China’s Looming Balance Sheet Recession
Blake Morrow sits down with Adem Tumerkan, founder of Speculators Anonymous to discuss some of his macro views on the China as the worlds second largest economy and their attempts to turn around their economy.
Adem feels that there are many hurdles that China would have to take to turn their economy around and lists out many issues fueling their fledgling “consumer driven” economy.
China is eerily falling into a balance sheet recession, just as Japan did 30-years ago, because of a dramatic decade rise in property prices and household wealth tied to it (over 70% of household wealth in China is in property). But as property prices remain anemic, Chinese households are shunning credit and spending. Fueling a slowdown. Making matters worse, China is facing a demographic cliff.
Adem believes China is most likely already in a balance sheet recession, and it will require hard decisions and pain by Beijing to try and rebalance their economy.
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