Chinese Economy and USA

China's consumer prices slid into deflation territory in July and as economic woes continued to Cloud's hopes of a recovery President Joe Biden is calling out the world's second-largest economy Biden said China's economy is in trouble and fears the country is quite a ticking Time Bomb over its slowing growth and the high unemployment rate now that's according to a pool report of the Thursday fundraiser that took place he went on to say they've got some problems and that's not good because when bad folks have problems they do bad things.

Well, it's nothing great Brad, I have to To be honest, what's shocking to me about this whole thing because you look at the activity data, you look at the Credit Data just this morning uh you know the overall you know I'd say I'll call it the vibes from China's economy are. Says Eric Nelson

Not good um so I'd say the um what's concerning here Beijing is certainly not taking the action it needs to give the weak demand picture the weak activity picture um and that's concerning because you have a reopening economy here we thought this was going to be the big growth story of 2023 and it hasn't come to fruition if China doesn't do anything the risk is you have a downward spiral here activity is predicated on this idea of the property sector is that the lead uh sort of problem uh when it comes to you know medium-term

Activity um you know there needs to be some some big action here from the central government they need to sort of uh counter the deleveraging that's happening in the private sector and until that happens it's going to be continued weakness out of China um you know I think even easing from The People's Bank of China the central bank rate cuts probably aren't enough at this point you need to see something on the fiscal side to counter this

Weakness um and we've talked to some other folks on the show who have said that even if the Chinese government does do take certain measures, particularly with the property sector that the Dynamics this time is such that it might not even be as effective as it was in the

past so you know if that's the case what's the the risk that they just sort of if they don't do anything or if they do something small then what's the scenario yeah there's there's a lot of parallels being drawn to you know Japan and in the

Standpoint it's gotten a little bit more positive and that's welcome obviously. Some of the Spy balloon issues that cropped up a few months ago seem like the two countries have sort of agreed or can put that behind them so generally speaking the overall discussions have become more constructive from a trade standpoint.

The US is still importing a lot from China Despite all the talks of reshoring friend Shoring you know China remains a very important trading partner. So in terms of the hard data, the relationship is still pretty strong, and I think that in general what's driving discontinued positive movement and talks that the realization the two are very reliant on each other I don't see that changed materially anytime soon so that does limit the extent to of you no substantial Financial Market Volatility from you know Chinese weakness and also, you know Fallout you know to say the Chinese currency, for example, we think that's going to get a little bit weaker but we're not in 2019 an environment where there's real big headline risk on the U.S China.