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I admit to being a bit obsessed with this story and I’ll also admit the reason is largely schadenfreude. I’m enjoying seeing China’s arrogant nationalists, the communist apparatchiks who believe the party knows what’s best for everyone getting humbled by the simplest of problems: economic reality. After seizing the freedom of millions of people in Hong Kong and threatening to do the same to Taiwan, China suddenly finds itself facing a severe crisis of confidence.
For much of the past four decades, China’s economy seemed like an unstoppable force, the engine behind the country’s rise to a global superpower. But the economy is now plagued by a series of crises. A real estate crisis born from years of overbuilding and excessive borrowing is running alongside a larger debt crisis, while young people are struggling with record joblessness. And amid the drip feed of bad economic news, a new crisis is emerging: a crisis of confidence.
A growing lack of faith in the future of the Chinese economy is verging on despair. Consumers are holding back on spending. Businesses are reluctant to invest and create jobs. And would-be entrepreneurs are not starting new businesses.
“Low confidence is a major issue in the Chinese economy now,” said Larry Hu, chief China economist for Macquarie Group, an Australian financial services firm…
In the past few weeks, investors have pulled more than $10 billion out of China’s stock markets. On Thursday, China’s top securities regulator summoned executives at the country’s national pension funds, top banks and insurers to pressure them to invest more in Chinese stocks, according to Caixin, an economics magazine.
