Something Happening In China

Little introductory note. I actually began this post on Monday, 2/17/2020 but didn’t have time to finish it. Today the DOW went down by -166 pts and Apple announced a lower earnings projection due to decreased production and sales related to these conditions. So what I cover below is already proving out to be true. However it has only just begun.

In the last few weeks, China’s GDP has dropped precipitously. While the Corona Virus is clearly responsible for a portion of this, I am not convinced that this is the full explanation. Yet even if I am incorrect and this is solely due to the Corona Virus, the economic implications remain the same.

Coal consumption has dropped significantly during this time, as has oil usage and freight shipping. All combined indicates a serious decline in manufacturing and goods transportation.

Several banks in China seem close to collapse. However, those are primarily non-state banks.

China’s Finance Minister said they will not introduce an economic stimulus. They will reduce taxes and fees on small businesses and individuals but will not be taking the approach of The US Federal Reserve, which includes creating new currency out of thin air to bail out banks and large companies.

Basically, this means they will focus on their economy from the bottom up, which is a long term view to help their people, rather than the elite at the top of the chain.