Collapsing China? - Haven't you been hearing about China in the news a lot lately? From peacocking over "Crazy Nancy's" visit to Taiwan to news about its economy, we can't get enough China news.
Their ongoing show of force over the Taiwan visit might seem like a heavy-handed response to an octogenarian's visit to the island, but it's a little more complicated than that.
In February, Vladimir Putin thought that he could invade Ukraine and achieve strategic and tactical victory in days.
The biggest assumption in this line of thinking was that the West would not intervene: there wouldn't be a unified backlash against the autocratic dictator, nor would the West provide literally billions in aid to the Ukrainians in what amounts to a Vietnam-era proxy war.
Sure, the Chinese are going bananas, firing missiles, flying fighter jets, and flexing their military muscles in the straits of Taiwan and the South China Sea right now, but this is all for show.
Integrated or strategic deterrence in this scenario really means that the US's policy aim is to convince Xi that if the PRC attempts to "reunite" China, the US military will intervene both diplomatically and militarily. That is the game.
Conflict with China is not an improbable event, and a credible set of threats enable this kind of deterrence.
Speaking of credibility, much of the economic data that comes out of China is beyond inaccurate. "Farcical" is the word that I would use.
Considering that their economy was allegedly the strongest in the world after the pandemic, it's hard to believe the data given that the Chinese economy is struggling to keep the wheels on right now.
Manufacturing has long been a pillar of Chinese strength, but after a staunch commitment to zero-C19 policy and weakening demand, the industry is sputtering.
The Chinese housing market is also in rough shape. Rumor has it that the good communists in many dwellings throughout China are revolting against the man, refusing to pay their mortgages over concerns that developers are struggling so much that they won't be able to deliver.
Chinese economic growth is slowing, and it looks like they're not going to hit the party's goals this year. This might be a bad sign for Xi going into this fall's National Congress of the CCP.
This might get worse; it would appear that the West is waking up to its reliance on Chinese goods, whose export is critical in the production of the stuff that makes our economies go 'round.
Overseas orders for Chinese goods are on the decline, and Western economies are starting to shift their spending towards services as opposed to made-in-China imported products.
The Chinese consumer is also struggling. After months of lockdowns, some of the largest cities in the PRC and their residents are holding on to their hard-earned cash, fearful of subsequent lockdowns with no sign of reprieve from the zero-C19 policy. This will have implications for many multinationals who do business in China.
There's a lot of off-putting content here, but by no means is China going to collapse. That being said, reliance upon the Chinese consumer or Chinese intermediate goods is something that should be at the forefront of your stream of consciousness as you attempt to navigate the rough seas of today's financial markets.