Recently, a statement appeared saying that the Xi Jinping administration “raised” a lot of gray rhinos. The information was widely circulated in mainstream media.

“Grey rhino” is originally a metaphor that refers to the ignorance of obviously bad things that eventually causes significant crises.

The Epoch Times reporter investigated China’s economic situation in 2021. They identified at least seven economic gray rhinos.

The first grey rhino: Real estate crisis

China’s property market has been developing quickly without any planning, thus causing many wasteful losses over the past decades. Estimations are that 20% to 25% of all apartments are vacant, and many ghost towns and ghost buildings have appeared everywhere. In 2021, the ongoing debt crisis has made this industry a catastrophe. 

At the beginning of 2021, China Fortune Land Development Corporation first issued a debt default announcement. As of Nov. 30, China Fortune Land Development announced that the company’s defaulted debts totaled $16 billion in principal and interest. 

In September this year, real estate company Evergrande Group was heavily indebted with default risk exceeding $300 million. After Evergrande Group failed to fulfill a $260 million private placement bond on Dec. 3, 2021, the Chinese Communist Party (CCP) immediately dispatched a working group to the station.

In addition to Evergrande, Fantasia Holdings, Kaisa, Greenland Holdings, Sunshine City, R&F Properties, Xinyuan, Modern Land, China Aoyuan have successive incidents. Sunshine 100 failed to pay its debt, and interest of $179 million was already due on Dec. 5. 

Political and economic researcher Ren Zhongdao said earlier that if real estate debt becomes larger and larger, it will affect the financial system. As a result, an economy in a financial crisis is very likely to collapse. 

The second grey rhino: ‘Zero Covid’ Epidemic Prevention Policy

To control the spread of the COVID-19, the CCP has adopted a strict “zero-covid” policy. Once confirmed cases are found, they will mobilize all staff to lock down, test all people in the area, and quarantine them.

However, this “zero covid” policy directly hinders China’s economic development. This is because it leads to rising economic costs. Moreover, repeated travel restrictions and blockades will seriously impact first-line consumers, such as the service industry and household consumption. 

Hao Zhou, a senior emerging market economist at Deutsche Bank, said that if China continues to insist on the “zero covid” strategy, China’s domestic demand will be under pressure. There is no sign that China will loosen the restrictions in the short term up until now. That’s why, in the next few quarters, he believes that the Chinese economy will continue to slow down.

During this epidemic, the “zero covid” policy has triggered the further withdrawal of foreign capital from China. 

On Nov. 18, the American Chamber of Commerce president in Shanghai, Ker Gibbs, posted on Facebook, confirming that many foreigners are leaving China. He said, “I am one of them.” He said travel restrictions related to the epidemic are part of the reason. 

In addition, China’s application of a strict anti-epidemic policy has caused great difficulties for international freight transport.

Guy Platten, secretary-general of the International Chamber of Shipping, told Bloomberg News that “any restrictions on ship operations will have a cumulative impact on the supply chain.”

Zhang Zhiwei, a chief economist at Pinpoint Asset Management, wrote in a report in August that the “price of the zero covid policy is that China will remain isolated.”

The third rhino: Deteriorating unemployment 

The authorities went from cracking down on technology giants and rectifying the microfinance industry in the name of anti-monopoly to cracking down on the entertainment industry. It followed that with an overtime teaching ban on education and training, triggering a wave of layoffs and private enterprise closures. Coupled with the implosion of real estate agencies and the reduction in the scale of cross-border e-commerce, at least 10 million people have lost their livelihoods.

The mainland’s “Times Weekly” has counted that as of the beginning of September this year, at least 274 real estate companies in the mainland have declared bankruptcy, and on average, one closes every day.

On Oct. 19, China’s multinational internet technology company—ByteDance said that it laid off up to 70% of its employees.

Kuaishou, a short video platform, has also reported laying off 30% of its staff.

In addition, due to rising raw materials and power cuts and other reasons, many small and medium-sized manufacturing companies are also in trouble or even going bankrupt. It also brings more unemployment.

Scholar Cheng Xiaonong said in an interview with the Sound of Hope earlier that many college students have become a burden on the family. Moreover, because they think they are educated, they don’t want low-ranking jobs such as working on the farms, etc. Thus they “eat the bread of idleness” with no escape. Since then, they have been dissatisfied with the regime and curse the CCP daily online. 

