Why China’s Deflation Is More Dangerous Than High Inflation | WSJ
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- เผยแพร่เมื่อ 13 พ.ค. 2024
- China’s economy is teetering on the brink of widespread deflation-a scenario that could cause even more problems than high inflation. Economists are afraid that deflation is happening in China like it did in Japan’s recession in the 1990s.
Like Japan in the ’90s, Beijing is also experiencing a real estate crisis. So how could this affect the U.S. and the rest of the world?
WSJ looks at Japan’s “lost decade” to explain why China’s economy is struggling and what it means for the global economy.
Chapters:
0:00 China’s economy
0:31 Japan’s “lost decade”
2:30 Deflation in China
3:56 Impact on the U.S. and the world
4:36 China’s response to deflation
News Explainers
Some days the high-speed news cycle can bring more questions than answers. WSJ’s news explainers break down the day's biggest stories into bite-size pieces to help you make sense of the news.
#China #Economy #WSJ
when you're poor
inflation bad
deflation bad
existence bad
edgelord
How can BOTH be bad? That should tell you a lot.
With that mindset you will accomplish nothing. You have a lot more control over your life than you think.
The first two I'd agree with the, the last one is subjective in perspective of mindset. I know many who are homeless and in unbelievable debt and don't have a care in the world because they understand the money isn't real and there is nothing for the banks to take from them. Not saying that is a good thing, but again that depends on your viewpoint.
@@RM-jb2bv It should be in the middle.
Prices can’t go down because then people get laid off, prices can’t go up, because people get laid off. I think the companies and their expectations of never ending profit increases are the problem
well, that's the nature of competition, you're supposed to want to increase profits.
The problem in China is mostly that it's very corrupt, so lots of loans or money just keeps getting wasted in things that literally produce nothing, i.e. their chip manufacturing attempts.
@@GameFuMasterWe will be facing the same problem here in the US in the coming years. Eventually the government cant continue with $2t deficits year after year. The impending deflation (or perhaps stagflation), caused by previous wasteful government spending, will current inflation (as bad as it is) seem like a dream come true. This is what happens when you tamper with the natural balance of market. The point is: There is NO free lunch.
@@jonusjonus9271 possibly. But you forget that the US is the world's reserve bank.
If something happens to it, it'll take the world down with it, kinda like 2008.
@@jonusjonus9271Most of the tampering and costs are giving corporations tax breaks and subsidies and incentives. That's the distortion of the market that's really going on, and it's to the detriment of the taxpayer, not the Corpos
@@GameFuMasteri agree its the only reason we've gotten away with it for so long.
"Deflation is bad because it's not profitable for capitalists"
There. Summed it up for you.
...and those lower profits are bad for the people who work for those businesses.
There. Finished your statement for you.
If it's not profitable for capitalist then they can't use that profit to employ people. Then they have pay cuts, layoffs and now everyone doesn't have a job.
Deflation makes car loans, mortgages, student loans, etc ridiculously expensive for normal people so no one can better themselves. The rich already control their money so they can afford to exploit a deflating economy by saving as much as possible instead of being forced to spend anything.
Excluding the bankers, what capitalists gain with inflation, man?
@@megapeiron Generally speaking - since inflation decreases purchasing power of money - capitalists, i.e. those that own the means of production, own vastly more non-currency assets than workers, and can thus weather inflation much better.
That's why large economic inflations (like the 2008 crash) usually result in wealth being transferred from the working class to the capitalist class.
At 3:15 the graphs are very irritating since it isn‘t the same scale. Be aware of it because it would not look as bad as it does if they were equally scaled
I saw that. I had to pause to see what was really happening. It seems like there was about 20 percent point drop (+15 around 1990 → -5 around 1993) in about 3 years (-133.33% decline in prices), and China seems to have experienced about a 7.5 percent point (+2.5 around 2021 → -5 around late 2022 / early 2023) in about 1.5 years (-300%). While Japan experiences a greater percent point decline due to a greater level of exuberance in property prices, it seems China has experienced a greater percent change. Things are not rosy in the Middle Kingdom.
It is equally scaled. They both just have different increments. But the scale is the same. Hope this helps.
@@Patrick-sl8pc It's not scaled the same by chronological range nor by physical scale of the image itself - which if you don't look closely it is misleading.
@@Patrick-sl8pcNot true. Left goes from -10 to +20, right from -10 to +10
Next years headline in Wall Street Journal:
" Why China’s High Inflation Might Be Riskier Than Deflation | WSJ"
No matter what China does or does not, no matter the numbers, Western MSM will criticize and condemn EVREYTHING. It's the policy of losers.
The dominating class does get wealthier when everything is more expensive
trust me that our God isn't Jesus and Jesus isn't our God and no his son. He is a messenger from Allah and our Muslims love Jesus but our God is Allah and He is the Greatest there's no God but Allah and you can learn and read about Islam religion 😊🌷
@@ahmedkamel7065 That's right, he was a great man, but a man nonetheless
@@danielvisky yeah, it is all messed up, I was trying to secure a loan for my new arm tattoo and starting my own business, couldn't get any because I took one in the past
Oh I get it, people having impulse control and saving money for later = bad for companies and “deflation”. Who is it bad for again?
it causes huge employement and slows economic growth a lot
You want to lose your job? Why you think governments gave “free” money to everyone during pandemic ?
Who woulda thought that saving all your money and not reinvesting it is a horrible for an economy? That’s exactly why 2% inflation is ideal, it’s low enough for the currency to be stable, but high enough to encourage you to invest into assets.
I bet you are the same type of person cheering on empty home taxes, speculation taxes, foreign owner taxes, while crying about consumer staples inflation where you live
Even with the hike in interest rates because of it they were looking at key unemployment figures
Because those numbers were expected to jump up in order for that inflation to go down
But for the longest time people were buying debt like US Sovereign debt at near zero bound interest rates. Basically people were paying the US Government to borrow their money
👇
The End of Zero Interest Rates
Aug 13, 2023
JEFFREY FRANKEL
As recently as 2022, most monetary economists expected interest rates to remain low indefinitely. While many analysts still expect near-zero interest rates to return, they will likely remain elevated for the foreseeable future, making it harder for governments to service their debts
.
