Posted on 11/21/2025 9:27:32 PM PST by SeekAndFind
Is the Chinese economy collapsing? Or is something worse waiting in the wings?
The short answer is that we could be looking at something much worse than a crashing economy. China could be part of a collapse of the global monetary system.
We’ll begin the analysis with the latest official economic releases from China. These releases showed some of the weakest performance by the Chinese economy since the 2020 pandemic collapse.
Industrial production growth for October declined to 4.9% (year-over-year) from a prior level of 6.5%. This was the weakest reading since August 2024. Some sectors receiving state support such as autos, computers, shipbuilding and telecommunications did better than average, but the broader manufacturing sector slowed materially, and mining output also weakened.
Retail sales in October were also fragile. There was overall growth of 2.9%, but certain sectors crashed, including household appliances (- 14.9%), building materials (- 8.3%), and automobiles (- 6.6%).
Sectors showing strength included jewelry (+37.6%, although this can be partly a proxy for buying gold in the form of jewelry) and cosmetics (+9.6%). This was the smallest increase in retail sales in years and is especially weak considering that October traditionally marks the beginning of a seasonal buying surge.
The most disastrous data came from fixed-asset investment (FAI), which showed a 1.7% year-to-date decline. This is the steepest decline since the pandemic crash year of 2020.
Property investment fell at -14.7% while infrastructure investment (long the pillar of Chinese growth) went negative at -0.1%. Manufacturing investment was positive at +2.7%, but that was only half the rate from earlier this year.
The bottom line is that all three pillars of investment – fixed assets, property and manufacturing – are slowing at the same time. Investment is one of the most powerful drivers of Chinese growth. While developed economies typically attribute about 25% of their GDP to investment, the Chinese component is closer to 45%. If investment is crashing in China, then overall growth is crashing along with it.
This recent data comes on top of the multi-year crash in property values. This crash has caused equity on many properties to be wiped out. To the extent that vanished equity represented the life’s savings of many everyday Chinese citizens, the impact on consumption and the reluctance to make new real estate investments is profound.
The real estate crash goes beyond individual owners and has led to the collapse of several of the largest builders and property investment companies in China including the Evergrande Group ($19 billion in losses), Country Garden ($11 billion in losses), Fantasia Holdings (recent $1 billion operating loss), Sunac (filed for bankruptcy in 2023), and several others.
The financial collapses of China Evergrande, Country Garden, and Sunac all come against the background of a broader crash in real estate debt and real estate-backed wealth management products. This chart shows that a major Chinese high-yield real estate index collapsed 82% in recent years and has never recovered.
The real estate collapse arrived at the same time as several failed “reopenings” of the Chinese economy after COVID and several “stimulus” plans after that. A major economic reopening was announced in 2022 after pandemic lockdowns were eased. This was a failure. Then China announced other major stimulus plans – so-called bazookas – including rate cuts, reductions in bank reserve requirements and subsidies to favored industries. These failed in 2024 and again in 2025. As in the United States, lower interest rates are not a sign of stimulus. They are associated with recession and depression.
Chinese economic data must be considered in light of Goodhart’s Law. This economic rule says that when a metric becomes the object of policy, it loses value as a metric.
This applies to Chinese GDP. The Chinese GDP growth rate has declined from 10.0% per year in the early 2000s to 5.0% in 2024. The GDP growth rate (year-over-year) for the third quarter of 2025 was 4.8%. The Chinese clearly target the GDP growth rate and currently have a target of 5.0% growth. This means that growth is almost certainly lower, and the Chinese are using statistical sleight-of-hand or outright lying to make it appear they are at or near their target.
As noted above, about 45% of Chinese GDP comes from investment. However, much of that investment is wasted on ghost cities, white elephants and lavish projects that can never hope to provide any return on investment. If this wasteful investment were written off (as would be required under GAAP), Chinese growth would be cut from 4.8% to about 2.5%. Taking into account other manipulations and Goodhart’s Law, it’s entirely possible that China’s GDP growth is negative today. That outcome is not widely understood and would come as a shock to the panda-huggers on Wall Street.
At an even higher level, China is stuck firmly in the middle-income trap. Absent pervasive corruption or war, countries can move readily from low income (annual per capita GDP of about $5,000) to middle-income (annual per capita GDP of about $15,000) through a combination of urbanization, infrastructure and cookie-cutter assembly-style manufacturing.