The fourth rhino: Energy–increased risk of economic disruption

In August, to carry out the “reduce carbon” campaign, the CCP issued production and electricity restrictions policies in many places. But a month later, coal shortages and power outages in some areas ensued and have spread to more than 20 provinces and cities across the country, seriously affecting business operations and people’s lives.

However, approximately 56% of China’s industry-based economy is powered by coal.

The authorities ordered that the coal supply be guaranteed, with all efforts to increase production and supply under safety, ensuring the need for coal for power generation and heating. However, on Oct. 12, The National Development and Reform Commission of the CCP issued a notice to allow electricity prices to increase by 20%. Afterward, mainland China ushered in a wave of price increases, and diesel prices continued to rise. Many gas stations in China also limited refueling, resulting in long queues at gas stations. 

Not only are raw materials such as energy and chemicals rising, the prices of edible oil, vegetables, eggs, and even pork are also increasing.

The fifth rhino: Chinese enterprises pressured within and without

The US. Securities and Exchange Commission finalized a final plan to implement a new law on Dec. 2, requiring Chinese companies listed on the U.S. stock exchange to disclose whether they are owned or controlled by a government entity and provide evidence of audit inspections. 

Chinese concept stocks listed in the United States plummeted on Dec. 3. Their total market value evaporated by $108.3 billion overnight. 

On the same day, giant Chinese online ride-hailing Didi Chuxing announced that it would delist from the U.S. and move to Hong Kong for listing. In just a few hours, the company’s stock price reversed from a 16% increase to a 12% decline.

In addition, Bloomberg pointed out that Didi’s stock price plummeted due to pressure from the CCP to delist, which has caused China’s concept stocks to have accumulated losses of more than $1 trillion since their February highs.

Current affairs commentator Li Lin told The Epoch Times that Chinese companies’ overseas financing is now under internal and external pressure. On the one hand, the U.S. and the EU are wary of CCP investment in science and technology. But, on the other hand, the CCP requires Chinese companies to obey the party’s laws. Otherwise, even if they are listed overseas, they must pay a heavy price for disobedience.

The sixth rhino: Private enterprise insurance companies under political shock, and Taiwan’s withdrawal

The private economy accounts for more than 60% of China’s economy and creates more than 80% of jobs. However, it is being hit with solid supervision by the authorities, and its prospects are unpredictable due to political factors.

In April of this year, Alibaba was fined about $3 billion, setting a record for China’s antitrust fines so far. Other private enterprises have also been severely punished to varying degrees.

Before this August, CCP authorities proposed “common prosperity” to do “three distributions.”

On Nov. 18, the CCP established the National Anti-Monopoly Bureau. In addition, various signs indicate that the CCP plans to further crackdown on giant private corporations. 

On the other hand, the environment for Taiwanese business people on the mainland has also become tense.

Last month, Taiwan’s Far East Group invested in China was fined $13.9 million by the CCP. The Beijing authorities claimed that those who support “Taiwan independence” and disrupt cross-strait relations could not make money on the mainland.

Due to that pressure, on Nov. 30, Far East Group Chairman—Xu Xudong hurriedly and disgracefully expressed his opposition to Taiwan’s independence on social media, supported the so-called 1992 consensus and the one-China principle, and hoped to maintain the status quo.

 The seventh rhino: Aging population that may deliver a severe blow 

In May 2021, official data from the Seventh Chinese Census showed that China’s population of 60 years and over was 264.02 million, accounting for 18.70%, an increase of 5.44 percentage points from a decade ago aboluowang reported.

At the same time, the “China Statistical Yearbook 2021” disclosed that the national birth rate in 2020 was 8.52%, falling below 10% for the first time, while the natural population growth rate during the same period was only 1.45%.

Political commissar Lu, a chief economist of Industrial Bank and chief economist of Huafu Securities, wrote in September that China’s aging population is expected to deepen. From the perspective of economic aggregates, for economic growth, aging may reduce labor supply, lower labor productivity, and crowd out investment, leading to a decline in potential economic growth.

All money amounts are in USD.

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