When even an acknowledged China bull like strategic analyst Shaun Rein turns negative on its short-term economic development, things do not look well for the middle kingdom. “Consumer confidence has brutally collapsed and I think investors need to think twice or maybe even three or four times before investing in China right now,” says Rein in the Economic Times.
I have been in China for 25 years and this is by far the worst consumer confidence and business confidence I have ever seen and it is really because of the implementation of zero Covid. Most people in China actually support zero Covid because it saves lives and the Chinese government should be credited for what they did in 2020 and 2021 but in 2022, the implementation has been a disaster. That is the only way you can word it. It has hurt mental health, it has hurt other health issues and it has actually killed people because people cannot get to hospitals or as we saw in Xinjiang and Urumqi fire, people could not get out of their homes.
Consumer confidence has brutally collapsed and I think investors need to think twice or maybe even three or four times before investing in China right now. The next three to six months are going to be a real struggle because the government cannot ease up on zero Covid without causing a lot of deaths but they cannot continue the current pace without causing a lot of lack of business confidence. We are in a very difficult conundrum right now. No matter what the government does, the economy is going to be weak for the next three to six months…
The problem that we have right now is each province, each city, each district, even each street are making up their own rules as they go along and they are not following the directives of the central government. So sometimes the street will put up barriers and say one cannot cross the street. These local officials do not have the right to do that, the central government is telling them that they do not have the right to do that but they are so scared of Covid, that they are still putting up barriers.
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