CAMBRIDGE - What a difference two years make. In 2021, when interest rates were near zero in the United States and the United Kingdom and slightly negative in the eurozone and Japan, the consensus was that they would remain low indefinitely.
Project Syndicate
everyone..if companies cant profit..whats their incentive to provide people with..anything? will you make your own electronics/clothing..grow your own food..nope..so if people keep waiting to spend & chasing the bargain bottom prices..backing companies into a corner..those companies cant afford to pay their workforce & build the products..thus have to fold..but his is all part of the reset & most people dont even realize we are the carbonoxide2 they want to eliminate
prices go down and wages go down. what's the problem with deflation? it's the problem only for people with debts, assets, and banks.
people get laid off
Employment is the issue
@@garysanderson5774 the thing is, many Chinese families either have a home outside of the cities, and possibly a 2nd home in the city. If they get laid off, they probably have to move back in with family, or rent apartments with other people, as they try to find a job. Thing I see is too many people looking for jobs, and not enough good paying jobs. Thus wages are being suppressed.
it is kind of hard to tell, what is better? inflation of basic goods or deflation? If inflation is caused by gov't stimulus spending, then I suppose it keeps people in their jobs, but then people's purchasing power gets eroded?
Like the other comments said, that plus usually a product price will stay the same and won't be adjusted accordingly too, so you're essentially spending more monetary value to purchase the same product.
Deflation is good for fixed income earners.
until you're out of the job because there's no demand
You need an education. Deflation is not 10 or 100 times worse than inflation, but 1000 times worse!
@@AhmetTekin101 tell me why ?
Lol businesses are not charity, how much money goes in is how much comes out. Fixed income workers will be laid off if they can't afford to pay out anymore.
China isn’t playing ball
Our top of the food chain 1%ters and their multinational corporations
Don’t want a closed off or slowing China
They want those Chinese buying their 4th and 5th homes right about now.
They want their companies in China lending that money and selling those goods and services to them. Hopefully get them to spend those high saving and then borrow to spend more like we did in the west.
In China in 2008 around 70% of the people in their real estate markets were buying their 1st homes in their cities
By 2018 around 70% of the people in their real estate markets were buying their 2nd and 3rd homes in their cities
That’s why you are hearing about problems with their property developers these days. Because back in 2010? Their Central Government started cutting of money flow to these developers.
Thus why you heard about Shadow Banks and Underground Economy back then, that their Government had to come into to shutdown or regulate.
Even then, It took them almost 14 years to get their overheated real estate under control
Heck they were about to introduce a nation wide property tax, but then trump started the trade war in 2018
Why is their Central Government doing this?
Because there are still a few hundred million poorer rural folk they still expect to move to the cities to join their more well off urban city folk countrymen.
Problem is these property developers were building higher end homes, and not building the affordable homes these rural migrants will need
In China
Owning a home in the city you migrate to? Affects your employment, health, education and even marriage prospects don’t have a house you don’t get married
Thus the common prosperity push and the crackdown on the overt displays of wealth in China
Their Government probably figured out you disenfranchise the people at the bottom of your society they are the ones most likely to act out in protest
Economists worried, normal people happy.
You must be new here, that's not how this works.
@@twelvecatsinatrenchcoat jew spotted
@@shiiboxx79290/10 nice try boy.
Ignorance is bliss as they say.
Er normal people in a deflationary economy aka thr working class would be the most worried since there gonna get pay cuts. Massive layoffs and expectations of working would rise in order to keep essential businesses afloat like grocery stores, shipments, construction for building new homes. Economists are worried, but the working class is pooping their pants 💩
Homes are for staying, not for speculation. Price drop benefits home buyers at the expense of speculators and developers. Secondary sales volumes are up although values are down. Developers are encouraged to build government subsidized homes going forward. Evergrande could not get local financing a few years ago so issued foreign bonds so its bankruptcy hurt mainly the foreign speculators.
trust me that our God isn't Jesus and Jesus isn't our God and no his son. He is a messenger from Allah and our Muslims love Jesus but our God is Allah and He is the Greatest there's no God but Allah and you can learn and read about Islam religion 😊🌷
Cheaper prices are bad? Stagflation is the worst thing.
cheaper prices are bad when 70% of your savings is stored in an 'asset' that's the cause of the massive deflationary spiral that's currently occuring. You can't sell your house unless you sell it at a discount and even then nobody would buy it if there's an oversupply of it in the market and especially if there's a lot of other people in the same boat as you. A normal household wouldn't buy a house today if they expect the prices to fall. They'd rather store their money in the bank where there's a guaranteed interest. People know too that the banks lend the money to developers and they'd rather pull their money out of the banks so that they don't get fleeced. The really bad precedent this makes the normal household in China think is that there's no other 'asset' to store their wealth in other than gold since real estate is now pennies on the dollar. Other than capital flight of course.
trust me that our God isn't Jesus and Jesus isn't our God and no his son. He is a messenger from Allah and our Muslims love Jesus but our God is Allah and He is the Greatest there's no God but Allah and you can learn and read about Islam religion 😊🌷
Yes the *Wall Street journal* wants us to be worried about slower growth and lower prices…things that would be good for the planet, and good for regular people, but bad for billionaires.
Mmkay
Yup China isn’t playing ball
Our top of the food chain 1%ters and their multinational corporations
Don’t want a closed off or slowing China
They want those Chinese buying their 4th and 5th homes right about now.
They want their companies in China lending that money and selling those goods and services to them. Hopefully get them to spend those high saving and then borrow to spend more like we did in the west.
In China in 2008 around 70% of the people in their real estate markets were buying their 1st homes in their cities
By 2018 around 70% of the people in their real estate markets were buying their 2nd and 3rd homes in their cities
That’s why you are hearing about problems with their property developers these days. Because back in 2010? Their Central Government started cutting of money flow to these developers.
Thus why you heard about Shadow Banks and Underground Economy back then, that their Government had to come into to shutdown or regulate.