The breakout to high-income status (annual per capita GDP of $25,000 or more) comes only from proprietary technology and high-value-added manufacturing. Only a few countries (Singapore, Taiwan, South Korea, Hong Kong) have ever made this leap since World War II. China is good at stealing technology, but they are not good at creating it or applying it in their manufacturing sector. This is another major headwind to Chinese growth.
China has other significant growth hurdles independent of the issues noted above. China is now in the early stages of the greatest demographic collapse in the history of the world, even greater than the Black Death of the 14th century.
China’s current population of about 1.4 billion is expected to decline by half in the next fifty years. That’s a loss of 700 million people. This is due to a combination of the one-child policy (which began in 1980), sex-selective abortions and infanticide (which killed twenty million girls), and the decline in births per woman as the result of education, urbanization and job equality.
The simplest formula for estimating economic growth is (work force x productivity). There has been a global decline in productivity for reasons economists do not completely understand. If China combines this decline in productivity per worker with a decline of several hundred million workers, then its economy will likely decline by half or more. This is not a catastrophe that will suddenly strike in 2080. It’s happening now and will grow worse with time.
Chinese growth will also be hindered by an excessive debt-to-GDP ratio. That ratio is estimated at 300%, more than double the U.S. ratio of 123%. Any ratio > 90% retards growth. It’s impossible to borrow your way out of a debt trap. The only solutions are default, hyperinflation, or reducing the ratio with less government spending.
All three hurt growth or destroy capital in different ways. The only certainty is that growth will be weak for decades, unless there’s a total collapse in asset values and debt in which case the system may be reset after wiping out trillions of dollars in wealth.
On top of this economic catastrophe comes political turmoil. The best information available is that Chinese President Xi Jinping has been subject to a soft military coup in which he is now subordinate to the PLA leadership. Xi’s allies have been mostly purged. What comes next in terms of Chinese leadership is unclear. But uncertainty that will deter foreign capital from investing in China is almost certain.
And China is not alone. The weakness in the Chinese economy today comes in the context of negative growth in Japan and the UK along with barely positive growth in the EU. Unemployment is rising, world trade is shrinking, and commercial bank lenders are tightening lending standards among surprise credit losses.
Don’t believe the Wall Street narratives about how China is winning the AI race and is building a technological juggernaut. It’s not. China is stuck in the middle-income trap and has a unique combination of a crashing economy, trade wars, collapsing demographics, excessive debt, political turmoil, no rule of law and the flight of foreign capital all amid a world of no growth. Investors should keep as far away from China as possible.
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As noted above, about 45% of Chinese GDP comes from investment. However, much of that investment is wasted on ghost cities, white elephants and lavish projects that can never hope to provide any return on investment. If this wasteful investment were written off (as would be required under GAAP), Chinese growth would be cut from 4.8% to about 2.5%. Taking into account other manipulations and Goodhart’s Law, it’s entirely possible that China’s GDP growth is negative today. That outcome is not widely understood and would come as a shock to the panda-huggers on Wall Street.
You are misrepresenting how GAAP was being referenced in his assessment that you cavalierly poo-pooed. It was not referenced for the nation of China itself, but rather by their investments in Ghost Cities, white elephants and lavish projects that can never hope to provide any return on investment that China & others include in their GDP growth numbers when talking about China's economy.
Do you still want to stand by your statement that this article is worthless?
Sorry, but I respect Jim Rickards assessment as correctly assessing China's real finincial health, and that the real danger is the financial health of this world in totality. It is all creashing down around us, and the evidence is quite obvious to those who see the seams spliting under the pressure gross mismanagement that has been taking place for several decades has finally brought to the entire world.
This reality is the direct result of useless wars that have destroyed efficietcy & production, in my opinion.
Okay, guys, look. GDP has a very specific equation.
GDP = C(onsumption) + G(overnment Spending) + I(nvestment) + (Exports - Imports)
This talk from this guy (who somehow celebrates himself as working out the LTCM bailout, rather than counseling management a priori so that no bailout would be reqd) about how Investment is squandered seems to not address where the I came from. It’s China. That I is G. It’s not commercial I, where the CFO sits down with the CEO and says you want to build a data center? Here’s what it will cost. We’ll have to put together a bank consortium and borrow it.
