Posted on 05/06/2025 10:01:01 PM PDT by SeekAndFind
President Donald Trump's tough stance on China is already producing results, and the evidence suggests that Chairman Xi Jinping will have no choice but to back down. China's economy, long propped up by unfair trade practices, is starting to crumble under the weight of Trump's strategic 145% tariffs on Chinese imports.
Protests from furious factory workers in China demanding back pay are spreading across the country after President Trump’s tariffs on Chinese imports began impacting the communist nation’s economy.
Unrest has been reported across the country as workers have taken to the streets protesting unpaid wages and challenging unfair dismissals following the closures of factories squeezed by US tariffs, according to Radio Free Asia.
Chinese industry leaders, meanwhile, are “extremely anxious” about the steep duties, with many telling factories and suppliers to halt or delay supplies, Wang Xin, head of an industry group representing more than 2,000 Chinese merchants told the Financial Times.
The scale of the crisis is staggering. Goldman Sachs' analysis indicates that 16 million Chinese jobs are at risk due to Trump's tariffs. Chinese industry leaders are reportedly "extremely anxious" about the steep tariffs, which is likely an understatement given the mounting evidence of economic turmoil.
“It’s not easy at the moment,” a 26-year-old toy factory worker told the FT. His employer, in the Chinese city of Zhejiang, mostly sells to the US, and management recently forced workers to take two weeks off unpaid in the face of the tariffs.
Last month, construction workers threatened to throw themselves off the buildings they were working on unless they received their unpaid wages in the northeastern city of Tongliao, Radio Free Asia reported.
Elsewhere, a sporting goods factory in southern Hunan province also shut without warning last month, offering no compensation or social security benefits,
(Excerpt) Read more at pjmedia.com ...
Here’s the key point that the mainstream media keeps missing: China’s social safety net is practically nonexistent. When Chinese workers lose their jobs, they’re completely on their own: no unemployment benefits, no food stamps, nothing. That’s why we’re seeing increasing unrest as workers demand back pay and protest unfair dismissals.
The Chinese Communist Party maintains its grip on power through economic growth and iron-fisted control. But when millions of workers take to the streets, even totalitarian regimes start to sweat. History shows that no government, not even one as powerful as China’s, can ignore the fury of its people indefinitely.
They may not recover from this. Once a company leaves your country, it is usually forever and nearly impossible to lure them back.
If necessary, China has the dollar and gold holdings to recapitalize their banks, finance production for a consumer economy, and to provide a social safety net. The problem of course is that this stored wealth and a vast trove of stockpiled food and oil are intended by the CCP for the extended economic emergency that would ensue from hostilities over an attack on Taiwan. From that strategic perspective, Trump’s tariffs may avert war by forcing Xi and his minions to break open the piggy bank in order to remain in power.
Didn’t severe and sudden joblessness eventually lead to Tiannemen Square shooting and government showdowns against their citizens? I was only barely paying attention back then.
I think even if China does cave to the power of Trump’s tarrifs, President Trump knows enough about Chinese culture to be somewhat diplomatic about it, and figure some way in which President Xi can “save face” with his own people.
FTA—— Goldman Sachs’ analysis indicates the scale of the crisis is staggering.......16 million Chinese jobs are at risk due to Trump’s tariffs. Chinese industry leaders are reportedly “extremely anxious” about the steep tariffs, ...likely an understatement...given the mounting evidence of economic turmoil in China.
Look how it worked in Russia. The companies left and sold their assets to the local businesses for pennies on a dollar. Most are doing just great and expanding.
The saving-face thing is very important. If Trump pushes too far and Xi thinks he, and by extension China, is being humiliated, Trump might not end up with a trade deal but a war. And the media would fan the flames.
Is 16 million jobs a lot in China?
And suddenly Walmart remembers its roots of “ made in the USA” merchandise pride.
Crazy.
Russia and China both essentially did the same thing.
Russia allowed corporations into the country and learned how they work, before they were kicked out and Russia came up with copycat corporations. China required any companies, except for the largest like Apple, to give up their patents. To which, China then produced their own copies of those manufactured goods.
The elephant in the room is that China’s economy is not exports anymore. It is like 18-22% dependent on exports, of that only a small fraction to the US.
I think that Trump is more vulnerable to face issue than Xi is.
China’s real estate collapsed, so there is that. China has less tolerance to carry its debt, so there is that as well. It’s ministries cannot show bad balance sheets, because that’s basically a death penalty offense. So, what their balance sheets say in all their ministries may be a tad optimistic from the reality.
From Grok:
In 2023, exports of goods and services accounted for approximately 18.9% of China’s GDP. This figure reflects a decline from 19.6% in 2022 and a peak of 36% in 2006, indicating a shift toward a more domestically driven economy.
