Pay my wages. Pay my wages. The developing trade war between the United States and China keeps ratcheting up.
The Chinese economy is not doing well. China is digging in. She's saying that his nation is quote unquote not afraid.
This is a worker. This is from the production contract team. This is also a worker.
This is the boss. This is also a big boss. Look at what is happening in China.
China's economy is in trouble because China's economy is a export-led economy. The problem is nothing is moving from China right now. So nobody is shipping at this point.
The trade stalemate between the world's two largest economies could soon see a major shift. Beijing says it's now considering trade talks with Washington. Here they come again asking for money.
China is currently on the brink of one of the biggest economic crises of the last century. The 145% tariffs advocated by US President Donald Trump combined with the deflationary environment in China have caused things to spiral out of control in the country. I don't want this to happen, but I I know that China is doing very poorly right now.
I just saw some reports coming out and I don't want that to happen to China. Chinese factories, which found billions of dollars worth of export markets closed overnight, are facing the risk of a major collapse. American companies are cancelling millions of orders, and China is unable to fill the gap.
More than 15 million Chinese workers could be affected by this move by the US. Beijing is facing a situation where the workforce is collapsing at a dizzying pace. Orders are being cancelled and factories are collectively filing for bankruptcy.
It's happening every minute. Massive facilities that were swarming with foreign customers just yesterday have halted production and are now idle in empty hangers. The bill for this situation in China is being paid by workers and small-scale factory owners.
To understand what has happened to the former global giant, we need to take a closer look at this issue. But before we begin, we have a small request. By clicking the like and subscribe buttons, you can help us remove the restrictions imposed by the Chinese government on videos criticizing it on YouTube, thereby providing us with tremendous support.
Thank you in advance. Economic data in China no longer matches the myth of continuous growth we have been accustomed to for many years. Two critical indicators sounded the alarm in the March price indices.
While the consumer price index has been falling consecutively, the producer price index has been in a downward trend for much longer. In short, instead of inflation, a deflation spiral is now being discussed for China. This critical situation shows that production wheels are not turning.
Consumer spending is declining and companies are forced to sell their products below cost. Moreover, the collapse of the real estate market and the negative developments in the construction sector are confronting China with a slow motion version of the 2008 crisis. Despite frequent statements in the Chinese media by former bureaucrats saying that the public should eat grass for a year if necessary to boost morale and weather the crisis.
The impact of this nationalist rhetoric is waning as unemployment rises. Some may ask whether China has not already turned to domestic consumption. However, Cinping does not seem to have embraced the consumption model as much as is believed.
Exports are still the main source of foreign currency and Trump's tariffs are crippling Beijing. The Chinese press labels Trump an unstable president and says he arbitrarily imposed a 145% tariff. However, the US side emphasizes issues such as the theft of American intellectual property, China's closure of its own market while benefiting from free trade in Western markets, and currency manipulation.
Washington, which claims to support fair trade, argues that China must either open its market in accordance with all rules or lose access to our market. The new tariffs immediately undermine China's exports. Many US buyers canled their orders, asking why they should pay an additional 145%.
These cancellations turned into a complete disaster for Chinese factories. Chinese producers already had very low profit margins. A single order cancellation could mean millions of dollars lost.
This is because factories typically receive a small advance payment and finance production through large bank loans. They make a profit by receiving payment after delivery. Now, with orders canled, inventory piling up, and banks knocking on the door, we've invested our current funds in raw materials, and now we can't collect payments.
Complaints have spread throughout the sector. Some small businesses in China have gone bankrupt, selling their machinery at scrap prices. Others have closed their doors without any explanation and disappeared.
Actually, it's not very logical to ask the business owners who made this decision why they did so. After all, doing business in China is already difficult. And now with tariffs, if you were a business owner with a $2 million investment capacity, you would first need to receive an advanced payment of between $100,000 and $200,000 from the person buying the business in order to export it.
