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The professor added that the CCP finds itself trapped in an endless loop of internal conflicts, with the key uncertainty being which side will make the initial move. Should Xi Jinping wish to salvage his position, he might have no choice but to renounce communism.
China's property market has undergone a major downturn, leading the nation into a fresh predicament. Analysts are divided over whether this situation represents deflationary or inflationary pressures. Nonetheless, all agree that China's economic outlook is grim and growing more perilous with each passing day.
A seasoned investor recently penned that the ongoing real estate crisis marks only the start of more significant issues. Should it remain unresolved, it could spiral uncontrollably into a full-blown financial crisis. The author emphasized that China’s property market constitutes the biggest asset bubble ever seen globally, with peak valuations reaching up to an astounding $450 trillion. With the bubble now bursting and values plummeting, this momentous occurrence stands as a pivotal point in global affairs. Disregarding these developments when making decisions poses serious risks.
China's current economic challenges appear to be rooted in insufficient consumer spending. However, the underlying cause of this low consumption and lackluster demand is that households have been borrowing against anticipated earnings for many years and now find themselves obligated to pay back these debts, thus limiting funds available for spending. Currently, the government does not exhibit urgency about this issue nor has it implemented corrective measures promptly. Consequently, the situation keeps deteriorating and could ultimately result in a significant rise in non-performing loans within banks, potentially escalating into a full-blown financial crisis.
The investor pointed out that without funds, residents won’t be able to sustain the demand, causing suppliers to face bankruptcy. This could lead todefaults onreal estate debts cascading throughout the market. Ultimately, individuals would find themselves indebted to banks. Typically, banking systems operate with leverages exceeding tenfold. Therefore, should these institutions suffer even a 10% loss in asset value, magnified by such high leverage ratios, they might collapse financially. It’s worth noting that roughly two decades back, most Chinese banks were essentially bankrupt and insolvent. Despite many people having forgotten this chapter of history, circumstances appear poised for repetition.
China's economic downturn has triggered various societal transformations. On September 8th, a food delivery worker in Shanghai stood with a placard on Nanjing East Road advocating for the formation of a labor union. The message on his banner stated, "These days cry out for China's version of Martin Luther King, and we seek our very own workers' unions, representatives who will voice our needs, and an eight-hour working day." Such developments are precisely what the Chinese Communist Party (CCP) dreads the most.
Moreover, the economic downturn has offered opportunities for Xi Jinping’s adversaries. This situation has put the Chinese Communist Party (CCP) into a state of unease. An esteemed professor from the Department of Political Science at National Taiwan University mentioned during a livestream that once Xi Jinping consolidated his power, he started preparations for conflict. Specifically, he undertook four key actions: firstly, initiating a trade dispute with the U.S.; secondly, seizing control of Hong Kong, leading to an exodus of foreign investment as the city could no longer create substantial wealth; thirdly, enforcing strict lockdown measures over three years, which pushed many small and medium-sized businesses to their limits; and finally, advancing state-owned enterprises while retreating support for private companies, resulting in swift economic deterioration within China.
The professor mentioned that when the economy declines, societal progress halts, followed by increased unemployment. Severe joblessness can lead to higher crime rates, social instability, and emerging political issues. Historically, the Communist Party has shown ruthlessness during power struggles. Lately, rumors have circulated with a common theme: aiming at Xi Jinping’s removal from power. These whispers seem to be fueled by anti-Xi factions. Aware of this opposition, Xi Jinping has stepped up his crackdowns and grown increasingly wary.
The professor added that the CCP finds itself trapped in an ongoing cycle of internal conflicts, with the key uncertainty being which side will make the initial move. Should Xi Jinping aim to secure his position, he might have no choice but to distance himself from communist ideology.
The implosion of China's property market has triggered a series of economic and societal issues, placing the country in a highly vulnerable position. Despite disagreements about whether the turmoil stems from deflation or inflation, most agree that China faces a substantial economic decline with considerable hazards looming ahead.
The collapse of the property market bubble has led to extensive repercussions. Not only has this altered China’s economic environment significantly, but it has also underscored the risks associated with overlooking major transformations when making decisions.
China's economic challenges stem from an extended phase of excessive spending and accumulating debt. As future earnings have been committed, there is minimal space left for present consumption, which intensifies the economic downturn. The authorities' failure to act promptly has worsened the situation, resulting in a rise in non-performing loans within banks and posing a significant risk of a major financial collapse.
The signs of social upheaval are more noticeable now, as demands for improved labor rights and greater voice reflect rising dissatisfaction amongst the public. Economic instability has furthermore offered an opening for critics of Xi Jinping, escalating power battles within the Chinese Communist Party (CCP).
As the crisis progresses, the CCP finds itself caught in an intense loop of economic downturns, societal unrest, and political upheaval. In order to manage these intertwined challenges, Xi Jinping might have to contemplate substantial changes in both politics and economics, possibly including moving away from core Marxist doctrines. This ongoing predicament highlights how closely linked fiscal strategies, public peace, and governmental authority truly are within China’s current scenario.
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