China's industrial profits stayed resilient. That's the headline. Resilient profits from factories producing goods for export markets that definitely want more stuff right now. Nothing says economic health like doubling down on the sector that already works while the property market collapses into a sinkhole shaped like every ghost city built since 2010.
The economy leans on factories and exports because the alternative is acknowledging that domestic consumption remains dead. Can't sell apartments to your own citizens when they watched their life savings evaporate in concrete shells. So make more widgets. Ship them overseas. Call it resilience.
Structural imbalances is economist-speak for we built our entire economy on one idea and that idea stopped working but we're going to keep doing it anyway because pivoting is hard. It's the financial equivalent of a man driving his car into a lake because the GPS told him to turn right.
Retail traders saw this headline and thought it meant Chinese manufacturing stocks were a buy. They confused resilient with good. They always do. Resilient means not dead yet. A cockroach is resilient. No one's putting their retirement fund in cockroach futures.
The property downturn is prolonged, which is a polite way of saying it's been years and no one has figured out how to fix it without admitting the problem was the fix from last time. Factories keep humming because acknowledging the real problem means admitting the growth model died sometime around 2015 and everything since has been weekend at Bernie's with better choreography.
Imagine your neighbor's house is on fire but he's really proud of how well his lawnmower still runs.
Photo by on Unsplash
Leave a Comment