But three cheers for his Hopkins alma mater, mine.
Not $27,534?
That is what you are ignoring, what you are also ignoring is that China is not bound by the way we assess our GDP to caluclate their GDP, which means they not only can, but do include these useless "investments" which have zero propabiity of providing returns on those investments. Thus the result is that their GDP claims are based upon deceit.
This guy as you label him, has a proven track record that spans over decades.
Here is a brief bio of Jim Rickards:
James G. Rickards is an American lawyer, investment banker, media commentator, and author specializing in finance, geopolitics, and precious metals.
He is the author of several New York Times bestsellers, including Currency Wars (2011), The Death of Money (2014), The New Case for Gold (2016), The Road to Ruin (2016), Aftermath (2019), The New Great Depression (2021), Sold Out (2022), and MoneyGPT (2024).
He is the editor of Strategic Intelligence, a financial newsletter, and director of The James Rickards Project, an inquiry into the dynamics of geopolitics and global capital.
Rickards has held senior positions at major financial institutions, including Citibank, Long-Term Capital Management (LTCM), and Caxton Associates.
He served as the principal negotiator for the 1998 Federal Reserve-sponsored rescue of LTCM, a pivotal event in financial history.
His expertise spans financial risk, global capital flows, and the strategic role of sanctions.
He is an advisor on capital markets to the U.S. intelligence community, the Office of the Secretary of Defense, and the Director of National Intelligence.
Rickards has also served as a facilitator for the first-ever financial war games conducted by the Pentagon.
He has contributed op-eds to major publications such as The Financial Times, The New York Times, The Washington Post, and The Evening Standard, and has been interviewed on networks including CNN, CNBC, Bloomberg, Fox, and BBC.
Rickards holds an LL.M. in Taxation from NYU School of Law, a J.D. from the University of Pennsylvania Law School, an M.A. in international economics from the Paul H. Nitze School of Advanced International Studies (SAIS), and a B.A. with honors from Johns Hopkins University.
He has lectured at institutions including The Johns Hopkins University, the School of Advanced International Studies, Northwestern University’s Kellogg School of Management, and the U.S. Army War College.
He has also presented research at high-level forums such as Singularity University and the Los Alamos National Laboratory.
Rickards has predicted major global events, including the 2008 financial crisis, Donald Trump’s 2016 presidential victory, and the 2020 pandemic lockdowns.
He is currently a guest speaker and commentator on global economic and security issues, with a focus on the risks posed by currency wars, financial system fragility, and the strategic importance of critical minerals. He lives in Connecticut.
In other words, he is not a flash in a pan as you try to portray him as being.
Your alma mater may be shared, but your degree is not mentioned. Do you care to mention what you degree is?. In additiion to that shared institution of higer learning, his goes on to other institutions, with heavy emphasis on ecomics.
Sorry, while your schooling is impressive, I still stand with Jim Rickards evaluation, while ignoring you poo-poo of it based on one reference that you misrepresented as to why it was referenced in the first place.
Long story . . short. What can we do to cushion ourselves from this calamity?
Nah not trying to be impressive. Hopkins is a military physics school, my Masters as well as medicine, et. al. MBA elsewhere.
Not important.
The issue is the equation. There are many attempts to redefine such things and PPP has become popular. Building a ghost city is not all that different from FDR’s CCC who dug ditches and then followed that team with another team of guys to fill them in. All in order to generate G which adds to GDP.
Useless spending is never easy to define. Military spending is G too, adding to GDP.
China has been pretty impressive. Even despite Chiang’s theft of the natural Treasury’s gold supply in 1949, they have achieved what they have achieved 75 yrs later.
Their biggest obstacle is not the monetary babble and finance of this or that. It is simply that their domestic oil supply provides them 4.5-5.0 million barrels/day, with a consumption north of 16. Make no mistake here, the US faced this in 2008. The very same problem. Huge oil imports to satisfy huge oil consumption.
Then interest rates went to zero (and sub zero) and fracking became economically possible to reach oil everyone had known was there for decades. The Permian guys say that peaks and begins its end . . . next year.
China has no such hope, other than some offshore sorties. There is likely nothing there. They are for sure trying to cement a Maduro relationship, but the Orinoco heavy won’t fix the problem, either.
