Is China causing the recession? The united states economy has officially entered into a recession and that has left many people wondering what is causing the financial pain.
While it is obvious that undisciplined monetary and fiscal policy has definitely played a part. There is another theory that is starting to gain popularity could china be causing the u.s recession? The united states spent decades pursuing low cost and high efficiency which led them to offshore their labor manufacturing and supply chains.
As they spread, global pandemics forced governments to halt their economies. Corporations began to realize that they had drastically reduced their resilience and increased their dependency on china. Fast forward two and a half years and geopolitical tensions with china continue to rise.
Is China causing the recession? China is trying to deter u.s politicians like Nancy Pelosi from visiting Taiwan and the manufacturing of semiconductors is ultimately being put at risk. To take this a step further apple one of the world’s most valuable companies is asking its suppliers to swap out made-in-Taiwan labels for made-in-china. Additionally, sophisticated investors like Kathy wood believe that china’s economy may be unwinding.
According to Kathy’s commentary, “we think a recession is underway. That definition starts with real GDP contractions in two straight quarters. Leading indicators, which have now declined three months in a row, would indicate the same. The main concern right now, in my opinion, is China. I believe that some of the declines in commodity prices are related to China’s apparent unraveling from a cyclical perspective. In many ways, they’re trying to ease off a little bit here and there, but in my opinion, the real estate that has declined in China as a result of our economic downturn accounts for 30% of their economy and 75% of consumer savings. They won’t be able to manage it the way they thought they could, in my opinion”.
Is China causing the recession? Here are a few other data points to think about youth unemployment in china is near 20%. The top 100 companies in the country saw a 40% decrease in sales in July of 2022. The energy crisis plus a zero covid policy is absolutely destroying consumer demand within their borders.
End the CCP https://t.co/tFuxHOGXxX— jack (@jack) August 6, 2022
We also have Jack Dorsey the famous founder of Twitter and Square who recently tweeted to end the CCP after a viral video from CNN showed the totalitarian state’s response to the public health crisis. As geopolitical tensions continue to rise supply chain disruptions get worse and china’s propaganda becomes more obvious.
How much China’s actions have affected the current American recession is still an open question. Maybe one day we’ll actually get an answer do you think that china’s causing the recession?