China Cuts Key Rate As Economy Struggles
China on Thursday turned in a set of activity data for May that was perhaps not as bad as feared under the circumstances.
That assessment comes with too many caveats to plausibly enumerate, and it's anyway not saying much. These figures are difficult to parse in real-time beyond the headline prints, which were ok-ish, if readers will forgive the informal cadence.
Retail sales rose 12.7% YoY last month, Beijing said. That counted as a miss, but it wasn't too wide of the mark. Consensus wanted 1
Of course, China’s Covid policies were obviously destructive. But the CCP asserts that it is in charge. And the people of China need to have faith in that, even though they probably do not wish to do so.
I’m sympathetic to China’s people, especially the youth who are unemployed and trying to imagine how to engage in their economy and build a life that includes the possibility of growth and wealth. But CCP decisions in favor of regimented policies dictated by the party and require party control have a negative impact on wealth-building by individuals and have a dulling influence on western participation in China’s economy. That undercuts the volume of opportunities for unemployed young Chinese, limiting the options they can explore for work.
Who can know the way out of this predicament for China and its young people seeking work. But as western companies leave China, the opportunities are only going to dry up even more.
I fear that the next step for China has to be a complete take over of Taiwan in order to bolster the Communist party through military and economic gain. Then install a puppet government in Taiwan – a playbook that has already worked for Xi in Hong Kong.
No way the US can defend an island that China wants, which is only 100 miles offshore from China, even if the US wanted to. The GDP of Taiwan is about $800B and China’s GDP is about $20T. – so not a bad prize for Xi.
Plus, China needs jobs for that 21% of China’s youth, who are currently unemployed. The Taiwanese who are not sympathetic to Xi can be replaced with the unemployed youth from Mainland China.
The best defensive might be to continue to relocate as much GDP from Taiwan as quickly as possible and then to destroy the existing factories that are currently in Taiwan.
Even if the Taiwanese organize a “resistance”, it is hard to think that such a resistance could force China to retreat.