China’s Rising Dragon Falls Hard

The 21st century has been the century in which everyone expects the ''rising Chinese empire'' will overtake the US empire.

These views of coming Chinese dominance have been shaped and influenced by Ray Dalio’s analysis of macroeconomics and geopolitics in his brilliant book, ‘’The Changing World Order.’’

In the book, Dalio clearly outlines why he believes China will be the next rising global superpower and why he believes the US empire is in a period of decline.?

Ray Dalio is an insanely smart guy who ran one of the biggest hedge funds in the world, Bridgewater Capital, and he probably spent millions and millions of dollars on research in writing this book. For this reason, when Dalio talks, the world listens.?

Now, I still recommend the book but disagree with his conclusions surrounding China taking over the world. We can see this dominant Chinese narrative has been repeated over and over throughout all the mainstream media outlets, who appear to have also taken Ray’s analysis as gospel.?

CNBC is also regurgitating Dalio’s view that ‘’the Chinese Yuan will become a top global reserve currency sooner than expected.’’

CNN also says that ‘’China is rehearsing for when it overtakes America.’’

Most recently, everybody's favorite bond villain, Klaus Schwab from the World Economic Forum,(WEF), declared on Chinese state TV that ‘’China is a model for many nations around the world to follow.’’

China is a model for the rest of the world to follow. Aren’t they currently operating concentration camps and draconian lockdowns and possess one of the largest debt bubbles in the world?

Now, there are a lot of problems with China that contradict the mainstream media narrative surrounding their supposed coming rise to global dominance.

I believe The Chinese model for growth was built for the world that was and not the world we're moving into. In a decentralizing, adversarial, and trustless world, China will be left vulnerable due to a host of issues we’ll discuss.??

We can see that the Chinese yuan, which is apparently going to be the next global reserve currency of the world, is currently CRASHING against the US Dollar.

The Yuan is down 13% in the past 12 months alone as investors all around the world flee their local currencies to accumulate US Dollars.?

I believe the straw that will break the ‘’Chinese camel's back,’’ could be the ''0 covid'' policy they’re still attempting to enforce. They've implemented very strict lockdowns since January 2020 in a country of 1.4 billion people, which isn't realistic.?

China's decided they're going to lock down hundreds of millions of people, which is decimating their economy and hurting their manufacturing sector.??

To make matters worse, the lockdowns have very little impact when we look at the data.?

We can see here that positive case numbers are exploding to levels that even dwarf what was seen in the outbreak of early 2020.?

However, despite cases exploding, we can see that there are almost no deaths happening in a country of 1.4 billion people.

Yet, they still continue to implement this insane policy that’s decimating their economy.?

The major problem is that people can only be pushed so far before they're pushed to the breaking point, and that's what’s happening in China today, as the Chinese citizens are revolting in mass.?

The catalyst for this most recent wave of civil unrest was triggered when there was a fire in an apartment building in Jing Zang, where 10 people unfortunately died.

Due to the strict covid lockdown policies at the time, the people couldn't get out of the building, and rescue attempts couldn't get there in time to save the 10 people who died.

Another catalyst for the unrest we’re seeing was triggered when Chinese workers tried to walk off the job at Foxconn’s iPhone manufacturing plant.

When the workers tried to walk away, they were met with a massive retaliatory response from the CCP, who wouldn’t allow them to leave, and even began beating them and forcing them back inside to work.?

Now, some of the other tactics they've been using to really squash this civil rest are by falsifying the Chinese citizen's health status.

China has quelled protests by turning their citizen's smartphone virus passports red, which hurts their social credit score, and restricts their freedom.?

All of these draconian measures from the CCP are infuriating the Chinese citizens and sending them into the streets to protest.

Civil unrest is EXPLODING all across the country, and China is seeing its largest wave of protests since the 1989 Tiananmen Square massacre.

This civil unrest in China has to be scaring the CCP, because there are MANY different types of protests occurring. So we've seen labor protests, rural farmer protests, student protests, and the bank runs.

Now let's explore how all of this will impact the global economy and markets.

Whether you live in Europe, Australia, or the United States, we need to watch what happens in China because China is the world's manufacturing powerhouse of the world.

They produce the majority of the goods the rest of the world consumes.

We saw during the pandemic when supply chains broke down just how dependent China is on the United States and the rest of the world.

They're also the world's number one consumer of oil, food, concrete, and steel. So they not only produce the most goods, but they also buy the most, so if China enters an economic slowdown, then they’ll buy fewer goods from the rest of the world.

We can see that China is already entering an economic slowdown, as their Purchasers Manufacturing Index,(PMI) has been in a contraction since 2020.?

Other nations around the world are doing comparatively better than the Chinese economy, which is still yet to recover from 2020.

We also know that their real estate markets are on the brink of collapse. The Chinese real estate market is the largest in the world, and there’s simply not enough demand to keep it elevated today.

They’ve been overbuilding hundreds of these ‘’ghost cities,’ that no one lives in. The PBOC is now pushing Chinese mortgage rates lower and lower, trying to incentivize people to enter this market, but it's simply not working.?

Their economy is crumbling, which is highlighted by their financial institutions' poor performance.?

Now, China is the world's largest net exporter, and they're also the United States largest trading partner, sending over $500 billion of goods to the US each year.

China also sends over $100 BILLION of goods to Hong Kong, Japan, South Korea, Vietnam, and Germany. It doesn't matter where you're in the world, and you will be affected by a slowdown in China.

We can also expect more supply chain disruptions if the Chinese ports aren’t operating at full capacity due to their protests, riots, and lockdowns.?

We can also see here that Apple shares have declined after their recent earnings report because iPhone production is taking a big hit from the civil unrest occurring at the manufacturing factories in China.?

Apple is very important to the US economy and our retirements because apple makes up a large portion of the S&P500.?

If Apple takes a big drop, you can expect the index to take a big hit as well and your retirement account to take a big hit. This is just one example of why we need to pay attention to what happens in China.?

In this report, Mohamed El-Erian says the supply chain issues have been a major driver of inflation, and US inflation could get stuck at 4% due to the Chinese protests that are interrupting supply chains.?

The Fed is committed to it, bringing it back down, right??

So they want to get it back down to 2%. However, depending on what happens with China, they may not be able to get it below 4%.?

What does this mean for the Fed pivot that everyone's waiting for??

What does it mean for Fed policy moving forward??

If the supply chains remain broken, it’s possible that inflation will continue to rage on.

China’s financial markets are already wobbling, their currency is plummeting, and if they continue to keep people locked down, it could crash the entire global economy.?

China has lots of other problems we've talked about before. They can only grow their own food from plummeting demographics, water, and energy scarcity.

I think it looks like the USA's biggest challenger might be crumbling before our very eyes.?