Saturday, August 17, 2019

China shifts priorities

Sundance reports this morning in the Conservative Treehouse that
An interesting article in the South China Morning Post (SCMP) highlights how China is shifting their procurement priority from minerals used in manufacturing (cobalt, copper) to the acquisition of food and agriculture products.

The impact is being felt throughout Africa, where mining companies are shutting down operations because Chinese demand no longer exists.

Articles like this highlight the ancillary impacts of a weakened Chinese economy.

Despite the proclamations by Beijing about their ability to withstand the withdrawal of the U.S. as a primary customer for manufactured goods, reality shows they cannot.

There is a confluence of events all leading to radical changes just below the surface. China has been burning cash to subsidize industries impacted by U.S. tariffs. Simultaneously Beijing has lowered the value of their currency in an effort to eliminate the tariff impact in the cost of their finished goods. However, as the ideological economic conflict between the U.S. and China continues, Beijing cannot hold their position indefinitely.

...Countries that attached their economy to purchase agreements with China over the last 20 years became dependent on those exports. As China slows or stops their purchases those dependent economies are now at risk.

...And now China’s biggest weakness starts to surface. A country that cannot feed its own population even during the best of times, is now facing a downturn in economic and employment activity while the need to import food remains.
Read more here.

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