Tuesday, March 8, 2016

China & Global Economic Collapse Explained in a Few Charts

The story of China is the same as the story of Japan, as the story of the EU, and likewise for the US.

1 - The annual growth of China's working age population (20-59yrs/old) peaks in 1989 at +17 million a year.  The growth slows to 15 million by 2008 and now has collapsed to less than 1 million in 2016.  By 2018, the working age population begins declining every year thereafter.

2- The PBoC interest rates peaked shortly after the peak of population growth.  Rates were cut dramatically as population growth decelerated.  There was a short hike in rates coupled with the final wave of annual population growth in 2008.  Since, rates have been falling.

3- Since 2000, China's debt has increased by 15 fold ($2 T to $30+ T). 

What comes next as the contraction of the working age population accelerates is a cheapening of credit and once ZIRP is hit...then central bank balance sheet expansion coupled with NIRP...and then???  Who knows but I'm guessing it isn't good.

China isn't unlike the US's (below)...but obviously the US's demographics are better (almost solely based on continued high levels of immigration.

And finally, the basket case of basket cases...Japan (below).
As for the EU, bad demographics being met with interest rate cuts and certainly surging debt (though I can't find a good source of the EU combined debt).