Even then, It took them almost 14 years to get their overheated real estate under control
Heck they were about to introduce a nation wide property tax, but then trump started the trade war in 2018
Why is their Central Government doing this?
Because there are still a few hundred million poorer rural folk they still expect to move to the cities to join their more well off urban city folk countrymen.
Problem is these property developers were building higher end homes, and not building the affordable homes these rural migrants will need
In China
Owning a home in the city you migrate to? Affects your employment, health, education and even marriage prospects don’t have a house you don’t get married
Thus the common prosperity push and the crackdown on the overt displays of wealth in China
Their Government probably figured out you disenfranchise the people at the bottom of your society they are the ones most likely to act out in protest
there is economic consensus that deflation is worse because of its negative spiraling tendencies. Deflation is much harder to stop than inflation. That being said, yes your currency gains relative value but if no one is spending then the economy will shrink leading to lower wages.
Without deflating slowing down their real estate markets and economy
They would be faced with some people buying their 4th and 5th homes right about now
While a few hundred million. Poorer rural folks can’t afford to buy a home in the cities they migrate to
While some people have fallen through the cracks the majority of the people complaining are usually the more well of Chinese
Talking about how they are having a harder time keeping up on their 3rd and 4th home purchase
It’s a biased narrative as our Central Banks were raising rates looking looking for a bump up in unemployment figures. As our own real estate has cooled as we invite speculation, empty home and foreign owner taxes
Where China is going to crash as their wages come down
Wild assertion, no supporting arguments.
@@DW-op7lyI have a comment somehow similar to yours though. But yours is great.
Deflation is the natural state of the economy as technological advancements remove inefficiencies in production, resulting in more supply at cheaper costs. Central banks offset this deflation with money printing resulting in the redistribution of wealth from everyone to the ultra-wealthy since they are able to access the newly printed money before everyone else. This is known as "the cantillon effect" described by economist Richard Cantillon.
Correct. Well written comment. Thanks for the source.
Comparing inflation to deflation
is like measuring a big wave vs a tsunami.
Why does deflation seem to produce an economic malaise ie poor job creation, stagnant wages, reduced risk taking etc. If prices were falling but people still felt confident about the economy it would be fine.
Well done, need to comment to put it in reference to
You need inflation if your economy is growing (or want it to grow). If there's higher wealth/value in the economy there should be more money to represent it.
Otherwise, people would just hoard money because you'll be able to buy more with it in the future.
falling prices benefit society. People are able to afford their life.
Only if its short term deflation. Long term deflation is bad
Until you lose your job in mass layoffs! See the Great Depression!
I don't think it's the deflation that is itself bad; rather, deflation indicates there was malinvestment and now there is a glut of stuff people don't want
The problem is that this is a Keynesian economy. Under Federal Law, the Federal Reserve cannot allow deflation to take place and they never will.
If unemployment rises and deflation begins, they will slash interest rates and begin quantitative easing to strengthen the stock market and large employers.
If this country dies, it will die from hyperinflation; never deflation again.
@@johnsamuel1999 Computer prices have been deflationary for decades.
In the US where everything is always getting more expensive and wages aren't keeping up, this doesn't sound much worse.
Wrong , wages are increasing here
wages do increase, just slower than what they should be. One reason why housing is expensive is a lot of tradesmen retired, as well as material shortages such as lumber. We don't have enough lumbar yards, and lumberjacks.
But that’s not what’s happening in the US, in addition that’s what WAS happening in China.
Your inflation is 3% while GDP 2.1%. You are very likely not keeping up expense. @@wisenG771
US experienced deflation in 2008 and 2009, wasn't exactly the greatest time to live.
Some deflation was necessary stop putting your portfolio above society 100% of the time
The problem with deflation is that when prices go down employment and wages go down too
@@alexzea9091Why would that happen?
Damm!! people people really want to be unemployed 🤦♂️
yes, deflation is really good , vampires also have to sleep , if vampires donnt sleep , no people live for vampires
China's economy is not the same as the US, they have deflation (and inflation) all the time, this is the 5th in the last 20 years. That's cause they have big swings up and down, that's not good, but it's nothing new either. The US government it's just trowing every 'bad' number they can get from China to justify their 'China is collapsing' BS, but we know which country is really collapsing. The Roman Empire at the end was providing distraction to fool the peasants too, there's nothing new in that either.
despite the lost decade in Japan, is that country really doing so bad all these years?
It wasn’t doing bad and isn’t. It was just frozen. They are trying to frame that as a bad thing
in many ways Japans is much better than the US. They at least have affordable housing,. And the media isn't at war with it's own peoplee.
japan literally 2nd largest economy in the world at that time lol
even its higher standard for most western country, its not magically going backwater
We wanted to see mass layoffs in japan to further damage their economy, but japanese corporations didn’t comply.
Let's just say it's not doing great, It never collapsed but the country lost its economic shine. Japanese companies no longer play a role in the new economy and the yen has crashed hard. Great place to visit though and cheap but not a place to live and work.
Toyota camry price has not come down.
They are selling so-called Kei-cars (small cars with 660cc ICE) at home.
Camry, Prius, Land Cruiser etc doubled or tripled in price in Japan because they are pegged to American inflation.
you mean in china? they will go down to around 15k us dollars
Toyota is Japanese...lol
Car prices have already gone down in China. Camry, Passat.
They're produced in the US.
Can someone explain to me how a moderate (2-4%) inflation in the cost of goods in an economy is considered a good thing in general but a moderate deflation of that same metric is considered dangerous ? Shouldn’t the cost of goods and service also occasionally go down as the market responds to various things
It's not bad, this video is making some outrageous speculations about how majority of people make decisions. If I need a new pan, I am not going to wait 1 year to buy a new pan, because the economy is deflating. It's a different story when it comes to housing market but in case of China deflation of the housing market is a very good thing, primarily because a lot of Chinese people used the housing market as an investment rather then a necessity or to live in their homes, but if house prices go down then people won't be buying new houses to earn money, they will be buying to live in them, which is a reeealy good thing for young people to get hold of their own house at much earlier age.
