China recovery trades under the microscope
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US consumers are spending more in 2023 because the US can print and borrow. High end consumption is not down at all. (Just visit a ski resort and see!) The brunt of the Fed rate hike is going to hit people borrowing for houses, autos, and credit cards. China consumers are not spending more because they are busy piling up savings and wealth is stored in real estate. Seems to me this will continue so long as the US Treasury can run 10% budget deficits and the rest of the world eats it. What this means for the buying power of the $ is a real question.
People focused on China being real estate focused should take a look at…
If China supplied weapons to Russia, we are at the legitimate foothills of WWIII, fought through proxies. CHINESE equities would be un-investable for western investors, and most likely take out their 2022 lows. Geopolitical analysts mostly believed Russia-China friendship was hollow, and this seems to have been disproven over time, and by Wang’s visit this week. Seems like the asymmetry is to the downside
On China, a couple of other things to look at that I think might even further support your worries about China. Haven't looked at numbers on either of these but household formation is probably falling and population movement to big cities is probably stabilising with both undermining demand for apartments. Also traditionally lots of the housing stock was held by mum and pop investors and sat empty (and without fit out). Liquidation of this holding as prices fall for the first time is probably fuelling excess supply. I recall seeing numbers suggesting that residential and commercial construction was an enormous share of GDP (compared to west) and traditionally largest growth contributor.