China's Economy in Crisis Property Slump Fallout Explained

China's Q2 GDP data, why do we care about this? Let's have a look, we do. We're really care about this. China is set to release its second quarter GDP data this week, arriving at a crunch moment for the entire world, because the world's second largest economy, according to the US who never want to accept it. They're number two, so they'll just say, China's number two. Recent monthly indicators have signalled rising economic pressures with retail sales foreign and the return of a slump and fix asset management. What do we care about this? Such declines raise questions over how far these indicators might be at odds with the GDP rate, which really deviates from the official target. This year it's set at around four and a half to five percent. Analysts forecast that second quarter Q2 growth will come in at the lower end of that range, because unlike other major economies, GDP data in China is opaque at best. It's pretty hard to actually get a read on exactly what's happening, because they don't release their raw data. They try to obscure that as much as possible, because they want their ability to be able to control the narrative within their own country propaganda. Let's have a look. Investment, a key area of concern. China publishes monthly year-to-date growth for fixed asset investment. This includes real estate development, which is in the tank, it's in the toilet, capital construction projects. These are critical, and I don't think these are in the toilet, but maybe they've slowed down. The overall figure remained positive. They were property slowed down that began in 2021. That there is an understatement. It wasn't a slow down, it was a catastrophe. China, their property market, because they're training the train degrees. The property market in China just completely tanked. Bloody noisy. There it goes. At tanks, like the market completely capitulated. A lot of money got lost over that period of time. A lot of Chinese lost their shoots. It's pretty tragic, actually, because they were basically told, everybody buy yourself an apartment, off the plan, and you'll be rich. You can't lose because they never go down. Property prices never go down. What they did, they did very strongly. As Trump says, very strongly, they went down. It was an absolute shit storm in China, to say the least. This weakness has recurred this year, raising questions about how it will be reflected in the growth. Why am I talking about this? If China goes, we go. If China has a problem, if they catch a cold, then so do we. It will ripple around the world, and it will impact everybody. Local governments in China have a limited ability to invest, given their need to use funding to tackle debt. All the debt that they built up when they did all of the property craziness a few years ago, because the council also had to build all the infrastructure to accommodate all the people that were moving from the countryside into the city. That to build the city's base of it. They were loaded up on debt to build all that stuff. It was an absolute diabolical mess. Too much growth, too far. Now you've got this unwinding and the government over there have been trying to let the air out of the balloon slowly. You hold the balloon and then you can release the air. You don't just poke the balloon, it goes bang. What they decided to do was grab the balloon, put a little hole on it and slowly release the air out of that balloon. That's what governments should do. That's how you're supposed to manage an economy. You make sure that you don't get the balloon blow up, basically. If it does get a bit of air in it, then allow the air to come out slowly and gradually so you don't harm people from things happening just too far. China, I think it has a bit of a challenge. Signs of weakness in retail sales and employment. Retail sales are in the tank. Signs of weakness, they've dropped by 0.6% in May on a year on year on year. It's the first decline since 2022. Forget about the year on year. It's the first decline since 2022. That's a big deal, man. That's a big deal. Month earlier it rose to 0.2%. Focus on, this is the first decline since 2022. That's a big deal for China. They're trying to stimulate the economy. They're trying to pull every stump they can to try and let the air come out of the balloon slowly. Urban unemployment remained within a band of five to 5.5% in recent years. Policymakers declined to set a five-year target, but targeted unemployment within 5.5%. We're not really going to be able to do much about that. There's basically relatively bright spots appearing in production and exports and that's about it. It's a bit of a debacle really for China, but I'll just note how well they are managing this. They're probably in terms of managing the economy. They do a good job when you compare and contrast to the USA, because I think the US does a really good job now after 2008. They do a very good job of avoiding those systemic issues from blowing the entire world up, but bottom line team. China's second quarter GDP data comes at a very sensitive time monthly data showing the weakness. While some industrial production and exports give support, the overall picture points to softening momentum. The gap between China's actual performance and stated performance seems to be widening at the moment. That's really the story here. It's always been hard to figure out what their actual performance is, but it's clear now that there's a big gap there between the two. That's dangerous for all economies because that's such a massive economy. I think in terms of PPP, much bigger. They dwarf the US economy. They dwarf the police believe me. If I can, I'll stick up on the screen. I'll actually splice it in, and that is the size of the Chinese economy compared to the US economy. It's just massive. If that thing gets upside down, then how can it not impact your life? How can it impact my life? I'm pretty sure it impacts us all. I think we all end up in the same boat. Let's hope that the Chinese can figure this out. They can let the air out of the balloon at the right speed, and they can turn their ship around and start to grow again. It's interesting. I think that's because it's got a negative impact. It's quite threatening to our way of life. I don't like that, but I think it's really important to understand what's happening. Not be surprised by something if it does happen and be prepared for it, and be agile and a little bit nimble. If you've got yourself in a particular situation or you've got some plans, at least you can understand the context of what's happening here and how that might impact on you. That's the show today. This is Dave Talks Politics. If you're new to the channel, subscribe to the channel and hit the little bell to be alerted about new episodes when they typically drop daily. We're now on Apple Podcast, Spotify Podcast, I.R.O. I think we're on 20 channels now, 20 distribution channels, short shorts, and we've got over on YouTube shorts and we've got Superstack, Supercut on X and we've got the main show here on YouTube. Yeah, it's amazing. We've actually started to really quickly grow, having a lot of fun. I hope you're enjoying it too, wherever you are on this basic motorbills. I hope you have a great day. Cheers to you. Bye.