Since you would have to cover the remaining amount from your own pocket, you would need to apply for a bank loan. The repayment of the bank loan could already exceed the $2 million you invested. you could pay your workers.
However, once the job is done, your profit margin would drop significantly. Add to all this the tariffs the US is imposing on China. It is now clearer that Chinese factories are nearing bankruptcy.
Therefore, cargo ships leaving ports in the country without loading cargo, the US cancelling orders, and China's maritime trade balance being shaken are not unforeseeable factors. The once thriving China US shipping route, which once saw unlimited cargo traffic, has nearly ground to a halt as we approach 2025. Analysts processing US customs data report that container occupancy rates have dropped from 90% to between 50% and 60% in the latest quarter.
This means that ships departing from China are operating at half capacity. Freight rates have fallen from $7 to $8,000 to between $2,000 and $2,500. Shipping companies are now struggling with a vicious cycle of excess capacity and low demand.
This means that the waters are seriously heating up in an industry that has been reporting big profits for a long time. The US is focused on shaking China's dominance in the global market and has imposed tariffs that will severely restrict imports. American companies are also looking to Vietnam, India, or even Mexico for production.
Millions of dollars worth of orders expected from China are being cut off. As customs barriers rise, American consumers are not turning to relatively more expensive Chinese goods. And when combined with inflation and savings trends, demand for Chinese goods is suddenly plummeting.
Now, let's add giant companies to the mix. The Boeing dispute is the best example of this. In retaliation for Trump's tariff move, the Beijing administration is imposing various restrictions on large companies it considers to be linked to the US government.
Boeing is at the top of the list. A new directive has been issued requiring Chinese airlines not to purchase Boeing aircraft and to postpone deliveries. Although it is being presented to the outside world as a reciprocal measure, this move could backfire on Beijing.
This is because there are currently hundreds of Boeing aircraft in the skies over China. Their spare parts and technical maintenance support must come from Boeing. Without this, it is impossible to operate the aircraft safely.
accidents or technical failures would put the Chinese government in an even more difficult position. The irony is that Xiinping's official state aircraft is also a Boeing 747. So by saying no to Boeing, Mr Xi is effectively sabotaging the aircraft he uses himself.
Of course, how long this will last remains uncertain. If China really continues to boycott Boeing, flight safety will be threatened. Will airlines looking to expand their fleets in the Chinese market opt for Airbus?
This is possible, but such a sudden decision would have major logistical and financial consequences. Many analysts believe that Beijing may back down on this issue, at least showing some flexibility. Image aside, the economy actually requires the purchase of aircraft.
Xiinping may appear to be thinking that China is a huge market and can afford to pay the price, but in practice, this step seems like shooting oneself in the foot. On the other hand, Chinese factory owners are facing the most dramatic situation on the ground. Business people who say that the US market has closed due to the sudden introduction of huge tariffs are left with billions of yuan worth of stock.
Fabric, textiles, plastic toys, and electronic parts are all sitting on shelves with demand from the US having dropped to zero. Can these products be shifted to other markets? Partially, yes.
But the global market is not unlimited. Europe is also experiencing an economic slowdown and other consumer markets in Asia are not as large as the US. Moreover, the postcoid recovery which was almost complete has dashed China's hopes.
Such a wave of cancellations leaves factories liable to banks and workers. There is no cash to pay workers wages and suppliers are demanding payment for goods. Mass bankruptcies are emerging.
Producers who grew accustomed to growth in the early 2000s10s, which was dubbed the Chinese dream, now describe it as a nightmare. Videos shared online show workers complaining about factory closures and unpaid wages. Perhaps the biggest nightmare for the Chinese Communist Party leadership is the possibility of mass protests by unemployed young people in major cities.
Reports have already emerged that even university graduates are struggling to find jobs. The situation is now even more dire. How will Beijing address this turmoil?
