The Chinese and US economies are tied together.
And any disruption to one greatly affects the other.
But what happens when both of them are in jeopardy?
Well, let's just say the whole world is put on notice.
We have a pretty good idea of what's going on here in the US.
Our leaders are addicted to printing money,
and our money isn't based on anything
except the full faith and credit of the US government.
Oh, goody!
But in China, the problem cuts deeper and the motives are sinister.
Behind a curtain of CCP propaganda and manipulated numbers
is a system of control put in place to do one thing---
keep the CCP in power no matter what.
Even if that means bringing everyone down with them.
Welcome to BitBoy Crypto!
In this video, I'm going to cover how the Chinese economy is poised
to take the rest of the world economy down with it.
I found critical information that other analysts have overlooked
that you need to understand just how big this crash is shaping up to be.
All this information is being suppressed by YouTube,
and, in fact, CCP bots have been brigading any video about the subject,
flooding with dislikes, negative comments and bogus community standard strikes.
So do me a favor and hit that like button and subscribe to the channel
to let the algorithm know this video is worth watching.
Thanks!
A lot has been said about China's real estate market bubble,
but the bubble is a byproduct of rapid growth.
No one can deny that the last 30 years have been very good to the average Chinese citizen.
In the 60s and 70s,
China was a third world country,
where bicycle-powered rickshaws share the road with modern vehicles.
Most of the population got by on subsistence farming,
and literacy rate was in the low 30s.
But in 1972, Richard Nixon opened up diplomatic relations with China,
kicking off a surge in trade with the international market.
Since then, middle class has exploded in size,
growing from 3% of the population in 1978 to over 50% in 2018.
The literacy rate is at 96%.
And the Chinese space program is one of the biggest in the world.
This influx of wealth has slowly warped the PRC's communist controls
into a quasi-capitalistic economic engine to change the world.
But all this growth came at a cost.
And just like in the US,
it's time to show the receipts.
The basis for China's growth has always been a bit of a problem.
And most of that comes from two things.
First, China manipulates its currency.
Second, the banking system in China is totally broken.
Most currencies ebb and flow in value based on market conditions,
but China is controlled by communists,
so instead of allowing the market to decide what the value of the RMB is against the dollar,
the government decides what the RMB value is
and allows traders to arbitrage a little on the up and downside by a few fractions of a percent.
This behavior has led the US and other countries to label China
as a currency manipulator several times over the last few decades.
It's just a symbolic label to show their disapproval of the practice
because manipulating your money can be great for growth,
and that's exactly what China did.
It depressed the value of the RMB relative to the dollar
so that Chinese goods were always cheaper than American goods.
This led to rapid manufacturing growth in China
and cost the US over 1 million middle class jobs.
That brings us to the Chinese banking system.
Phew!
Already, we have problems right off the bat.
A fiat currency that's actively manipulated.
Well, it just gets worse for your average Chinese person.
The largest banks are in place to serve the needs of the CCP
and other collectives in the country,
not as a safe place to store money,
or be a growth engine for capital to be used by private citizens.
Interest rates at Chinese banks are abysmal,
so anyone looking to make a return or use a financial product from a bank
would have better luck playing the lottery.
Because the major banks are serving the needs of the party,
the balance sheets of the big four banks don't make any sense
since debts come and go at a moment's notice and audits never happen.
Government projects show up looking for money,
get the money as a loan,
and then leave.
They never have to account for anything,
show a profit or even pay it back.
This has been an ongoing problem.
And even as far back as 2007,
it was well known by the World Trade Organization
that the big four banks in China are a ticking time bomb.
Now, if you want to find out even more
about what's been going on in China over the last several years,
make sure to check out Raoul Pal's Real Vision.
They've got all kinds of videos on China, its economy, the banks, everything.
We've got affiliate link down below in the description
if you guys want to check that out.
If you're interested more in the macroeconomics of the world,
geopolitical side of things of the economy,
make sure to check that out.
So, what does a Chinese person supposed to do with their money now?
The banks don't work,
and keeping cash is a guaranteed loser.
Why not put your money into a hard asset like real estate?
