China's Debt Trap

Timothy Birdnow

China may well have gotten caught in the debt trap they laid for Third World countries.

From Oil Prices Dot Com:

Since the beginning of this year, investment banks and international financial organizations, including the International Monetary Fund and the World Bank, have steadily downgraded their forecasts for the People’s Republic of China’s (PRC) GDP growth in 2022 to around 3.2 percent (Nikkei Asia, October 7). Most analysts agree that Beijing is in a difficult economic position, but the situation has the potential to become far worse due to off-balance sheet liabilities. Such debt risks defaulting, or may otherwise need to be covered by the central government.

Another drag on the country’s balance sheet that has yet to hit home fully is the impact of Belt and Road Initiative (BRI) financing. Due to economic problems and debt crises in BRI partner countries, a large percentage of the initiative’s loans may have to be forgiven or at least restructured. Before looking at its financing and hidden liabilities, it is necessary to establish an overall picture of the current PRC economy across a broad spectrum of indicators.

The Belt and Road Initiative was China's attempt at colonialism; they lent money to poor countries, money that couldn't be paid back, and the penalty was surrender of resources, of infrastructure, of land. China was taking control of many poor countries in this way.

Now they may have overxtended and face a huge debt problem. They are owed money and can't collect.
And without that money they can't pay their own debts.

Bully!

Up until now China has avoided a debt trap by curency manipulation. They have gotten away with it because of a preferential treatment by the IMF, the U.S. and world banking institutions. But none of these outfits can afford to subsidize China indirectly anymore. And the pandemic taught us all that China is a leaky vessel and reliance on Chinese goods is risky business. We've faced shortages and rising inflation rates on good from China as a result of their manipulation and as a result of broke supply chains. There is a consensus to buy American - and make it in America.

Biden and the Globalists want to change that, of course, and pushing electric cars is one such way; the Chinese own all the world's rare earth metals, which are absolutely necessary to manufacture EV's. Biden is trying to kill the internal combustion engine, and with it the hydrocarbon industry.

But he's got a long way to go and this debt keeps piling up in China.

China has to create a LOT of jobs every year, good paying jobs, or face a possible rebellion. They haven't been doing that of late.

China has seen catastrophic collapses in her real estate market and other segments of her economy.

This is a very dangerous time. Xi may well decide a little foreign adventure is what the doctor ordered to juice up the economy and divert people's attention. Taiwan is looking ripe; Biden has shown he won't defend anyone, and if he were willing he would screw it all up. Now would be a good time to strike for China.

Biden would no doubt send a strongly worded, polite diplomatic protest. And then another. And then another.

Even if the U.S. actually went to war, what are we going to do?  It would require boots on the ground, and in the Biden military that would rather mean stilletto heels on the ground as the military is now full of women and transvestites.

I don't think we could win a ground war. And an air war? The Chinese have at least as good an air game as do we. They are ahead of us in space tech, and while we may have more aircraft (something I'm not at all sure of) and we definitely have more carriers, the Chinese wouldn't have as far to go and wouldn't require carriers; just launch from the mainland.

All hell could break loose very soon over there.

What with the proxy war on Russia in eastern Europe and the declining economic situation in the Orient, one must consider how easily this powder keg could be set off.

Iran is facing revolution too. What happens if that occurs?  It would disrupt the flow of Russian and Iranian oil to Europe, and Putin couldn't allow that. Neither could Xi, frankly, as it would make it harder for China to get oil and gas if their energy partners were in trouble.

At some point someone is going to light the fusz.

Posted by: Timothy Birdnow at 02:14 PM | Comments (1) | Add Comment
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