top of page
  • andrewsingerchina

#AndrewSingerChina Newsletter Vol. 2, Issue 37

Our Economies Are Doomed - Or Are They?

Links for the following two articles appeared top-bottom in my Google feed when I swiped left on my cellphone screen the other day. A dire warning about the American economy coupled with a dire pronouncement about the Chinese economy. Should we be battening down the hatches and preparing for a long, dark period of winter?

America.  Ray Dalio is a prominent hedge fund manager who often comments on world economics.  America’s national debt, currently at $33.74 trillion, is keeping him up at night. “‘We are at a point in which we are borrowing money to pay debt service.’” He frets about the slippery cycle of repeated spending, borrowing, and servicing.

Moody’s Investors recently lowered its ratings outlook for the U.S. government from “stable” to “negative.” Like Dalio, Moody’s is concerned that the dysfunctional American political system (coupled with social conflicts) is a threat to America’s continued success.

On the flip side, America’s economy appears to be doing well based on government statistics. GDP is strong and growing (at an annual rate of 4.9% for 2023 Q3). Nonfarm payroll employment increased by 199,000 in November. The unemployment rate dropped to 3.7%. Jobs are growing in health care and government as well as manufacturing (though retail trade employment declined).

US Consumer Sentiment (

The mood on America’s Main Streets, however, remains decidedly unsettled.  Prices are still up (though gas has moderated slightly where I live). Personal debt servicing payments (credit cards, etc.) are up. Significant portions of the population feel that their lives are not only stagnating, but often backtracking. Insecurity runs rampant as the tensions within America cause widespread and deep agita. This turmoil feeds on itself, exacerbating an already precarious situation.

While it is easy to be grim in the face of such turbulence, the American economy is vast, powerful, and traditionally resilient. It should not be underestimated. It is unlikely to be doomed, unless, of course, we succumb to our inner demons and fall completely apart.

China. By now most have heard of the real estate crisis in China. These brick and mortar “piggy banks” for both developers and regular people (most of whose savings have been plowed into tax-free, real estate purchases over the past few decades) have been clobbered. “Household debt as a percentage of gross domestic product almost doubled over the past decade to 64 percent in September (2023).” Consumer prices have fallen year over year. Bank failures have occurred. The above is on top of an ongoing tidal wave of youth unemployment and business failures.

In a sign of the increasingly desperate times for many lower middle-class Chinese, the U.S. Customs and Border Protection Service has intercepted more than 24,000 Chinese immigrants at America’s southern border so far in 2023. This compares with a total of fewer than 15,000 in the decade between 2012 and 2022.

On the flip side, China is expected to hit its official growth target of 5.4% for 2023. China’s export market is rebalancing as a result of global de-risking. Chinese exports of lithium-ion batteries, solar panels, and electric vehicles have grown strongly over the past five years. And though China’s share of containerized ocean freight imports from Asia into North America has fallen, they have grown (and dominatingly so) in Latin America, Africa, and the Persian Gulf.

Chinese Consumer Confidence (

Notwithstanding this, the mood in many parts of the Middle Kingdom is also grim. Individual defaults are surging in a country without a personal bankruptcy option. Chinese penalties for missing payments are severe; More than 8.5 million Chinese have been officially blacklisted by authorities for defaults. This figure covers approximately one percent of working-age Chinese adults with likely millions more to come.

What does blacklisting in China entail? For starters, you are blocked from using Alipay and WeChat Pay to make payments in a cashless country that requires online payment by app to do most anything and go most anywhere. You are prohibited from purchasing airline tickets. You, and members of your family, are barred from government jobs, and all of you may even be exiled from using toll roads. Life is highly restrictive for those who do not or cannot make payments they have agreed to make.

Shanghai Nanjing Road (Reuters Aly Song File Photo)

Moody’s Investors also recently lowered its sovereign credit outlook for China’s financial health from “stable” to “negative.” Moody’s is concerned about the potential costs to the national government of dealing with tremendously debt-burdened regional and local governments and state-owned enterprises.

A Financial Times article recently noted that China’s central bank governor had a “sobering message” when speaking to bankers in Hong Kong: “…Pan Gongsheng warned that the country’s economy was embarking on a ‘long and difficult journey’ away from its traditional growth engines of property and infrastructure investment.”

For all of this ongoing turbulence, the Chinese economy is also vast, powerful, and resilient (since the Reform and Opening Movement began forty plus years ago). It should not be underestimated. It is unlikely to be doomed, unless, of course, the Chinese government goes too far in its quest for control such that the country is throttled and faces complete collapse.

Winter is coming seasonally. Extended economic winters do not need to follow.


bottom of page