Babble here. Bottom line. While they can get oil, they have no problems. Obsessing about finance or economics is obsessing about a substance created whimsically from nothingness by the People’s Bank of China (or the Federal Reserve).
Always be suspicious of anything that projects “collapse”. It is a word never defined.
What do you mean by Hopkins being a “military physics” school?
I’ve never trusted a chinaman. Except Charlie Chan.
—
What about his Number 1 son?
Sadly, Charlie Chan was played by Warner Oland, a Swede; then by Sidney Toler, an American; then by Roland Winters, another American.
No real Chinese need apply.
The author seems to actually believe the facts and figures promulgated by the CCP are real ... one is born every day still seems to be true.
But my reason for asking was to deteremine what discipline you were engaged in learning about. It appears that miliraty physics & meficen were the disciplines tou were focusing on, which are also impressive disciplines to enrich your mind with. Though they are not economic focused. even so that doesn't proclude that you on yourt own enriched your mins with that subject as well.
First, let's define waht GAAP stands for. I'm sure you know, but this of for pthers who may or may not have ooked it up yet.
GAAP stands for General Accepted Accounting priniciples.
Do you believe that China follows those standards?
Jim Rickards stated that under GAAP, Ghost Cities, White Elephants and lavish projects that can never hope to provide any return on investment, are not used to guage GDP growth, and in fact GAAP would require then to be written off.
My retort back to you that this reference is not a minuse based upon the calculation you presented, it's a requirement, because it is deceiving.
Now you present a whole different argument, which most, if not all, I agree with. However, it is also a swirch & bait tactic. Shame on you, I say in jest.
Now for your last statement:
Always be suspicious of anything that projects “collapse”. It is a word never defined.
It is a word that is defined, and that definition has varyying degrees. Perhaps you meant to state that the degree of collapse is never stated. I 'll agree with that, but does it really need to be, because a collaose is still a collapse if it falls to a degree that preents reall problems.
For example, communism finally collapsed in the Soviet Union, and from that collapse remerged the nation state of Russia that no longer held rule over its former satellite states. Yet some still view it as the Soviet Union.
You are correct that China has energy issues, which make it vulnerable as well.
Hoever, that was not a topic that JimRickards even toched upon. He was talking about the fragility that China's economy actually faces, and that it is fasley pumped up to be more than it is. He also stated that China is not alone when t comes that state of economic fragility. Every nation on earth has that ecomoic malady.
Jim Rickards provided an accurate assessment of the economic health of China, and that it also affects all nations.
Historically Jim Rickards was not recmmending gold as an investment, dut to its liquidity issues it inherently has. But he now recommends that it be part of ones portfolio as a hedge against the collapse of the dollar. That collaose would be to a far lesser degree in the world at large, than it would affect those who use the dollar. Musch as runaway inflation affected venezuela & the most extreme example of it in Zimbabwe.
The liquidity pproblem becomes even more pronounced when the fiat money collapses. 😡
Badly phrased. Masters in Physics from Hopkins, funded by the USAF. As are many grants at APL (Applied Physics Lab). Thesis not the precise title . . . Finite Element Analysis of Ionospheric Plasma. This was back in the days when the military had dedicated shuttle flights. Didn’t last long.
MBA came from elsewhere. My mention of medicine was to note it being a Hopkins area of excellence. Not my own.
China’s leadership is worth examining. Reputation of almost all engineers, ceased to be so maybe 15 yrs ago. Now it is economics and computer engineering.
No, they don’t have an energy problem. They have an oil problem. There is always a tendency and desire to extrapolate to the broadness of energy and it is not valid. Refrigerated food trucks move via diesel. Not energy. Oil moves food to mouths. Not electricity.
There is a popular, almost universal, presumption that China’s numbers are bogus. No problem with that. The problem is that people make up other numbers. They didn’t perform the sort of surveys done by the US computations of the CPI. They just decided to make up numbers worse than China reports and present them as truth.
If one does not know China’s economic numbers because they are distrusted, then one does not know them, but if one makes money writing about them, then one has to make things up to get the text filed by deadline.
An exercise for you. Google Earth. Zoom in on Chinese coastline. Especially down south where they have naval bases near Hainan. And then on Hainan, scope out the buildings with solar arrays to power intel satellite comm. But more to the point, find the naval bases and then look just a few miles down the coast. Resorts. Beach resorts. Beach resort skyscrapers. As far as the eye can see. Held up with concrete rather than neodymium magnets (because that might be a “provocative flex”).