While official statements claim that China is opening up to Africa and the Middle East and growing there, many economists say that it is impossible to compensate for the loss of a huge consumer market like the US with other regions. Trade between China and the US, which is worth approximately $600 billion, could fall to $400 billion by the end of 2025. This $200 billion drop is seen as a serious blow to the country's GDP and employment.
The fact that Western companies, including tech giants, are moving production out of the region with their China plus one strategy is a double problem. Both investment and employment are falling and youth unemployment is rising. In addition to the slowdown in exports, the Chinese economy is also facing serious challenges domestically.
The real estate bubble has long since burst. The construction and infrastructure sectors are stagnating and the riskiness of bank loans has increased. Public finances are struggling.
The most worrying indicator, as mentioned earlier, is youth unemployment. The Beijing administration, which once promised young people a bright future with its image as a huge growth engine, is now unable to create job opportunities for tens of millions of new graduates. Young people who cannot find answers to the questions, "What will we do?
Where will we go? " are organizing silent protests on social media and sharing posts criticizing the administration. Of course, censorship and pressure mechanisms are in place, but economic realities cannot be hidden.
Xiinping may try to diffuse tensions by blaming foreign powers, but the mood on the streets is far from calm. All of this raises the question of whether China's position as a global power is being shaken. Most experts say that while this is not a risk in the short term, it is a significant risk in the medium-term.
If the trade war with the US continues and high tariffs remain in place, China may find itself without alternatives. Domestic demand is not strong enough to fill the huge export gap. If there are chain bankruptcies in the real estate and financial markets, social unrest may be just around the corner.
The Beijing administration continues to pursue new trade agreements in East Asia and the Middle East, but the volume lost is enormous. The economic miracle appears to have entered a highly turbulent period. Empty container ports and rock bottom freight rates are the most tangible signs of the crisis.
Shipping companies that have been reporting record profits for years are now grappling with canceled voyages. Ship owners are forced to bear the costs of trans oceanic voyages with half empty vessels. Containers that were hard to come by just a few years ago are now rotting in warehouses.
This sharp shift is deeply shaking both the logistics sector and China's production structure because factories that cannot ship goods cannot stay afloat and are forced to lay off workers. So much so that even the spring season, which was seen as the hope of the year, passed quietly due to falling demand. Some analysts are comparing this to the biggest political test since Tanaman.
If the economy slows down and unemployment rises, protests against one party rule could increase. At this point, Xiinping's response is critical. Will it be a more repressive process or reform his steps?
Current indicators suggest that she will continue his authoritarian line. On the other hand, the US seems to be pushing for economic reform and free competition. This pressure is narrowing Beijing's room for maneuver.
Above all, there is concern that if the Chinese leadership fails to appease the anger of young people, it will not be able to overcome the social dimension of the crisis. If change does not come, China's development story could enter a difficult phase. At present, gloom clearly reflects the real problems in China, from half-built houses to bad debts.
However, it is also important not to forget the growing distrust of information about China. There is a belief that the government manipulates data, suppresses sensitive truths, and sometimes offers misleading prescriptions for the economy. This void feeds on itself.
The more fragile the economy, the more information is suppressed and the more nerves are frayed. This is not merely a cyclical confidence issue. By backtracking on its decadesl long policy of partially liberalizing information flows, China will struggle to complete its goal of restructuring the economy around new industries.
The country risks becoming an example of how authoritarian rule is not only illiberal but also inefficient. Much like the Soviet Union, the tightening of censorship under President Xiinping is wellknown. Social media accounts are being monitored more closely than ever.
Authorities are more cautious about engaging in candid discussions with outsiders. Scientists fear surveillance and business people are wary of repeating Communist Party slogans. Less familiar but particularly concerning if deemed strange or embarrassing for the party is the parallel disappearance of technical data.
To understand the significance of this change, one must look back to the midentth century. Liberal thinkers like Carl Pauper and Friedrich Hayak, who witnessed the totalitarianism of the 1930s and 1940s, argued that political freedom and economic success go hand in hand. Decentralized power and the tyranny of information prevent it, allowing millions of firms and consumers to make better decisions and live better lives.