Well, that's exactly what they did.
Real estate was seen as a bank account,
and combined with a rush of rural workers into the cities
to make a better life for themselves,
real estate was hot,
and prices started to skyrocket.
With a tsunami of middle class Chinese looking for work in the big city,
real estate was seen as the go-to investment play in China.
Construction could barely keep up with the demand,
and the property developers that were in the right place,
well, they were set up to make loads of money.
Evergrande was just such a company.
Its charismatic CEO Xu Jiayin was known for making large deals
and lavishing gifts on his associates.
He hung out with Jack Ma from Alibaba,
bought a soccer team,
has his own super yacht,
became one of the richest men in all of China.
His strategy was simple.
Make high-rise condos as fast as possible.
But Evergrande took it one step further.
If they couldn't get the land lease in a city or town,
they would just build an entire town.
Sometimes out in the middle of nowhere.
As long as it was in the plans for the massive Belt and Road Initiative,
then the leases could be gotten for pennies on the dollar.
This rapid expansion fueled by cheap debt and hardly any consumer protections
led to the real estate industry becoming a monetary silo
that create its own feedback loop of sales, construction, presales, construction, and so on.
The pace of building and lending became so fast,
the presales were happening years before the properties would be completed.
But according to Chinese law,
Evergrande could write mortgages that require payments
as soon as the paperwork was signed.
Contrast that to here in America,
where home presales happen all the time,
but the difference is,
you don't start paying your mortgage until you can move in.
The real estate frenzy was hot and heavy in the early 2000s.
Home prices saw unprecedented growth.
Chinese cities made the list of the most unaffordable in the world after time.
But an undercurrent was starting to form.
As the Chinese middle class grew,
so did its wages.
And as wages grew,
its competitiveness on the global manufacturing market,
well, it started to wane.
As years went on, in the middle 2000s,
manufacturing companies started to move operations to neighboring countries
with cheaper labor like Vietnam and Cambodia.
Unemployment started to come into the picture,
and the Chinese started to get a little more prudent with their money.
If you go by the official state data,
the graphs look good.
But if you survey the Chinese by household,
it paints a very different picture.
For example,
as of 2022,
nearly 20% of college grads can't find a job.
So far, it's looking like China's economy was set up to fail
via good old-fashioned greed and bureaucracy.
But this is where the story takes a dark turn.
Because China's economy hasn't just been growing due to making iPhones and baseball caps.
China is colonizing the world and is using debt to do it.
Since the late 90s,
China has been handing out loans to emerging economies
in the Middle East, Africa and Southeast Asia.
These countries are trying to grow but don't have access to loans from the IMF
because they're considered too risky.
That's where China has stepped in with an open checkbook.
Normally, government loans have terms that are low interest and are paid back in decades.
But Chinese loans are different.
The interest rates are up to 400% higher than normal.
The payback terms can be as little as five years.
To some of those countries,
a loan from the CCP is a lifeline to build critical infrastructure to help their people.
But the details of many of these loans are where it gets dark.
CCP loans often come with enough strings to outfit a symphony.
For example,
the nation of Laos took a CCP loan that connected their country to China,
hoping for increased trade with its neighbor.
The $5.8 billion loan dwarfed their budget,
but were able to finance their $480 million portion of the loan,
with the CCP taking up the rest.
But the project is huge,
and connecting the two countries via railroad means
drilling and blasting through impassable mountains.
So the project was immediately hit with delays.
The delays affected the Laotian international credit score,
and it was downgraded to junk status.
When Laos tried to renegotiate,
they found that in the deal, they're fully responsible for the debt,
and if a default occurs, the CCP take control of the railroad and the land.
In 2020, when Laos faced insolvency,
they were forced to sell off part of their power grid for $600 million to China.
Now, they're buying power from China off of their own grid.
That's the CCP's play.
Sell a too-good-to-be-true deal to a developing nation.
Hide crucial details of the agreement.
Collect some payments and late payments.
Eventually let the debt default.
Take the land.
Rinse and repeat.
You would think these countries will see a pattern forming
and wouldn't do business with China anymore,
but it's the squeeze that gets the juice.
