Why are so many young Chinese depressed? (Nancy Qian, 12/21/23, the Strategist)

China’s high youth unemployment rate and increasingly disillusioned young people—many of whom are ‘giving up’ on work—have attracted much attention from global media outlets and Chinese policymakers. The standard narrative is to associate the problem with the country’s recent growth slowdown. In fact, the issue goes much deeper.

The rise of youth depression has been decades in the making, and owes much to China’s rigid education system, past fertility policies and tight migration restrictions.


Japan cuts big deals with ASEAN — with one eye on Beijing (Matthew Kendrick, 12/17/23, GZero)

Tokyo committed to an implementation plan for over 130 projects with ASEAN, covering everything from the green economy transformation to cybersecurity to arms technology and equipment transfers.

The joint leaders statement also contained language regarding “respect for sovereignty and territorial integrity” and the “renunciation of the threat or use of force” — clear references to China’s activities in the South China Sea.

In a separate bilateral deal, Indonesia will get $63.7 million to bolster its maritime security and a Japanese-built patrol boat to boot.

Similarly, Malaysia will get $2.8 million for “warning and surveillance” gear as part of a Japanese program to bolster law enforcement and security in friendly countries.

The Philippines’ coast guard agreed to cooperate more closely with Japan’s. Manila also received advanced Japanese radars last month and is in talks with Tokyo over a formal military pact that could allow mutual troop deployments and training.

Also last month, Japan and Vietnam elevated their mutual relationship to a “comprehensive strategic partnership” and are discussing a potential military deal.


The country should stimulate consumption with spending on education, healthcare and public housing (CHETAN AHYA, 12/11/23, Financial Times)

Its gross domestic product deflator — the broadest measure of prices, taking in all goods and services of a country — is at minus 1.4 per cent and has contracted for two consecutive quarters. Consequently, China’s nominal GDP growth was just 3.5 per cent in the third quarter, much lower than the 6.4 per cent of the US.

A deflationary backdrop poses a few challenges. First, real rates after taking into account deflation will rise, increasing the burden on debtors. Second, even as debt growth slows, it will probably remain higher than nominal GDP growth. And so debt-to-GDP ratios will continue to climb. More crucially, a weaker GDP deflator negatively affects the trends in corporate revenues and profits. If deflation continues to eat into these, companies will cut wage growth, creating a vicious “loop” of even weaker aggregate demand and deflationary pressures.

These issues are particularly challenging in China’s context, considering that it is also facing elevated debt ratios and weakening demographic trends. Along with deflation, these factors combine to present a challenge to China we term the “3 Ds”.

The deflationary pressures in China stem from the deleveraging of the balance sheets of the property sector and local governments. When you consider that the combined debt on these balance sheets accounts for about 100 per cent of GDP, it is hardly a surprise that demand and price pressures are as weak as they have been.


It’s starting to look like China regrets its private-enterprise crackdown (Huileng Tan, Dec 14, 2023, Business Insider)

A document released after the conference set the agenda for China’s economy — the second-largest economy in the world — for the next year. Strikingly, this year’s readout acknowledged that China needed to prioritize economic development.

“Next year, we must persist in seeking progress while maintaining stability, promote stability through growth, and establish the new before breaking the old,” the meeting’s official readout said.

Rory Green, the chief China economist at GlobalData.TS Lombard, wrote in a note on Wednesday that the wording in this document suggested “hints of remorse at overzealous growth-negative policy implementation.”

“The emphasis on the economy was followed by ‘prioritizing development before addressing problems,’ alongside rhetoric that linked national security to maintaining a stable growth rate,” Green wrote. He added that this suggested official recognition of the difficulties facing the country.


The Billion-Dollar Question: When Will China’s Local Debt Explode?: Unless the CCP embraces capitalist innovation and public accountability, which is unlikely, China’s local debt could cause the central bank to collapse by 2030. (Jennifer Zeng, 12/13/23, Japan Now)

The only feasible solution to China’s financial trouble seems to be the central bank’s printing money. Suppose China’s central bank prints ¥10 trillion CNY ($1.41 trillion USD) of base money annually to assist local governments with debt repayment. With only a 4× money multiplier, this would result in over ¥40 trillion CNY ($5.63 trillion USD) of circulating money.

As of the end of September 2023, China’s total money supply, M2, stood at only ¥290 trillion CNY ($40.75 trillion USD). Injecting more than ¥40 trillion CNY into this money pool within a year would have big consequences. Within less than two years, the renminbi could face destruction by the central bank itself due to rampant inflation caused by reckless money-printing.

