China’s Economy Is Stalling, So Now They're Trying THIS

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China is desperate to boost consumer spending—but their $42 billion "cash for clunkers" style stimulus is too little, too late. As Beijing shifts policy to promote domestic consumption, deeper structural issues are dragging the economy down.
In this episode:

• Why China’s new $42B trade-in program won’t rebalance their economy
• The failed U.S. “cash for clunkers” blueprint they're now repeating
• A crumbling real estate market and no Social Security safety net
• Soaring youth unemployment, falling wages, and creeping deflation
• Why the Chinese public is saving, not spending—and what it signals
• Why Xi Jinping’s central planning can’t replace free market momentum

This does not look promising!

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Episode Transcript

Speaker 1 (00:00):
The Watchdog on Wall Street podcast explaining the news coming
out of the complex worlds of finance, economics, and politics
and the impact it we'll have on everyday Americans. Author,
investment banker, consumer advocate, analyst, and trader Chris Markowski.

Speaker 2 (00:16):
One of the things China has been well, they've been
trying to do this for a very long period of time.
They've been trying to get their citizens to consume more.
Now with the trade issues that we're having with China,
they're at full court press when this has taken place.
This from the Journal Today. Beijing has made bolstering domestic

(00:39):
consumption a top policy priority for the first time, promising
efforts to boost household spending. In one initiative this year,
the government allocated three hundred billion one equivalent to forty
two billion to expand a program that pays shoppers to
trade in old vehicles or electronics for new ones, whole

(01:00):
cast for clunkers. Honestly, and people tee talking about how
the leadership in China is so smart. Did you guys
see we did that here in the United States and
how that worked out? Yeah, no, no, no, good, no good.
They're trying that anyway. Yeah, you might get a little

(01:21):
bit of short term economic activity, but it just pulls
everything forward. It's not going to rebalance the economy. Ah. Boy,
China's got a lot of issues they don't have. They
don't have really any sort of social security program. There's
a real social welfare program there. People basically put money

(01:46):
into their homes and bought real estate. There was never
any real incentive like we have here for four oh
one ks and iras or anything like that. Then the
all the money is in real estate and their property
bus is massive. That's slowing growth. You've got high youth
unemployment within the cities, so wages are stagnating to going backwards.

(02:10):
You've got some deflation that's taken place there as well,
and you're going to rebalance the economy towards a consumption one, right.
I just I don't see it happen. I really don't.
It's from the journal as well. At Maydew Home Appliances,
a multi story retail store in the center of the

(02:31):
southern city of Haiku, A red billboard banners and colorful
streamers outside its entrance recently advertised deals of everything from
TVs to air conditioners to refrigerators, All products eligible for
the government incentives. Now again they find somebody a driver
for the they have a ride hailing apt they're called

(02:53):
d D, shop for a new washing machine. He isn't
earning much money from d D these days, so the
government substittes are helping him make big ticket purchases. He
planned to buy in a new electric scooter to take
advantage of the subsidy. It motivates me to spend more. Okay,
you got that guy to spend more. But again, you

(03:14):
are pulling these sales forward. The type of consumption that
they're seeing right now is going to fall flat. And
many people over there are saying the opposite. They're saying that, no,
our salaries aren't going up. I'm concerned about I'm concerned

(03:36):
about my real estate valuations. So they're kind of stuck.
And again this goes back to what we were talking before.
Somethingy've been trying for a long time to basically engineer
an economy. You can't do it. The best thing that
Zijian Pin could do, and I've said this for some time,
is just get out of the way. He has to

(03:58):
abandon the policies that he enacted and go back to
what under Deang, Zhaopeng and Hu Jintao worked watchdog on
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