With China's stock market tumbling, falling company profits, and stimulus failing to work as before, it looks as though China's rapid growth is shuddering to a halt. Given China's huge internal debt, there is every chance that this lack of growth will become a recession and that this could have as big an impact as the GFC.

From the Washington post:

"Indeed, while it might not have gotten as much attention, China’s benchmark stock index was, with its 25 percent drop, the world’s worst-performing in 2018. Part of this was because of the fear that President Trump’s nascent trade war might turn into something even more serious, but only a part. More significant than what Washington was doing, you see, was what Beijing was. That’s because, in what has seemingly become an every-other-year tradition in recent years, China’s government has stepped on the economic brakes pretty hard in an attempt to put an end to what looks like some bubbly behavior.

In the depths of the GFC, Beijing unleashed a stimulus the likes of which the world hadn’t seen since World War II. It amounted to some 19 percent of its gross domestic product. By comparison, Obama’s stimulus was only about 6% of GDP. Aside from its size, what made China’s stimulus unique was the way it was administered. The central government didn’t borrow a lot of money itself to use on infrastructure, but rather pushed local governments and state-owned companies to do so. The result was a web of debt that’s been even harder to clean up than it might have been because of all the money that unregulated lenders — so-called shadow banks — were frantically handing out above and beyond what Beijing had been hoping for."

The fears in Beijing have always been that the acceptance of the Authoritarian Communist government has been due to the continual increase in living standards could evaporate in the event of a recession and lead to internal instability which in turn could lead to more belligerent Chinese stance to divert attention.

Comments are welcome..

Who knows? There is a lot of fake news about everything these days. The MSM is not to be trusted. I do think, however, that Australia is relying to heavily on China and its Communist, pseudo free market attempts.

Shadow Minister agree
Our biggest trading partner is our biggest threat too
Japan bombed Pearl Harbor because they thought they had no other choice
We must keep our eyes open and minds clear in relation to both that country's economy and its intentions

I was suspected the trade war would be worse for China. The US should be more self sufficient of China. It will affect Australian raw materials but maybe it'll encourage us to develop a more sustainable economy.

SM we will look and talk about this much much more
Our eyes seem to be on other things, but Ostriches too do that
China is making hay while the sun shines, but a day of confrontation will come

A recession seems a bit hyperbolic given that they've been growing at double digit rates for 2 decades and are still up around 5% annual GDP rates.

Nonetheless, things aren't good for them and it doesn't look promising for China or the surrounding regions.

The Chinese have made an unspoken agreement with their government over the past 30 years - we'll surrender our freedoms so long as you (the government) provide us with economic growth. If the government breaks the agreement all hell breaks loose. And they know it. So they'll try to keep all the balls in the air and hope something comes along to salvage them from their own problems.

In the meantime, the government is trying to distract with things like increasing the war-like stance against Taiwan.

And in the middle of all this comes DJT. The trade war is a massive problem for China and they will ultimately cave in to Trump's demands. They have little choice. China has been able to grow at these rates so long as the US remained its patsy. That's all over (at least until another Democrat gets in the White House) and Xi needs to re-calibrate to the new circumstances. Its unpalatable but inevitable.

Longer term, China has a demographic problem. As Steyn said years ago, they'll get old before they get rich. And the average age in China is climbing rapidly. The one-child policy has been rescinded but Chinese families are still having just one (normally a boy) and, short of forcing women get pregnant, there's little the government can do to fix that mess.

All those who predicted the Chinese century are going to find a way to pretend they didn't.