next decade”.

Over 60 major Chinese developers are drowning in more than $13 Billion in debt which are to be paid by this year.

China has its lowest Consumer confidence ever after multiple decades, not to mention the real estate in China has plunged more than 30%, with real estate sales being down more than 40%.

Economists believe that if China wants to sustain, they must invest in anything but real estate, but China has over 70% of their wealth tied up in their real estate.

In the 2020 world recession about 780 companies in China reported a net loss in their earning, but this year more than 900 companies have reported a net loss in earnings. Even when the world was in Economic ruin the Chinese companies were still somewhat afloat, then why is it falling now?

This is due to China’s zero covid policy – which is basically a very tight and controlled lockdown by the government forcing people to stay home, and many businesses to stay shut for walk-in customers. More than 300m people have been affected in some way by the policy financially, not to mention China is also facing one of its deadliest heat waves ever causing droughts and power outages across the country.

Could this finally Pop the Chinese Economic bubble and correct the market?