China's Economy Built On Importing Wealth Is In Crisis

Where's The Gold?

China’s electricity production and road traffic congestion data have already been signaling a strong economic slow-down in China over the last 6 months.

However, the current sudden reduction in China’s exports due to its tariff battle with the US is going to have an outsized impact on China due to the sudden removal of a benefit that China has received from the West for decades.

China exports $3.6 trillion (T) of goods annually generating an annual trade surplus of $820 billion (B).

However, the export figures hide one vital factor - the vast majority of China’s exports are manufactured goods and manufacturing provide a tremendous economic benefit through the manufacturing multiplier effect.

Every dollar of manufactured goods generates another 3 dollars of economic activity in the local economy in support of manufacturing.

Thus, including this multiplier effect, China’s $3.6T of exported manufactured annually drives a total of $14T of economic activity. That’s the lion’s share of China’s $18.5T economy.

But today, the bite of tariffs are hitting China in a very real way:

“Just days before the new tariffs took effect, Chinese ports, including Shanghai’s Yangshan and Waigaoqiao terminals, were flooded with activity as cargo ships rushed to complete shipments before the deadline.

However, with the deadline passed, these once-bustling ports have seen operations come to an almost complete standstill.

Similar disruptions have been reported in Guangdong’s Yantian terminal, a critical shipping hub in Shenzhen.

Local business owners, including one from Guangdong who witnessed the slowdown firsthand in Shanghai, reported containers piling up at port facilities.”

China’s Cheaper Products Enabled The Central Bank Bubble Economy

Through the increased supply of cheap manufactured goods from China over the past 35 years, China played an important role enabling central banks to run loose monetary policy while proclaiming there was almost no inflation even as central banks inflated numerous asset bubbles.

The second element enabling loose monetary policy was the rigging of gold and silver prices by the Bank of England which prices had historically served as a warning of monetary inflation thereby limiting central bankers’ actions.

In trading economic wealth and higher paying US jobs for cheap imported consumer goods prices, low interest rates, and asset bubbles, the US working class was left in the lurch with a declining standard of living by successive administrations.

For a period of time, declining interest rates allowed access to cheaper credit and continuation of the US’s consumption patterns, that had previously been supported by a highly productive economy, even as vital economic activity was being hollowed-out.

Low interest rates and low gold and silver prices have now come to a close but the $102T mountain of accumulated US debt remains - and the accumulated debt cannot be sustained even at current levels and interest rates.

While China faces onset of an immediate economic upending, the US faces its own approaching credit, bank, and currency crisis that was always inevitable when the central banking loose money fraud met its end.

China’s Last Card May Be Its Best Card

It is believed that China has accumulated 20,000+ tonnes of gold since David Rockefeller’s scores of visits to China in the 1970s - far beyond China’s 2,300 tonnes it has officially declared.

As economic conditions deteriorate, China will likely face a rapid decline in the value of its yuan and thus a rapid increase in food prices. As an importer of 30% of its food and 75% of its daily oil consumption, China will face numerous challenges in purchasing these essential goods in a currency crisis.

This would likely pressure China to move to either a ‘gold yuan’ or a ‘BRICS gold unit’ medium of trade allowing China to round-up by spurring a knock-on crisis in the US dollar as gold was remonetized globally.

Of China’s 36 Stratagems, 'Remove The Fire From Under The Pot’ comes to mind.

https://truthsocial.com/@realDonaldTrump/posts/114372102982066647

The New York Fed vaults 204M oz. of gold as custodian for other countries.

President Trump’s April 20 tweet is intriguing.

Best regards,

David Jensen