If prices are rising marginally then investors will be encouraged to invest but if prices are constantly falling then no one will invest since the business costs of today will not be recouped tomorrow . The price of goods will be lower tomorrow meaning you will be operating at a loss. That's why Japan has been losing it's industries
Businesses want consumers to be fearful and greedy to keep profiting from them. Say you are looking for a new table, the salesperson tells you better get it now because prices will increase next month, you will hurriedly buy it. But if every month the prices keep falling then the sales person can't make you purchase quickly.
What a 2-4% inflation wants to force: because you want to keep your standard of living, the inflation keeps you to increase your productivity every year by 2-4%. If living with 0 inflation, many people would stay on the same level.
If the rest of the world sees 10% inflation and you see 1% deflation, this means your output has a 11% advantage over the rest of the world. Basically your exports will rocket as nobody can compete with you. At the same time your cost of living will stay low. The only disadvantage is that there will be little incentive to pump asset bubbles. For the west, that relies on financialization, this would be a to disaster. For china, which relies on manufacturing, it's ok.
Stability and equality are more important than growth.
Neither of which China has.
In China in 2008 around 70% of the people in their real estate markets were buying their 1st homes in their cities
By 2018 around 70% of the people in their real estate markets were buying their 2nd and 3rd homes in their cities
That’s why you are hearing about problems with their property developers these days. Because back in 2010? Their Central Government started cutting of money flow to these developers.
Thus why you heard about Shadow Banks and Underground Economy back then, that their Government had to come into to shutdown or regulate.
Even then, It took them almost 14 years to get their overheated real estate under control
Heck they were about to introduce a nation wide property tax, but then trump started the trade war in 2018
Why is their Central Government doing this?
Because there are still a few hundred million poorer rural folk they still expect to move to the cities to join their more well off urban city folk countrymen.
Problem is these property developers were building higher end homes, and not building the affordable homes these rural migrants will need
In China
Owning a home in the city you migrate to? Affects your employment, health, education and even marriage prospects don’t have a house you don’t get married
Thus the common prosperity push and the crackdown on the overt displays of wealth in China
Their Government probably figured out you disenfranchise the people at the bottom of your society they are the ones most likely to act out in protest
@@bugsygoo depends on who you comparing to. Definitely more stable than the US.
Right! Which China has none of those!
@@neilchan7361 Really? So when millions died of starvation during the Great Leap Forward, that was China being more stable? When Xi crashed the economy with absurd Covid restrictions, was that stability? I'll tell you what Chinese 'stability' looks like: the one child policy unable to be changed for decades despite the foreseeable demographic time bomb barreling towards the country. China will be paying for that bit of stability in the coming years. Stop thinking China has good governance. It demonstrably does not.
The US economy is grappling with uncertainties, global fluctuations, and pandemic aftermath, causing instability. Rising inflation, sluggish growth, and trade disruptions need urgent attention from all sectors to restore stability and stimulate growth.
3:18 omg, I always knew that ought to existed and what it meant because my english teacher has told me, but this is literally the first time I ever see it being used anywhere!
Falling prices leading to a reduction in demand? Okay, sure.
Actually its lack of demand that caused prices to fall, then due fall in price levels lead to fall in profits which further leads to decrease in wage rate or we can say decreased production due to lack of demand.
Due to dec. in wage rate it further decrease demand .
Yes, reduction in demand. You will put off that car purchase til next year because the price will be lower. Your decision not to buy creates a reduction in demand for this year.
@jaggagaming2519 If chinese goods are falling, isn't it good for the rest of the world that imports from China?
@@jaggagaming2519It's supply-demand balance shifting toward supply that causes prices to fall, reduction in demand can cause the shift, so can increase in supply.
Reduction in sales prices reduces profit margin but does not reduce net profit, otherwise events like Black Friday won't exist.
Decrease in prices directly increase real income per real income equation, reduction in corporate profit margin does not equal layoffs just as companies don't mass layoff after Boxing Day.
You created a specific scenerio to rationalize what you want to see while ignoring all the contradictory data refuting your scenario.
For example, Chinese auto prices vis-a-vis revenue and profit of companies like BYD, or Chinese smartphone prices vis-a-vis revenue of Huawei, or China's astronomical solar install and massive solar prices drop giving Chinese industry one of the cheapest energy prices in the world.
Deflation MUCH worse than inflation. Trust me US government would be much more in fear of deflation.
“I’ll wait til next year to buy because it’ll be 2% cheaper” Said no American ever 😂 (IMHO deflation is more of a symptom of other problems than THE problem)
True, but, it would probably effect people buying houses, and that’s 60% of chinas economy, and obviously some sectors are hit worse then others in regards to inflation and deflation
You forgot that wages in china also goes down. Let's not forget that part.
Deflation is a symptom of lack of investment and reduced economic growth
Well, when was the last time there was deflation in the U.S.?
@@mRGuitarShow1 Great Recession of 2009
Interesting video! Thanks!
“Oh no my money is worth more and prices are falling, this is a catastrophe!”
Who are they trying to fool?
The “deflationary spiral” is a myth
Conspiratorial thinking is for weak minds who can't negotiate aleatory, chaos, etc.-part of a world in which, for whatever reason, they feel powerless.
You muppet, the deflation is happening because no one can afford anything.Yes deflation is great if you have lots of money.
Deflation is a problem because nobody will buy anything if they know it’ll be cheaper tomorrow. And tomorrow, they’ll wait for the day after. Soon, it’ll have been 6 months with nobody paying for home renovations, refrigerators, TVs, etc. because it’ll be cheaper later, and people who work in those industries will lose their jobs.
If you knew your $100 would become $150 tomorrow, would you spend it today or tomorrow?
Unlike with inflation, with deflation, companies make quick adjustments to their employees' wages and salaries and employment status.