Through meticulous calculations by Lao Man, the conclusion is that without urban investment bonds, China might struggle through the next three years. It would be a bare survival level, though, with China limping along on money printed from thin air. This situation could potentially last until 2030, which is viewed as the ultimate deadline for collapse.

‘No Hope of Rescue’ However, the dilemma posed by urban investment bonds is like a noose around the Chinese economy’s neck, capable of asphyxiating the system at any moment. No matter what the central bank does, 2024 looms as the most probable year for collapse.

Lao Man suggests some solutions.

Elevating private enterprises to the same status as state-owned enterprises is one. He also suggests empowering the public to participate in and oversee government actions. But neither of these scenarios is likely to occur. If the Chinese Communist Party were to open the door to either capitalist innovation or public accountability, its very reason for existence would evaporate. All that remains, it would seem, therefore, is to quietly await the inevitable.

Lao Man’s final conclusion was stark: “Fortunately, the wait won’t be long. Local government debt will definitely explode within the next year, with no hope of rescue.”


China, America, and Thucydides’ Trap (Richard Allen Hyde, December 1, 2023, Providence)

Thus, these two powers have already traded places, come into armed conflict once, and are now in a position of relative parity. One would think that their chances of avoiding the Thucydidean Trap are pretty good. Both countries are at the top of the world’s economic heap and very risk-averse. Both have much to gain from their relationship and much to lose if it breaks down, as does the rest of the world.

A major shooting war between the two countries would be a disaster for both and for the world at large, an even greater disaster now than it would have been a few years ago because of the major shooting war in Ukraine. China (rather quietly) backs the Russian invasion. The US and most of Europe are sending military aid to Ukraine. The conflict is leading to a major upset of the world economy. China can certainly weather this storm, but it cannot be happy about the effect on the world economy and is apparently in no mood to bail out Russia with substantial aid. This brutal and clumsy invasion will certainly not make China’s intended digestion of Taiwan any easier. The chance of the Taiwanese voting to become part of China now looks more remote than ever.

Nevermind that China’s economy peaked at a GDP per capita half of Mississippi’s, it is now taking on basket case status. Treating it as a peer is really just a case of old “Yellow Menace” terrors.


China Tried to Keep Kids Off Social Media. Now the Elderly Are Hooked (LAVENDER AU, NOV 25, 2023, Wired)

Gao is 69 years old, one of a growing cohort of elderly people who have moved away from television and gravitated to Douyin, China’s most popular short-form video app. There are 267 million people aged over 60 in China, according to official statistics, and while China’s government has tried to limit young people’s use of Douyin, worried about its addictive nature, many of the app’s habitual users are their parents, or even grandparents.

“Whenever he’s not cooking, swimming, or sleeping, he’s on Douyin,” his daughter Helen says. “It’s brainless entertainment. It’s better to be playing with a cat, it’s better to be doing anything else.” She’s not a Douyin user herself. “I already have attention problems,” she says. “Douyin would make that worse.”

A former soldier, Gao follows the Israel-Palestine crisis and the war between Ukraine and Russia through videos made by commentators. He shows me one where a political analyst translates headlines from English-language media outlets, such as The Times of Israel. He watches others for their analysis of military strategy.

While television broadcasts the official viewpoint, Gao says that on Douyin there are often videos from different camps putting their views across. The censors might get to them after a while, but it’s possible to witness a spectrum of opinions.


China’s Self-Inflicted Economic Wounds (TAKATOSHI ITO, 11/21/23, Project Syndicate)

[X]i’s obsession with control continues to pose a serious threat to China’s prospects. Not only does it hamper innovation by domestic firms; it also discourages foreign investment.

Already, foreign companies, such as the polling and consultancy group Gallup, are fleeing the country. This can be partly explained by China’s economic slowdown, which has reduced the availability of high-return investment opportunities and, together with demographic trends, promises to shrink the Chinese market over time. But, with China still targeting 5% growth, there is clearly more going on.

In fact, foreign companies worry about becoming the target of spurious antitrust investigations, and fear that the newly expanded, but deliberately vague counter-espionage law could result in them being punished for normal business activities. Of course, US restrictions on high-tech exports to and investment in China are not helping matters.

China today shares many features with Japan in the 1980s. But the biggest risks to its economic prospects are all homegrown. By prioritizing security and stability – through surveillance, control, and coercion – over economic dynamism, China’s leaders are abandoning some of the policies and principles that underpinned the country’s “economic miracle.”

You can’t have a Clash of Civilizations when there is only one.