Weekly Market Update: Chinese Economy Living on Borrowed Time A Concern for Your Portfolio
Unbeknownst to most economists and policymakers in Washington, the Republic of China is kicking the can down the road on a national debt crisis time bomb which they have caused themselves with years of expansionary fiscal and monetary policies, per a new report from the global intelligence agency Stratfor.
Statfor warned that “China faces business defaults and bankruptcies, low industrial profits, winnowing returns on investment, and the very real prospect of yet another slowdown in the real estate sector,” John Minnich their lead analyst wrote. “How well Beijing manages these problems in the months ahead will, to a great extent, determine China’s economic, social, and political stability for years to come.”
The universally-respected and non-political global intelligence giant continued to warn that the majority of heavily indebted Chinese companies are only one more housing sector slump away from disaster. The report brings up a range of imminent concerns for the Chinese economy in 2017.
The construction and homebuilding segments of the Chinese economy are imminent to slow massively down unless the communists decide to loosen up their restrictive controls over credit, home purchases, and investment in real estate. The firms and sectors which are holding the vast majority of the extensive corporate debts of China, such as building materials, commodities, and construction-related firms, will suffer the most from any prolonged housing or economic slump. Add rapidly rising debts and dramatically slowing construction growth to drastically reducing periods of debt maturity and you have the recipe for a huge spike in bankruptcies and corporate defaults causing economic disaster.
At exactly the wrong time for China economically, the incoming Trump administration is preparing to play hardball with Chinese exports. Rapidly ramping up U.S. trade protectionism will further isolate and pressure the economy of China. This will corner the communists into abandoning their long term economic reforms in favor of higher spending sprees to try to keep the economy above water.
Even this will prove to be difficult for the government of a nation which has now accrued 250 percent of its gross domestic product in mostly corporate debt, which tallies 165 percent of Chinese GDP. The national debt crisis with which Beijing has to grapple, including record bankruptcies, business defaults, lower returns on investments, and declining industrial profits, may prove impossible for the communist government to successfully navigate.
It is very easy to smirk about the misfortune that was bound to catch up eventually with the morally repugnant Chinese communist dictatorship. Like the Japanese in the 1980s, the Chinese were so sure this decade would be the one in which they at last passed the United States economically. Now it looks likely to instead turn into more of an economic implosion rather than simply a few lost economic decades.
Is Your Portfolio Prepared to Weather the Imminent Chinese Economic Implosion?
China’s pain is not necessarily your gain. For better or worse, the American and Chinese (and European) economies are now inextricably interwoven. The first world consumer survives on ridiculously cheap Chinese imports of everything from toothpaste, toys, and electronics to clothing and shoes. Take these dollar store items away, increasing the cost of daily necessities dramatically, and you will boost inflation in the U.S., U.K,, and Europe by hundreds of percent overnight. The whole developed world economy relies on the benefits of cheaply-made and -sold Chinese necessities to keep their economic engines running.
The collapse of America’s number one trading partner China will have dramatic consequences for both the domestic and world markets. Traditional asset classes are where most American workers keep the majority of their retirement money. These markets are all in peril of collapse if the world trading economy goes into the toilet.
Gold has saved countless individuals from economic ruin because of trade wars, export collapse, and rising protectionism. The precious metals are the ONLY dependable physical assets which you can spend anywhere, easily take with you, and count on to protect your portfolios whatever happens to the Chinese economy and international trade. Ask for your no-cost, no-obligation gold IRA rollover kit from Regal Assets by clicking here to get more information on safeguarding your assets through allocating a part of your holdings to tangible gold and silver.
Will your portfolio weather the next financial crisis?
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