@@user-4m9-dr80h4 quick changes to their employment status made me laugh
The gall to spin deflation as a catastrophe compared to the exponential inflation in the west is unbelievable. China is managing a controlled reset after an extended period of growth with a responsible approach that maintains a reasonable standard of living and purges businesses/industry that was too speculative. This has always been the traditional cycle. But where as in the west, the US in particular with the ability to print money, believes it can ignore economic fundamentals and continue to achieve growth at the cost of squeezing the consumer for every last dime and incur more debt. With deflation as a threat, China can perform quantitative easing as well as reduce interest rates to stimulate growth again. What a luxury to have compared to spiralling housing costs and food prices.
Interesting take, but you could be giving China too much credit. Their economy looks to be in serious trouble, and a lot of people are about to experience a lot of pain. And for all the West's faults, most countries have decent social safety nets. In china there is almost nothing, and if people can't get jobs, they'll be left to simply die.
That's a B.S. spin job if I ever heard one. China is facing multiple potentially catastrophic crises simultaneously and doing a clown-show of a job managing them because the CCP has cement shoes when it needs to be fast on it's feet. Xi has centralized decision making to the point where nobody wants to make a decision for fear of being disappeared. China has trillions (Yes, trillions) of dollars of unnecessary apartment buildings and infrastructure, and as a result the overleveraged developers are all going bust. The CCP has been so hostile and capricious in it's treatment of foreign companies that foreign investment is fleeing the country at record speed. Which means both no money AND no jobs. And to top it all off, China pushed it's luck so far with it's Wolf Warrior diplomacy, intellectual property theft, and blatant over-subsidization of industries that it got itself into trade wars with America, Australia, and the EU. Oh, and let's not mention the whole South China Sea debacle, where China has both alienated AND alerted all of it's neighbors who are now arming themselves for the inevitable armed conflict China is pushing for. And China supposedly wants to continue trading with these countries it regularly threatens. And the countries debt to GDP ratio is going toxic fast, especially the provincial debt. Stop me when I get to spot where I'm wrong.
No he is right the Chinese Government started to crack down in real estate development in 2010
If they didn’t?
right about now????
You would have people buying their 4th and 5th homes. While a few hundred million rural migrants still expected to migrate to the cities couldn’t afford a home in the cities they move to
In China in 2008 around 70% of the people in their real estate markets were buying their 1st homes in their cities
By 2018 around 70% of the people in their real estate markets were buying their 2nd and 3rd homes in their cities
That’s why you are hearing about problems with their property developers these days. Because back in 2010? Their Central Government started cutting of money flow to these developers.
Thus why you heard about Shadow Banks and Underground Economy back then, that their Government had to come into to shutdown or regulate.
Even then, It took them almost 14 years to get their overheated real estate under control
Heck they were about to introduce a nation wide property tax, but then trump started the trade war in 2018
Why is their Central Government doing this?
Because there are still a few hundred million poorer rural folk they still expect to move to the cities to join their more well off urban city folk countrymen.
Problem is these property developers were building higher end homes, and not building the affordable homes these rural migrants will need
In China
Owning a home in the city you migrate to? Affects your employment, health, education and even marriage prospects don’t have a house you don’t get married
Thus the common prosperity push and the crackdown on the overt displays of wealth in China
Their Government probably figured out you disenfranchise the people at the bottom of your society they are the ones most likely to act out in protest
The real irony is while we see visions of doom and gloom in China as they slow their economy crack down on real estate speculation
We argue about housing, be a right here
Call for those higher interest rates speculation, empty home or foreigner ownership property taxes etc etc as we cry about consumer staples inflation
was watching a documentary some westerner who had come back to the poorest village in China 1 year later
As he walks in on a Senior Social worker berating 5 or 6 social workers because a deadline was fast approaching and they had a quotas to meet getting people in the village above a poverty line or they all including this Senior Social worker would get demoted/fired
Where they had to make sure the villagers were signed up for some State healthcare plan where the State paid 95% of the bills
Then this guys follows one social worker as he shows him the newly paved roads and new houses and the donated furnishings in a home
Even with all that you could get a sense of fear and worry in this guy demeanour.
As we find out he was some Government banking official who was demoted to this job
And the only way you move back up is to meet your deadlines and quotas
Is this a better system than we have in the west?
Depends on if our Government is willing to build roads and houses for people with little expected return
You can TH-cam search it if you want
👇
Revisiting China's poorest village
Demographic plays a very important role in determining the outcome of the economy. Population growth is declining. There needs to be people working, earning money and spending money to have an economy.
Housing needs to be affordable in order to have children
@@dingus6317 Boomers: “No”
@@dingus6317 in chinas case it doesnt matter how many children they are having. Decades of 1 child policy has effectively seen to it that their economy will shrink just like the west perhaps even worse
So japan that has supposedly had a bad case deflation for the past 30 years is still a market leader in manufacturing. Perhaps the issue is the western model of economics apparently not sacking your workforce is a bad thing judging from the tone of the narrator. Perhaps there is another way.
@@muyiwaajose-do8ktJapan is nowhere near the manufacturing leader it once was, and even in areas where it remains strong, a lot of the manufacturing shifted out of the country. Just look at it's unemployment rate over the last 30 years. It's just recovering all of which indicates that they also fired a ton of people
If exports from China are tariffed, are there any other vectors for contagion?
Thanks
For those who want US prices to roll back to 1950's levels 🤣
How about enough normal people can afford homes again. A house built in the 1950s is half a mil.
@@mattheww.6232 Don't buy houses in expensive areas then? Everyone wants to buy house in good areas but they don't want to work hard and smart for it. People only know how to blame and blame.
In China in 2008 around 70% of the people in their real estate markets were buying their 1st homes in their cities
By 2018 around 70% of the people in their real estate markets were buying their 2nd and 3rd homes in their cities
That’s why you are hearing about problems with their property developers these days. Because back in 2010? Their Central Government started cutting of money flow to these developers.
Thus why you heard about Shadow Banks and Underground Economy back then, that their Government had to come into to shutdown or regulate.
Even then, It took them almost 14 years to get their overheated real estate under control
Heck they were about to introduce a nation wide property tax, but then trump started the trade war in 2018
Why is their Central Government doing this?
Because there are still a few hundred million poorer rural folk they still expect to move to the cities to join their more well off urban city folk countrymen.
