Chinafication: It's a Global Phenomena
The Dividend Cafe
The Dividend Cafe - The Bahnsen Group
4.9 • 572 Ratings
🗓️ 18 August 2023
⏱️ 26 minutes
🧾️ Download transcript
Summary
Today's Post - https://bahnsen.co/44fYpKv
I am not sure it has gotten nearly the press it deserves, but the one economic story that has managed to get the financial press to talk about something besides the Fed’s rate plans and “will we or won’t we” talk regarding U.S. recession has been the state of China’s economy. Don’t get me wrong – it has hardly been barn-burning stuff, and press coverage has been limited to more substantive financial media (as opposed to the news that everyone watches, reads, and clicks). But there is increasing conversation about the state of China’s economy and what that means to the rest of the world.
If the coverage was merely, “China’s economy is not good,” it would be a pretty boring story. One of the reasons the story has a little interest to people is that after two years of hearing nothing but the “inflation” word when discussing places like the United States, the United Kingdom, and the European Union, the Chinese economic conversation is carrying with it the word “deflation” – and that seems to have people’s ears perked up (even those who have no idea what it really means).
In this week’s Dividend Cafe we are going to take a look at the state of affairs in China and offer a little forecast as to where they may be headed. More important than current conditions, as I see it, is what they plan to do about it all. I will propose in the Dividend Cafe that China’s response will be every bit as relevant to the United States (and the rest of the globe) as it will be to China.
So jump on in to the Dividend Cafe, and let’s see if “Chinafication” is about to be a buzz word for the rest of the world.
Links mentioned in this episode: TheDCToday.com DividendCafe.com TheBahnsenGroup.com
Transcript
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| 0:00.0 | Welcome to the Dividend Cafe weekly market commentary focused on dividends in your portfolio and dividends in your understanding of economic life. |
| 0:11.8 | Well, hello and welcome to Dividend Cafe. I have been very excited for some time to bring you a treatment on this subject about China's weakening economy and what it |
| 0:25.3 | means to this kind of state of global affairs. There has been so much talk for the last couple |
| 0:33.6 | years about inflation, inflation of prices in United States, in Europe, United Kingdom, |
| 0:41.0 | and so little talk about deflation based on the inflationary environment that the post-COVID |
| 0:48.5 | world represented, that to all of a sudden have a major financial story, news story, geopolitical, global |
| 0:57.2 | story centering around deflationary conversation seems somewhat surreal to a lot of people. |
| 1:05.2 | And yet it is my contention that a lot of what is happening in China right now has a certain precedent in history. |
| 1:13.9 | And I want to walk through what exactly is happening and how China got to the position |
| 1:20.5 | there and now. And then where some of the similarities to Japan in the late 80s, early 90s, |
| 1:27.0 | and the decades that have transpired since. |
| 1:29.8 | And some of similarities, by the way, United States and their property bubble that led into |
| 1:35.5 | the 2008 crisis, where some of those similarities exist and see if we can't draw some conclusions |
| 1:42.2 | here. Now, I purposely have done this in a way that I think, as I reread what I've written |
| 1:48.8 | in what's a pretty long Dividing Cafe, I think it is pretty understandable and coherent, |
| 1:57.0 | and yet it's a very complicated topic. |
| 1:59.4 | And so some of the understandability or coherence of it may be a byproduct of the fact that I'm |
| 2:06.1 | trying to simplify things that do have a lot of nuance and that do have a lot of complexity. |
| 2:11.6 | So I hope you can understand that. |
| 2:14.0 | There is no way to simply say, China did this, now this will happen. And if China does this exactly |
| 2:22.5 | like this, then exactly this will happen. There are shades of gray into what some of the policy |
| 2:29.2 | responses may be to the current state of affairs. There are shades of gray around what that state of affairs itself may be. |
... |
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