Here's the deal:
The Chinese economy became investment-driven instead of export-driven following the Great Financial Crisis. Exports are less important to GDP than real estate construction and infrastructure development (subways, high speed rail, bridges, etc).
In terms of exports, Europe is the biggest trading partner, not the US. The US is number 2.
The Chinese economy has a big problem: the government can drive GDP as much as it wants via state-driven investment and debt, but much of that is malinvestment and the debt cannot be self-funded. So there is and has been a large debt problem. This is why the Chinese economy has been slowing and the government has not found a politically acceptable way to tackle the problem.
The US trade war is basically kicking the Chinese economy while it's already down, but it's not the key source of the problems here.
The US as a foil works, but Chinese internal propaganda also talks about their strength and independence... if there is a serious crisis that hits the general populations, it's going to naturally raise questions that "If Xi and Co. made us so strong ... how is it US sanctions alone are to blame for this?"
Obviously there are options there but just from the outside looking in there seems to be a lot of pseudo "trust in Xi, he makes us strong" propaganda that would suddenly become problematic.
I'm not sure I would describe it that way. There's a real lack of visibility in China I think.
How else are you going to politically sell deleveraging? Nationalism ("made in america" stickers) weren't effective in the past. I do not believe it's going to be effective in steering capitalism now.
That all said, there was some news the other day that most of the farm bailout has gone to big agricultural firms, so there's that...
Exports have stopped mattering several years ago. Manufacturing is increasingly being moved to Viet Nam, India, and Africa. Countries with cheaper labour costs and that don't steal your IP and lock you out of their domestic market as part of the manufacturing deal.
You forgot the ghost cities, the buildings that crumble before they are ever populated, and the roads that fall apart within a year of being built. The backbone of the Chinese realestate economy.
The chinese real-estate investment bubble is a bomb and the trade war is rapidly counting the timer down to 0. Is it a bubble? Yes it is, the Chinese government has had to put in multiple controls over the last 5 years to slow its growth and try to prevent it from bursting[1]. They're in a difficult position. Letting it keep growing will guarantee it bursts. Stopping it entirely will cease only source of the economic growth that's kept the population placated with the authoritative government.
The more wealthy and smarter Chinese have been investing overseas. That investment has fallen exponentially since the start of the trade war[2]. This bubble isn't going to hold up for more than 2 more years, assuming the trade war continues. And if it bursts, it'll hit the world economy pretty hard.
Recently the Chinese government has also put in tight controls on who can move money out of the country and how much. This was in response to everyone trying to move all their assets overseas as the trade war ramped up. They're even going after party members now[3].
tl;dr: China's economy is large, but most of it is a house of cards built on a bluff. That bluff has been called during a downturn that the CCP didn't know how to address in the first place. Anyone with the means to do so is folding, cashing out, and leaving the country or at least sending their children overseas[4].
[1] https://www.scmp.com/property/article/2080470/more-mainland-...
[2] https://www.abc.net.au/news/2019-04-08/chinese-investment-in...
[3] https://www.scmp.com/economy/china-economy/article/2167731/d...
[4] https://www.cnbc.com/2018/07/05/more-than-a-third-of-chinese...
I’ve been around the world enough to see this first hand. Empty brand new offices in Malaysia, Taiwan, Indonesia. Big apartment investments in small cities in USA and Europe. Lots of both in the southern half of Africa.
Perhaps the most interesting were the giant empty office buildings in Asia. Brand new, but seemingly falling apart, elevator shafts open with wires hangout of control panel locations. Ready to fix up for the right client, but I wonder who that is and when they are coming?
Asset valuations are not in line with reality.
The usual reaction I've seen when it is acknowledged (even if generally) is to note that it is "unhelpful" to talk about it.