Problem is these property developers were building higher end homes, and not building the affordable homes these rural migrants will need
In China
Owning a home in the city you migrate to? Affects your employment, health, education and even marriage prospects don’t have a house you don’t get married
Thus the common prosperity push and the crackdown on the overt displays of wealth in China
Their Government probably figured out you disenfranchise the people at the bottom of your society they are the ones most likely to act out in protest
@RyanOKaiser do you blame people for wanting to invest in homes in good areas 😂
@@RyanOKaiserLOL. Your mentality is akin to telling people without health insurance to not get sick. Thanks for coming out buddy.
I would welcome lower prices imo
It feels very odd to ping back and forth between stock market figures (Japan's 34 year gap between highs) and GDP. The longest gap in peaks of GDP per capita is 15 years in Japan (1995-2010) and the same is true of Japan's GDP overall (not per-cap) because of the population size issue. Compare this to the cited 34 year figure.
Very interesting! Serious issue, but I like the way they explain and simplify things.
Deflation is good. Prices are too high now so we need much lower prices. A gallon of milk costs $5. It should cost $1. A simple truck costs $30,000. It should be $10 Grand. So we need a lot of deflation.
Yup. Stop letting Wall Street stooges set national economic policy and the market will sort it out far better than some bureaucrat in Washington ever could.
Low prices won't help you when you don't have a job due to deflation.
@@pulipakasrikiran9307Why does deflation cause unemployment?
@@Aelfraed26deflation causes a cycle of demand to slow down and subsequent lower production which will cause the companies to cut jobs to keep their margin
@@Aelfraed26It's an indirect correlation, and depending on the market may not even hold true. It's a business major's presumption on emergent human behaviors that has proven to be a decently accurate take in modern times. It does not hold true at extremes, or if the entire "system" breaks down. At that point the fictional nature of it all overwhelms anyone's belief in meta economics. Typically at that point people organize into unions, tribes, townships, gangs, name it. Many an economic system abound at that point. Scarcity plays a role in nearly all of them, still.
I’m a Chinese and I’m living alright in china
Hey, how about a free market instead of central planners?
No such thing as a free market, crony Capitalist control the market.
Could be an advantage for exporters during deflation due to lower costs in labor, materials and costs of living.
If one can get a BYD Seal AWD for USD 25K one day that has to be a good thing. Do we not want to reduce our reliance on fossil fuels. If PRC deflation brings us more quickly to the widespread use of renewal energy that would be a great thing.
Their car life span and battery life span is terrible. Resale bad. Quality bad. Why pay for a cheap car that depreciates to zero and breaks down in five years? Short sighted. Versus a Toyota that will keep going for 20+ years. In the end, you have to waste money buying another car in a few years and over the long run you’ll lose out
The people doesn't like deflation is because every price is Dropping only happened in day dreams
not so much local govt propping up real estate prices, it's that they are NOT allowing realtors to sell property below what the officials perceive as an acceptable price!
The economies are so connected, so complex...
Technology is deflationary and awesome. I think "deflation is evil" propaganda is a demonization of lower prices for consumers and terrible news for profiteers.
How much did the govt pay you guys lol
Most of the struggle to take this size of inflation is in the wang-dong province.
It is a “vicious circle” when things get better and better for the consumer.
failed to point out, Japan's stock market new high is also a bubble.
The PER of the Japan's stock market is 16x, and you can't call this a bubble.
@@ajgjmtgmddt9868 at the same time population is declining. If you look at Buffet's investments, he made sure that he got companies with global exposure.
Considering inflation, Japan's market has not actually reached a new high yetm
Canada is also issuing bonds as emergency stimulus. The global financial crisis is just starting.
lol got a invest in canada ad for this video
I think they can't inflate assets any higher without causing mass unrest.
Isn’t canada is china already.?
@@Pmooli yeah, their housing costs are insane, even compared to some of the bubbliest places in the US
Deflation is a metric. The risk is a self-enforcing spiral of counterparty losses and risk-adverse psychology to a degree that leads to a Minsky Moment.
The funny thing is the stuff coming from China is getting more expansive here in Singapore.
Why are they comparing China to Japan. That's like apples to fake apples. 😂
I'm living in China. I'm so jealous of the high prices in the US.😂
😂😂
I'm jealous of low wages in China.
@@nntflow7058let’s put it how you can understand, their wages may be low but their cost of living is also low. Can you say the same for the west?
Purchasing power in China is still growing. Unlike in the US.@@nntflow7058
You need an education!
Comparing inflation to deflation
is like measuring a big wave vs a tsunami.
It's almost like infinite growth year over year is an unsustainable system and will inevitably collapse.
Scenes of small market like Lhasa is almost never touched in economic news….
Worrying about Chinese deflation harming the American economy is a fallacy. The importer will just keep the growing difference as profit.
it would work if there is was only 1 importer 🤣
@@leeme179 Most of them are in cahoots or pretty large, thus greedy.
China has no solution! Deflation has no solution.
I wish we had some deflation. Inflation sucks and the FED shouldn't have stopped raising rates.
thats the plan, how china will dominate the world and underprice the US and EU
What you need is a pay raise to keep up with inflation. Deflation isn’t good for anyone except creditors.
@@TravellingAllendeflation is good for everyone except for the rich. Decrease in profit margin
Short term deflation is good, but long term deflation sucks
I would say some Chinese buying their 4th or 5th homes
While 300 hundred million rural Chinese are still expected to move to the cities but can’t find affordable homes
Isn’t the best kind of inflation
WSJ officially thinks we're dumb
If it’s paying 20 year 200,000 mortgage then turns to 100,000 is bad, that possibility means homeowners don’t even have the ability to pay 200,000 mortgage, it’s asset can’t be sold to recover it losses?
Yeah but with ownership that cheap who would want to buy second hand anyways?
Why US so scared about anything thats happening in China. Focus on your own economy and stop worrying and blaming others for your own problems!
Okay 五毛. #50CentArmy
Except for the greedy who invested in China,nobody else cares what happens there.Nobody !
