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China’s Core Problems

April 25, 2016

I spoke about the big troubles with China’s stock market earlier this month, but the issues aren’t segregated to just the market and falling exports.

No, China also has an import problem, decreased demand and labor unrest. And they tie in together to create headaches all around.

The country’s imports fell to their lowest levels in at least five years. Why are imports down? Because Chinese consumers aren’t buying, or they’re at least not buying at expected levels. And why aren’t they buying? Because millions of workers are losing their jobs, and hence, their incomes.

The people aren’t just losing their jobs, they’re showing their disdain. In 2015 there were 2,800 labor strikes and protests. That’s double the amount of 2014 and 400 percent more than 2013!

It’s showing no signs of slowing either. There were 704 strikes, protests and demonstrations in the first two months of 2016 alone.

Between the heavy spending to prop up the economy and currency manipulation, China’s reserves have fallen to just over $3 trillion. That’s the lowest level since December 2011.

So between the economic troubles, labor issues and currency manipulation, we’ve got one of the world’s largest economic powers on a direct collision course with trouble. We might want safety belts and helmets nearby for the rest of 2016 and beyond.

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