CCP loans aren't done with oversight from any credit agency.
It's all off the international books.
You can't check the receipts.
Finding data on just how much money CCP has floating around,
it's hard to ascertain.
But credit monitors say that there could be hundreds of billions of dollars in bad loans.
This sort of loan sharking has been happening at a rapid pace,
and the high interest rate payments have been a crucial part of keeping China's economy afloat.
But every grift has a flaw,
and that flaw has been Xi Jinping's obsession with zero COVID.
The party's response to COVID has been nothing short of dystopian.
Entire city populations were locked down,
or, in some cases, welded shut inside their apartments.
Transportation was shut down.
Anyone refusing quarantine was locked away and never heard from again.
Health tracking apps monitored everyone's movements,
and medical directives were carried out by force.
Since 2020,
China has shut down part or all of its economy more than any other country.
This had serious side effects on its trading partners.
It's proven to be the crippling body blow to the Chinese financial system
CCP has been able to dodge for almost 30 years.
September of 2021,
Financial Times reported,
Evergrande was using retail money,
money from its mom-and-pop customers,
to fill funding gaps in construction projects and other parts of the business.
This was after the PRC implemented the three red lines law
that was meant to curb leverage to financial institutions.
But by this time, 14 of the largest banks violated all three of the lines
and were banned from adding to their positions.
Evergrande was chief among them.
It had over $310 billion in liabilities.
As money started getting sucked out of the system,
construction projects started to fall behind so much
that a viral mortgage revolt campaign started.
Tens of thousands of Chinese boycotted their mortgages and refused to pay
until their properties were completed.
Even with the CCP stepping up their censorship of the boycott,
campaign caught on and soon became a national movement.
This pulled plug out of Evergrande and popped the real estate bubble.
Soon, banks associated with Evergrande and Evergrande itself were freezing funds.
Series of bank runs ensued.
And even though the PRC did its best to crush the panic,
even sending in tanks against its own citizens,
the panic hasn't subsided,
so the government was forced to give Evergrande an extension
on paying its debts for another six months.
It's just kicking the can down the road,
but it's giving the CCP enough time
to redact any data or deals within the toxic Evergrande debt
that could hurt the party.
Now, CCP is playing a cat and mouse game of trying to shore up investor confidence,
dissolve bad debt without printing money
and salvage the value left in the Chinese real estate market.
If the money printer turns on,
inflation is going to come on strong.
If the debts collapse,
millions of Chinese will lose their life savings,
and the party may collapse.
It's all very bad.
But why should someone in the US care about this?
Well, guess what, buttercup.
You're holding the bag.
Our friends at BlackRock, UBS, HSBC and Ashmore Group
have hundreds of billions of dollars in Evergrande debt
sitting on their balance sheets
and are going to pull GDP down even further with it
over the next few months as Evergrande starts restructuring.
We are in a debt singularity,
a black hole of bad decisions.
And that will pull down the rest of the world economy.
But as that happens,
smaller countries are going to get defaulted first.
Just look at Sri Lanka.
Total collapse of its government.
It is a failed state now.
Coincidentally, it owed a lot of money to China.
As worldwide debt spiral out of control,
it's the CCP who is exposed and is going to be bearing the brunt of that pain.
But the instability caused by multiple governments going under is a threat to global peace.
And nowhere is that more apparent---
Pakistan,
who was told by the IMF
they have only a few months until they're insolvent.
This news has made already dire political situation in Pakistan a full-on crisis,
and the West is highly concerned
because the last thing anyone wants is a fight over who controls the nukes in Pakistan.
Like it or not, the West is on the hook for this Evergrande debt.
Economy and supply chains tied to China,
our debts are held by China,
and our fragile peace with China depends on them having a stable government.
It's important that you know what is happening in the world,
that your money and livelihood are being used as pyramid blocks
in a global get-rich-quick scheme.
When it comes to financial stability,
there is no "set it and forget it."
You have to actively manage your money and wellbeing.
It's time to be your own bank.
Anyone else is trying to use you to line their pockets.
That's all I got.
Be blessed.
BitBoy out.