Because this channel is about the economy and China's economy is still number 2 and a pretty important trading partner for all major economies, including the US. Nobody would care about China's economy or domestic politics at all otherwise. It's pretty obvious.
Just ignore what's going on with our single biggest trading partner and the number one global producer of various critical commodities? Gee can't imagine why the Wall Street Journal is reporting on such matters but yeah, okay. "America bad" for paying attention to such things.... Whatever.
The most mind-boggling logic is that China is doubly blamed for producing cheap products AND not consuming these cheap products themselves.
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Lower prices is a consequence of productive economies.
We have a fed with a 2% target and they still can’t stop printing money and causing inflation.
I would be hesitant to buy a bond issued by the Chinese government. What stops them from changing the rate or just declaring them void or worthless?
It's like I'm seeing each video 3 or 4 times. Every TH-cam channel is doing the same videos about China and Germanies economies
There’s only one Germany.
This is what corporate media has devolved into.
so in china wages r raising and food and stuffs are cheaper , i do not see anything wrong for its citizens ?
They explained the issue pretty clearly. Prices continually going down means that people are not going to go out and buy things (except essentials). This is bad for business as no one is buying cars, houses, tech, and luxury goods. This leads to people being fired, companies downscaling, losing money on investments, etc. Lower prices sound great on paper, and sometimes are alright if people are still going out and using their money, but that typically is not what happens.
Wages goes down for most people.
@@nntflow7058Real wages literally go up with deflation and go down with inflation, it's a fundamental economic principle.
China is one of the only countries in the world where real wages rose last year.
@@vlhc4642 😂 You don't anything about economics do you?
@@nntflow7058 The equation for real income is Real Income = Wages / (1 + Inflation Rate). Do I need to explain fractions to you?
Next time save yourself the humiliation by loosing up econ 101 first.
So just realize the Nekkei has finally caught back up to where it was 35 years ago.
Inflation resulted in the rise of facism, and world war 2. What has deflation cause other than a sluggish economy?
Japan is also unique with a very aging population, and a shrinking workforce and meager birth rate.
China has all these too now
All developed economies are experiencing this. The world population is unlikely to exceed 10 billion.
uhhh haha, chiner too
China is one of the fastest aging populations on earth
Do you know why prices are skyrocketing? Due to export restrictions imposed on the manufacturing countries of the goods, many countries such as the Philippines, Vietnam, Malaysia, etc. purchase goods from the manufacturing countries and label them with their own country before selling them to Europe and America. The result is that Europeans and Americans are paying for this bill themselves. That's right, the manufacturing country I mentioned is China。
Nope. That is fake news…
depending on the amount of Chinese inputs into the products, that could very well violate trade compliance laws. you can't just move something made in china across a border then label it as being made somewhere else
@@alquinn8576 Tell me, there is a product with a few screws left that haven't been tightened. If I buy this product and tighten the screws, can it be used as my product? Can I publicly claim that I did it and that it can be sold worldwide?
@@user-bt5sx7tc6n it depends on a lot of things, but often, something that trivial would not justify a country of origin other than China, if that's where 99.9% of the work and inputs were sourced. I work with people in trade compliance, so I absorbed some of this info, though I'm not in that game myself.
@@alquinn8576 If the manufactured goods are commodities such as tomatoes and cotton, can the country of manufacture be determined?
This deflation and the cost of borrowing going up is a lie. It depends on whether you are talking about the banks or any other person who can access cheaper money for nothing or the normal person.
For the normal person, the main thing is your earning power. If ot stays the same you want prices to go down. If the salaries go down and you have debt then there is a problem. If you have no debts and the cost of the debt goes diwn,then OK. If the cost of the debt goes up with high interest rates, priblem.
.
Exports to US and Europe collapse hence excess capacity result in deflation.
In America, things must be so expensive that people can’t afford decent food or pay the rent only then the economy is good😂
At least the numbers look good, even if half of the population are homeless and the other half on food stamps.
say the wumao bot😂
@@fuckheinschitt239 The question is, is what this wumao bot says is true? *crickets*
Oh nyooo consumers now can buy cheaper products 😭😭😭why china? why you do this to your people?
What a paradox! Is the purchasing power of the Yuan too strong? Home prices are falling making it more affordable...yet...that's a bad thing? I'm so confused...
When China ferts....
Western MSMs: It's bad
When China doesn't fert....
Western MSMs: it's bad
😂😂😂😂😂😂😂😂
Not sure why economies have to be growing all the time. Japan seems to be doing fine.
Yep. Stockmarkets owned mostly by the rich were going down. So unsurprising the obsession with growth.
Fun fact: America had deflation in late 1800s while becoming the richest economy in the world.
Yeah but that was racist.
@@RM-jb2bvexistence is racist according the woke.
Bidenomics give all wealth to illegal immigrants
That was because money was gold backed and America had raised its productivity. Neither of these are happening in Japan.
@@CryptoCryoto and that was dum they also didn't have aluminum or silicone invented , only in planes was in used, its in everything from cans to carsnow, back in 1960 they only believed in cold hammer forged steel like Russia , now in USA cold hammer forged is banned to make becuz osha
I'm learning Mandarin so I can move to China. Affordable housing. No looting. No looking over my shoulder at the ATM. I can walk around at 3AM without worried about getting robbed at gunpoint.
You need an education!
Deflation is not 10 or 100 times worse than inflation, but 1000 times worse!
Government guaranteed jobs programs can help mediate many economic and social problems.
Looking at China through coloured lens.
An analyst can always find negative things to say even in the best situation and showed up their bias.
There a Chinese phrase - picking bones from egg shells.
Deflation caused the Great Depression, why do you think China is so worried about people talking about it on the Chinese internet?
Chinese being butthurt when you say one negative thing about China…. lol “wuaaah but what about US wuaaah”
@@bullpup1337Butthurt? lol. Stuff are getting cheaper in China. Enjoy your high prices getting higher and higher😂😊
Your money being worth more = bad
Aren't they planning on, or already stimulating with CBDC that can only spend on certain essentials like food, mobile phone bill, and you have to spend or it disappears
Velocity helps more than we assume/intuit because scale is so deceptive
The salary increase lesser than commodity price. To me, except the latest MacBook I bought over $1500, I am rarely going to shopping mall spend more than $30.
