A friend in equities trading is convinced China is about to implode. So I got an ear-full this weekend.

He cites 47% official debt ratio to GDP & expects the number is 2X to 3X that much since a large portion of the lending is off balance sheet. He also cited 64M empty housing units & said the entire system is infected with bad loans.

As a Brit, he never mentioned the trade war. When asked, he said it’s minor. He believes the systemic risk is INTERNAL to China…since most of that debt & other underperforming assets were issued in RMB.

He thinks we’re crashing…but how many times have I heard this in the last 25 years?

It’s so hard for me to accept this reality. Even if it’s true, I don’t feel it (yet). The generation of young shoppers we serve seem to be fairly resilient.

So I asked him: do you realize that the 400M 九零后’s (the generation born in the 90’s) are only children that stand to inherit the assets of 800M people? And they’re currently subsidized or supported by those parents?

I think he isn’t considering the buying power of this generation, which is larger than the American population, has financial backing from their parents & more disposable income. America has certainly consumed its way out of trouble in the past…can’t China do the same? Thoughts?

#China #TradeWar #Crash