The Consequences of China's Slowdown

Patrick Boyle On Finance

Patrick Boyle

Investing, Business

4.9 • 320 Ratings

🗓️ 27 January 2022

⏱️ 16 minutes

🔗️ Recording | iTunes | RSS

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Summary

Send us a textChina’s Economy Is Slowing Which Could Have Big Consequences for the World.Economic output grew four percent in the last quarter, a slowdown from the previous quarter. Growth faltered as home buyers and consumers became more cautious. Construction and property sales have slumped, as the country grapples with power shortages, Covid-related restrictions, a crackdown on a range of companies, and debt troubles in its property sector. Some of those pressures could ease, but China’s e...

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0:00.0	Hello and welcome. You are listening to Patrick Boyle on Finance, a podcast exploring ideas from quantitative finance, examining events occurring in markets right now and financial history to see what lessons can be taken away, including interviews with some of the most interesting people in the world of finance. To learn more about the podcast, visit
0:21.6	onfinance.org.
0:23.6	In autumn 2018, a Chinese blogger who claimed to be a veteran in China's financial sector
0:33.6	sent shockwaves through the business community with an article saying that the historic
0:39.2	mission of private enterprise had achieved all of its goals in China and that communist
0:45.1	ideology would be coming back in full force. The error of private enterprise was over.
0:51.3	The article was so widely shared and caused such consternation that the Communist Party
0:56.6	spoke out to calm the nerves of the business community. There was nothing for people to worry about.
1:03.2	Shortly afterwards, though, the crackdowns began. Over the last few years, President Xi's
1:09.3	administration launched a series of campaigns targeting
1:13.1	different areas of business with the goal of reshaping the business and cultural landscape
1:18.5	in China.
1:19.8	The government targeted the fintech industry, private tuition and entertainment, as well
1:25.6	as perceived societal ills such as celebrity culture, gaming,
1:30.5	and effeminate fashion trends. They also banned the beloved children's animated character
1:37.1	Winnie the Pooh. I don't know, maybe you're not supposed to say poo. I mean, honestly,
1:42.5	who named that there? The severity of the action taken
1:46.2	by Beijing against private companies surprised people both in China and abroad. And while these
1:53.1	attacks on private enterprise were harming the economy, the real damage was yet to come. The three
1:59.7	red line policy in August 2020 essentially sucked all of the air out of the room for China's property developers.
2:07.6	This was a big deal as China's property sector is estimated to make up almost a third of the country's total economic output.
2:15.7	A number of developers unable to refinance, including
	...

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