Tuesday, January 26, 2016
It's...[pause for terrifying base tone pulses] the Chinese Market of Doom!
Looking at the NBCnews.com article here you could be forgiven for thinking that these things certainly get overblown with the media. Just as an advocate like myself can just as certainly be criticized for making too much of it. And I have to admit, it's hard not to when the said media make it so easy.
What you have to understand with economic situations like this is that any one metric of an entire economy is bound to get some part of what's going on right, and at least some part for which it is not so accurate.
The Chinese economy, though it is facing enormous difficulties, also has a lot that is still working to allow it to continue chugging along. The problem with markets, as it is with any market based economy, is that perception is so fundamental in the determination of value. So much has been chugging along in what the Chinese make that there are surpluses; which is not only objects that are not selling where a profit is involved, but that there are probably too many producers in the mix. This does not make for positive perceptions.
The thing is, as the German market watcher quoted in the article points out, there are other objects, or services, that are selling quite well and that this should be a perceptive positive. In this case Health Care. This gets tricky, however, in deciding over all economic benefit, when one remembers that one sector's growth is simply another sector's increase in the cost of making what may already be difficult to sell. And in the regard of Health Care one has to also remember that something like 360 cities in China have air unfit to breath. Not to mention the fact that smoking is increasing, and the picture for water purity isn't look so good either.
On the one hand this is going to insure that Health Care will be a big growth sector. On the other hand one wonders how a shrinking employment base, or producers fighting new sources of cheap labor, is going to afford it. Factor in a population the size of China's, as well as the fact of not only an aging population, but one where the majority are still dirt farming poor, and you have to wonder what they are going to do to keep a lid on things.
And then there is the rest of the world and all of the shit that goes on to make it hard for anyone anywhere to be able to afford what their producers make, let alone what the Chinese make. Global severe weather, resource scarcities and growing political turmoil that throws huge amounts of instability into every market conceivable. It does not paint a pretty picture for any economy. Throw in the fact that trying to address any of the issues that might aleaviate these causative factors costs counters that someone has to fork over and you get everyone pointing at the other guy for who should be responsible.
Have no doubt that the Chinese market will come back... At least for a while, for which it will pay with another downturn of even greater proportions. And the thing you can most likely count on is that the wild swings will start happening with greater frequency.