The remaining 81.1% of China’s economy is comprised of the following components, based on available data for 2024 estimates:
Household Consumption: Approximately 39% of GDP. This includes spending by households on goods and services, which has been growing but remains lower than in advanced economies like the U.S., where consumption exceeds 60% of GDP.
Government Consumption: Around 17% of GDP. This covers government spending on public services, infrastructure, and administration.
Investment in Fixed Capital: Roughly 40.5% of GDP. This includes investments in infrastructure, real estate, and industrial capacity, though overinvestment in areas like property has led to economic imbalances.
The composition reflects China’s mixed socialist market economy, with significant contributions from state-owned enterprises (SOEs), a growing private sector (contributing ~60% of GDP), and a focus on manufacturing, services, and high-tech industries. Manufacturing remains the largest sector, with China as the world’s top industrial economy, but services and domestic consumption are increasing in importance. High-tech exports, such as electric vehicles and solar panels, are growing but constitute only ~26% of total exports, with the majority being low- to medium-tech goods.
These figures are estimates and may vary slightly depending on sources, as China’s official economic data can sometimes be inconsistent.
China’s debt situation is complex, with various estimates depending on what types of debt are included. Here’s a breakdown based on recent data:
General Government Debt: In 2023, China’s general government gross debt was approximately 83.4% of GDP, equating to about $14.34 trillion USD, given China’s GDP of roughly $17.63 trillion. This includes central and local government debt. By 2024, estimates suggest this rose to 88.3% of GDP, with projections indicating further increases to 27.2 trillion USD by 2029.
Augmented Debt (Including Local Government Financing Vehicles - LGFVs): When including off-balance-sheet debt from LGFVs, which fund infrastructure and urbanization, the debt-to-GDP ratio is significantly higher. The IMF estimates augmented debt at 124% of GDP in 2024, up from 86.3% in 2019. This could amount to over $21 trillion USD.
Total Non-Financial Debt (Macro Leverage Ratio): This includes government, corporate, and household debt. In 2023, China’s macro leverage ratio reached a record 287.8%, or roughly $50.7 trillion USD, reflecting weaker economic growth and high borrowing. Corporate debt, particularly from state-owned enterprises (SOEs), accounts for about 123% of GDP, household debt (mostly mortgages) is around 61%, and government debt (as noted) is about 55-70%.
External Debt: As of March 2024, China’s external debt (denominated in both domestic and foreign currencies) was $2.51 trillion USD, with 44% medium- and long-term and 56% short-term, including trade-related credit. This is relatively manageable, as major indicators are within international thresholds.
Hidden Debt: Estimates suggest local governments may have additional off-balance-sheet debt, potentially $5.8 trillion USD or more, through shadow banking and public-private partnerships. This could push total public debt closer to 92.8% of GDP when included.
Context and Implications:
China’s debt is largely domestic, denominated in yuan, reducing external vulnerability (unlike countries with dollar-denominated debt). Former Fed Chairman Ben Bernanke noted in 2016 that this makes it an “internal” issue.
High debt levels, especially in real estate and LGFVs, pose risks. The property sector’s over-leverage has led to a crisis, with developers like Evergrande defaulting. Local governments face a “maturity wall,” with $2.1 trillion in bonds due over the next five years.
Despite the high debt, China’s centrally controlled economy allows for creative debt management, such as bond swaps and state-directed bank lending. However, posts on X and some analyses suggest opacity in China’s financial system raises concerns about hidden risks and potential over-leverage.
Critical Perspective:
While official figures and IMF estimates provide a framework, China’s economic data can be opaque, and some argue the true debt burden is higher due to unreported liabilities in SOEs and shadow banking. Conversely, others dismiss excessive worry, citing China’s ability to manage debt internally through state-controlled banks and monetary policy. The real challenge lies in balancing debt-fueled growth with economic stability, especially as GDP growth slows and external pressures (e.g., trade wars) mount.
In summary, China’s debt is substantial—potentially exceeding $50 trillion when including all sectors—but its domestic nature and government control mitigate some risks. However, the scale, particularly in real estate and local government, is a structural concern requiring careful management.
I don’t think they have a choice.
P4L
Yep, under 40% in consumption as contrary to 60% in the US vs 18% in exports.
In short, bad sheets or not, there is a great room to absorb the lost 3xport domestically.
Not to mention the other export markets.
Face saving?
They’ll figure out some way to understand.
“The elephant in the room is that China’s economy is not exports anymore. It is like 18-22% dependent on exports, of that only a small fraction”
“In 2023, China exported approximately 14.8% of its total exports to the United States, totaling about $502 billion”
It’s open to interpretation if that is a meaningful number. I tend to think it is and exports to the USA probably have a higher margin say a huge but poor country like India.
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