7 Reasons Why the Chinese economy is slowing down?

  1. Too much supply, too little demand in too many sectors. Chinese companies continue to manufacture stuff which people are not buying. In order to buy all their output, we need approximately two more earths;
  2. Chinese government policy is geared to keep people at work, even if it means that companies (especially state-owned enterprises) are inefficient in order to keep social stability;
  3. By offering cheap money to inefficient loss-making businesses, the Chinese government is piling on the debt. There is almost no chance that this debt can be paid off;
  4. For 2015, the main fund-raising vehicle for cheap money for Chinese state-owned enterprises has been the Shanghai, Shenzhen stock markets;
  5. Most people do not believe that those share prices, especially for state-owned enterprises, are sustainable;
  6. Because the Chinese government has recently devalued the yuan, a lot of money wants to leave China because the yuan may continue to move down;
  7. The full effect of the China slowdown has not affected Chinese yet; it will take about six months for it to reach them. It has however, hit emerging markets such as Malaysia, Indonesia and Brazil hard, and also major commodity exporters such as Australia very hard.