No sign of collapse.
Donald Trump is emplying tariffs which helped this nation grow in its infancy years as a nation. While we nevr completely elimanted tariffs, for the majority of the world we did not impose them starting in the depression after first placing on protect mtariffs that were too onerous. Hoping that these nations would reciprocate. But that was a fantasy that really did not materialize.
Some wnat to say that we should remove all tariffs, because they are under the belief that it was what made America great to begin with, which of course is utter nonsense.
Some say that tariffs were given solely to the Legislative Branch of the government by virtue of the Constitution.
Article I, Section 8 of the U.S. Constitution vests the power to lay and collect tariffs with Congress. The Founding Fathers intended for legislative oversight on taxation, tariffs, and related financial matters, viewing tariffs as strategic levers to be used with caution and prudence.
Historically, Congress set tariffs and maintained tight control over this power. However, over time, particularly after the Great Depression, there was a shift towards delegating some authority to the executive branch. This began with the Reciprocal Trade Agreements Act of 1934, allowing the President to negotiate trade agreements without separate congressional approval each time.
Later acts, such as the Trade Expansion Act of 1962 and the Trade Act of 1974, further evolved this delegated authority. These allowed the President to act on national security concerns through tariffs or respond to unfair foreign trade practices. However, this delegation is not unchecked. For instance, Section 232 of the 1962 Act enables the President to impose tariffs if imports threaten national security, but this is bounded by specific findings and processes.
Source for the above 3 paragraphs
It is my belief that the conditions regaring national security do indeed provide the president with the authoity to levy & control tariffs. It is a useful tool that bring in money from outslde the nation.
The short answer you asked for is to build back the economy, and put Americans to work. I would also declare a 10 year moritorium on legal immigration while we sort out the deporatation of the illegal aliens the Biden administration allowed in. Furthermnore, we need to gain solid control of all 3 branches, and Congress needs to declare sanctuary cities, counties, states to be illegal, and that all acts leveled against the forces used to remove the illgals will be adjucated as acts of sedition. I can say that creating infighting within the MAGA movement will mean we will fail if we continue down that path.
Sadly, there are too many on this board who are trying to foment that division. If you love this nation ands want to save her, you need to speak out against these agitators, for they do not love this nation as founded.
The process is not going to happen quickly, and it many ways it will be messy as well, but we must stay the course if we are to take back this nation.
United we stand, d ivided we fall is not just a catchy phrase, it is a reality.
I hope I answered your inquiry satisfactorily. 😁🤙
I have macular degeneration, which I hope that you never have the pleasure of knowing first hand, it has progressed to the point that I now have to use a magnifying glass, sometimes two together.
On top of that, the letters on some of the keys of my keyboard are being worn off, if not all of the letter enough to make itn unreadable with my condition.
But my condition doesn't prevent me from still seeing that you will never admit that you are worng. your looking at China's coast on your monitor hardly qualifies you over Jim Rickards when it comes to assessing China's true finacial health which he has seen up close mamy times over, and in far greater detail by virtue of seeing with his own eyes physically there in person. He is a true expert, you are nothinh more than a wannabe.
My mention of medicine was to note it being a Hopkins area of excellence. Not my own.
I am well aware of what Hopkins is known for, but I would have no way of diserning why you would mention that, when I was asking for your area of training from Hopkins, because it has programs beyond just medecine that it is renowned for. So, you were being oh so clever were you, or was it purposeful intent to trip me up?
BTW, do you still contend that Ukraine will defeat Russia as you have for quite sometime now?
Now you enjoy a blessed life.
You misunderstood. The bad phrasing quip was pointed at me and the initial sentence about physics and medicine.
You have me mistaken with others. I have thought since day one the only long term solution is a pro Russian government in Kiev that ejects or kills MI5, CIA agents and any Euro diplomats. The govt will be purely technocratic, keeping the trains running on time with no foreign policy.
And it will need to be former Ukraine military officers in that junta, to undercut inclinations towards guerilla warfare.
The current plan being forced onto Zelensky doesn’t go far enough in that regard, but it has a chance of success. Refusal of it will make it all much worse.
LOL. Of course Number 1 Son! He was an all American kid. He was a real hep cat.
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