Already stressed, China’s economy is heading for big trouble as U.S. sanctions go into effect on Chinese imports.
The tariffs, says China expert Steven Mosher, will be a “serious shock” to China’s economy, and if they remain in place for more than a couple of months, will have lasting impacts on China’s economy.
China now has 60 million apartments sitting empty, due to the government overbuilding, and now with the trade war it won’t just be apartments.
“They’re going to have a few hundred thousand factories sitting empty in China where the manufacturers have gone overseas,” Mosher says.
Steven Mosher is the president of the Population Research Institute and the author of the 2017 book “Bully of Asia: Why China’s Dream is the New Threat to World Order.”
Even before the new tariffs were announced, China’s economy was already in recession, according to most experts, and its national debt is estimated to be 300 percent of its gross domestic product – three times higher than in the United States.
China claims its economic growth rate is 6 percent, but it’s unlikely this is true.
“No one believes that,” says Mosher. “The Chinese people don’t even believe that. The numbers are fabricated for political purposes to convince the Chinese people that things are getting better all the time. But in fact, that’s not necessarily true.”
He told BizPacReview this week that the tariffs announced by President Trump, and the threatened tariffs of 25 percent on ALL goods imported to the United States from China, are going to “stress the system tremendously” in China.
What no one is asking is whether the economic hit could weaken the Chinese Communist Party, and possibly even contribute to toppling it.
An “external shock,” says Mosher, is likely the only thing that could ever have any effect as China’s population is “essentially on lockdown” – with cameras everywhere, the largest internal police force in the world, and the government assigning a “social credit score” to each and every person, with points awarded for toeing the government line.
“Could serious economic setbacks lead to national unrest?” asks Mosher. “Sure. That’s probably the only thing that could, an external shock. Not an internal organized sort of resistance, but an external shock through the system…”
Trump announced on Monday that the United States will raise tariffs on $200 billion in imports from China from 10 percent to 25 percent and warned China not to retaliate or he would impose a 25 percent tariff on every last product that comes into the United States from China. But China went ahead and retaliated anyway, raising tariffs on U.S. goods starting June 1.
“Even with 10 percent tariffs, supply chains were starting to move elsewhere,” says Mosher.
With tariffs going to 25 percent, it’s going to get much worse for China, he said. Much, much worse.
In February, Taiwan announced a plan to encourage 200 Taiwanese companies that have been manufacturing goods in China to move their factories back to Taiwan, offering several kinds of incentives.
And with wages rising in China over the last several years, a lot of manufacturing has been moving to Southeast Asia, especially Vietnam.
“I think when the supply chains start shifting, initially, you know, you have some problems ramping up economies of scale and shipping and so forth, but once this gets underway, those problems can be solved,” says Mosher.
The closing of factories in every town and every province will likely weaken the Chinese Communist Party’s hold on power, as local party leaders will lose money and influence.
“There are going to be a lot of local officials upset,” says Mosher.
The Chinese Communist Party is already losing its power and influence after 70 years (and an estimated 80 million Chinese killed).
Charles Lee, a New Jersey real estate investor who came to the United States from China as a young adult, is the spokesman for a group that works to persuade Chinese people to leave the communist party. So far, more than 300 million people living in China have already signed on, agreeing to leave the party.
Now with tariffs on all Chinese goods going to 25 percent, Chinese will lose jobs, Lee says, and the Communist Party “will collapse.” But it won’t happen overnight. It will be a process.
“Chinese people work very hard, so once the Communist Party is gone, China will become a much richer country,” he told BizPacReview.
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