Also, the tax rate is too high, the street food is unhealthy, and healthy food is over expensive. That’s the reason I am spending lesser. I’d rather put the money into the stock market or other investment products.
Anyone who says "falling prices are dangerous" is a corporate schill and immediately needs to stop talking.
Short term deflation is good, but long term deflation will suck for everyone
Who wants lower prices anyway?
Certainly people who’s wage are getting smaller.
People with a lot of long term debt -- mortgage, primarily -- will NOT want to see deflation.
Who wants higher wages anyway?
@@andyyang5234 lol you are under every comment that suggests deflation isn't bad 😂
You really hate the idea that Chinese aren't living miserable lives like you hope uh? 😂😂😂
@@darthvadeth6290 Since you've seem my comments, my plan is working as intended.
Profit margins information should be more publicly available
So we can see how greedy a company is
profit margins don't tell how "greedy" a company is
@@alquinn8576 maybe not always but a better evaluation can be made such as there employees wages vs company earnings vs company spending 9 out 10 times we would see spending to profit that profits would be way greater than needed to say that a company needs to to raise the price of a product 30% when employees pay only went up $1 which is like 4.5%
Deflation also means Ordinary people can live a better life. With the great improvement of productivity and the progress of science and technology, the profits of traditional industries began to decrease, and more people invested in emerging industries to develop more things. More intense market competition and Industrial upgrading. I don't see what the problem is.
Why are you guys so obsessed with China?? and most of what you talk about them its always negative "China is struggling with this, China is struggling with that" how about you talk about US struggles for a change? you guys have a massive debt problem and it keeps growing if I recall correctly. How about you talk about the fall of the US dollar in global trade and the reasons why?
Price of being a major power.
The consequences of making 1 billion people work I guess
Why obsessed with a thug?
Deflation is better for price stability than this crazy inflation.
But doesn't that mean that the price is decreasing? So how is that price stable?
@@user-lt5no1xt1zbecause they are printing money to buy resources like oil in yuan, they used to need dollars, now they buy oil and all other resources in yuan.The cost of production has fallen rapidly
You need an education!
Deflation is not 10 or 100 times worse than inflation, but 1000 times worse!
@@AhmetTekin101 that's what I was thinking also
@@AhmetTekin101there's market adjustment in China leading to oversupply and cheaper goods price. Deflation isn't a problem, it's just an indication that something wrong somewhere
Peter Schiff says deflation is the result of increased efficiency, so it should be embraced. I will never complain of lower prices!
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another "at what cost" from the americans XD
You r wallstreet journal. U r expected to provide professional views. Deflation is following a property bubble? How to explain similar bubble in other country's? Is there any reason overlooked ?
Growth is ending. Balance and Harmony to follow.
I don't really understand the argument that deflation postpones consumption. If you need a new car to get to work or something else, you buy one. If you postpone consumption due to expected price drops, it must be because it is something you don't really need. Falling prices must be positive, as you can buy more.
Yeah, don't believe in all these "economists". They just want price to keep going up with infinite inflation so everyone can't afford anything eventually.
Imagine them trying to convince us price going down is bad if we have savings? It's bad for those without savings in the bank since they can't find a job but we need massive unemployment and high deflation to bring the price back to where it was.
Yeah but advanced economy is not an economy of things we need, it's about luxuries and things we want.
It’s not an argument it’s just a lie. These people told you BLM riots SLOWED the spread of Covid.
@glennielsen Totally agree! As if people were super-rational about their purchases! Not the humans I know!
It's empirically observed. One reason is that house prices also tend to fall, so your net worth relative to your mortgage gets worse, which reduces consumption
I don't trust WSJ when it comes to economics. Especially while they try to say "low consumer prices are bad". Isn't the entire point of 'economies of scale', to be able to produce goods cheaper, reflecting a better price tag for consumers? Why is every corporation's #1 goal to raise their prices as much as humanly possible?
because it is a capitalist principle, see how american companies always raise prices while chinese companies always reduce prices.
Capitalist want people to live miserably. They want keep the price high to maintain high profit margin. Socialist says otherwise
Economies of scale are good for them because it reduces the cost of input prices. While they _can_ use that to lower consumer prices to compete, America's economy is monopolistic, most can simply keep increasing consumer prices and see an ever increasing profit margin. Prices already outstripped the ability for many consumers to continue purchasing, which is why cheap credit is so important to the American economy.
Nah…not worried
China sneezes and the whole world is catching a cold?
Pretty much. Same as the US.
US trade with China is only a few % of US GDP
Like Covid
China 5% growth is recession, US 2.1% is resilience!
if you _believe_ that it was 5%...
Real China's 🇨🇳 economy shrank -3.5% in 2023 as opposed to 5.2% expansion as officially announced.
Because for USA it is an already oversaturated or developed market. The people of USA already earn 60k dollars as a median income and about 80k per capita.
But thats not the case with china. Their GDP per capita is not that of a rich nation. Their market is not saturated,they still have opportunities.
@@whymyname251 But how are they going to buy all those flammable EVs and tofu apartment units?
That 5% figure has been met with skepticism from international governments and banks. The property sector in China was over 30% of GDP growth and it has now stopped growing, yet China is still citing the same growth figure, which simply doesnt seem to make sense statistically. It was predicted that China would cite 5% no matter how slow their growth was, due to the 5% figure reflecting policy and not reality, and that turned out to be true.
Deflation is a correction, not a problem. Japan mistake was getting highest debt to gdp in world.
I agree completely. Deflation is the normalization of over-inflated asset/consumer prices.
if anything money should hold it's value, if it doesn't it's not money. It's just paper.
Most Japanese debt is owned domestically that why their high debt isn’t a big of a problem than other countries and why they afford to be “stuck” in time
You need an education. Deflation is not 10 or 100 times worse than inflation, but 1000 times worse!
❤❤Only bad things come from WSJ ❤❤