Stock News: China, A Falling Giant

March 10, 2022, 3:51 pm EST

China, A Falling Giant

China used to be a manufacturer of the world in the past 20-30 years. Getting into the World Trade Organization in early 2000 gave China a chance to participate in the growth of the global economy. However, its China Communist Party (CCP) did not want to follow the practices of fair trade with its business partner. For example, the US lost 300+ billion a year on a trade deficit. Stealing intellectual property, forcing the transfer of trade secrets, breaking promises, and numerous unfair business practices made other countries suffer badly.  

Once China becomes stronger in economic power, it begins its program called Belt-and-Road. Basically, it attempts to provide other countries resources (loan, material, manpower) to build infrastructure like highways, ports, dams, railroads, power stations, networks, etc. When other countries do not have money to pay back the loan, China took over (or so-called borrowing 99 years) their properties as collateral. Obviously, this is a trap for those who participated in the belt-and-road projects.

President Xi and its CCP members kept expanding their control over Hong Kong and Xinjiang in the past few years. But its economy also began to crack after Hong Kong lost the ability to maintain its freedom of speech. Last September, China Evergrande Group, the REIT giant, got a financial crisis. It manifests its internal chaos of entire China quickly. As shown in the chart of China ETF FXI or CAF, it displays the falling giant that keeps collapsing in real-time. We can see similar pictures of BABA, JD, PDD, EDU, BILI, DIDI, etc. 

In our opinion, this is the beginning of the falling down of the giant. But, what China will do next is worrisome. Would it follow Russia to initiate its military actions? Xi will start a new term of forever-leader of China soon. We will need to wait and see what is going to happen.

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