January 08, 2024

3 things:

• So much of China’s rise is due to the U.S. outsourcing manufacturing jobs that supported our middle class. We’re in the process of decoupling from the Chinese (although we’ll probably never fully repatriate those jobs) and that’s going to have a huge impact on the Chinese economy. Remember, Mexico just became the number 1 trading partner for the U.S, with China in steady decline.

• Much of China’s recent economic growth has been driven by a massive over-investment in real estate that has created tremendous waste, with an estimated housing stock built for 3 billion people (China has 1.3 billion) and a ponzi-type scheme to fund that growth. China’s housing market is collapsing as we speak and that will resonate for years (decades?).

• Finally, China is an authoritarian state that expends huge resources controlling its own people, requiring massive investments in people, process and technology. Democratic nations, like the United States, don’t make these investments and are better able to deploy human and financial capital to for purposes of economic growth.