The collapse of the Soviet Union proved them right. To maintain political control, its leaders ruthlessly controlled information. But this required brutal repression, deprived the economy of price signals, and created a web of lies.
In the end, even Soviet leaders were deprived of an accurate picture of reality. As China became more open in the late 1990s and 2000s, its leaders hoped to maintain control while avoiding the mistakes of the Soviet Union. For many years, they allowed technical knowledge in business, economics, and science to flow much more freely.
Consider Chinese companies listed on the stock exchange that disclosed information to investors in New York or scientists sharing new research with groups abroad. Technology seemed to offer a more surgical way to censor public opinion. The internet was heavily monitored but not banned.
China's top leadership also doubled its efforts to understand what was happening. For decades, it operated a system known as Nikon or internal references where journalists and officials compiled private reports. During the Tanaman Square protests, the leadership received constant updates.
Technoutopian party loyalists believe that big data and artificial intelligence could improve this system and create a high-tech panopticon for a religious leader that would allow for the kind of enlightened central planning that the Soviets failed at. It is this vision of a partially open, hyperefficient China that is now in doubt. Amid a growing culture of fear and a determination to prioritize national security over the economy, the party has proven either unable or unwilling to limit the scope of its interference in information flows.
Monetary policy documents and the annual reports of China's mega banks now echo Xi Jinping thought. Foreign management consultants are being treated like spies. This is happening despite the fact that China's increasingly sophisticated economy requires more fluid and complex decision-making processes.
An obvious outcome is the retreat of individual freedom. With the reversal of its partial opening, China has become a more repressive place. Many Chinese still hold liberal views and enjoy debate, but they stick to private meetings.
They do not pose an immediate threat to the party. Other effects of the information vacuum pose a greater threat. As price signals diminish, capital allocation becomes more difficult.
This comes at a delicate moment. As the workforce shrinks, China must rely more on increasing productivity to grow. This is entirely about using resources efficiently.
The country needs to shift from providing cheap credit and construction to supplying innovative industries and consumers. As a result, capital expenditures are flowing into electric vehicles, semiconductors, and more. However, if investments are based on flawed demand and supply calculations, or if data on subsidies and profits is hidden, the likelihood of a successful transition is low.
China's admirers may argue that the country's key decision makers still have good information to guide the economy, but no one knows what data and reports Mr Xi is seeing. Moreover, as the public sphere empties, it is a safe bet that private information flows will become more distorted and less scrutinized. No one wants to sign a memo saying that one of Mr She's signature policies has failed.
After the horrors of the midentth century, liberal thinkers came to understand that the free flow of information improves decision-making, reduces the likelihood of serious mistakes, and facilitates the development of societies. However, when information is suppressed, it becomes a source of power and corruption. Over time, distortions and inefficiencies increase.
China has great opportunities, but it also faces enormous challenges. At such a critical juncture, is China the engine of the global economy heading towards stagnation or decline? Or will it find a way out through alternative markets, new domestic consumption initiatives, and state intervention?
Are America's high tariffs pushing Beijing to back down, or is China's resistance continuing? What will be the consequences if the younger generation struggles with unemployment for a long time? Perhaps before the end of this year, the voices of protests within China will grow louder.
Perhaps Beijing's leadership will seek strategic compromises. Of course, all this uncertainty is also opening new chapters in global supply chains. In light of all these developments, whether China will maintain its position as the world's factory, how trade ties with the US will evolve, and whether young people will look to the future with hope or anger continues to spark curiosity.
What do you think? Is the tariff weapon really shaking China? Will Xiinping be forced to reform, or will he take a harder line?
What could youth unemployment lead to? Share your thoughts in the comments. Don't forget to subscribe to our channel, turn on notifications, and like the video.
In the next video, we will focus on similar crises and geopolitical maneuvers that are affecting the gears of the global economy. Thank you for watching.
