Unpicking the China puzzle: from economic locomotive to handbrake

Download PDF

Unpicking the China puzzle: from economic locomotive to handbrake September 2022

Older generations will be familiar with a phrase as it relates to global economics: “when America sneezes, the world catches a cold.”

The phrase gained currency after WWII conveying the towering influence of America’s economy over the world. While the US is still the world’s pre-eminent economy, its shadow is no longer quite so large.

This does not stem from US decline, but rather the rise of others, chiefly China, over recent decades. The speed of China’s rise has been so great that it has spawned an industry of prognostication over when, not if, the Middle Kingdom’s economy will overtake America’s.

A tendency towards groupthink has presented this almost as an inevitability.

However, there are now cracks in the consensus evidenced by headlines such as Why China is unlikely to overtake the United States to become the biggest economy in the world¹  and From economic miracle to mirage – will China’s GDP ever overtake the US?²

It seems a rethink of China is now underway.

China’s economic trajectory matters to the world and is especially salient for Australia as the prosperity of our natural resources companies, education providers, tourism industry, and wine producers, amongst many others, is bound to the country’s fortunes.

Just think back to the 2008/09 Global Financial Crisis.

While many countries struggled through recessions, Australia’s contrasting economic resilience during the period “can be attributed….. not least (to) China’s robust demand for energy and minerals imported from Australia.”³

To gain a deeper understanding of what’s going on in China and its implications for Australia, we asked some of our boutique investment partners, and senior MLC Asset Management portfolio managers, for their views.

Their thoughts follow.

Kristian Zimmermann, Co-Head of Private Equity; David Chan, Portfolio Manager Private Equity, MLC Asset Management

The story of private equity (PE) in China over the past two decades broadly parallels the country’s economic progression over the same time.

The first phase, roughly 2004 – 2014, was one where it was possible for global PE investors to take minority stakes in Chinese firms and aided by an economy expanding at break-neck speeds to achieve outstanding, quick-fire financial returns.

Those days of swift and spectacular gains have passed as both the PE industry and the national economy transition to a more mature state. Strong returns are still possible, but patience, and careful industry and company selection, as well as being attuned to political and regulatory dynamics are now essential to winning.

Rates of revenue growth achieved by our PE program’s recent and current Chinese investments are lower than those recorded from the first phase of our investments in China. Nevertheless, we are seeing success by finding niches and marrying them to investee companies’ competitive advantages.

To be clear, China has not morphed into a low-growth country – the opposite continues to be true.

There is still a large growth runway ahead, but as the country advances from being an export-driven, low-cost manufacturer to one moving up the value chain, and where domestic consumption is emphasised, investors need to adjust both their return expectations and industry focus.

Great opportunities in healthcare

As global investors, we are agnostic about the industries we invest in and scour the private equity opportunity set on a fund-by-fund, and case-by-case basis. That said, our investment program does show an overweighting to select structural themes benefiting from long-term tailwinds, including healthcare.

Across the world, healthcare is an essential, dynamic, and opportunity-rich industry. The demand for innovation to drive simultaneous improvement in health outcomes, affordability, quality, and access will continue to be high, as will both large and growing public and private sector investments as populations age.

On this basis, we would argue that the healthcare opportunity is especially compelling in China.

A Japan-China comparison is one way of unpacking the issue because Japan’s healthcare expenditure, as a percentage of gross domestic product (GDP), was once around China’s recent level.

The corollary is that even more private equity opportunities will be created if China lifts investment to reach Japan’s current level of healthcare spending as a percentage of GDP.

Japan’s healthcare expenditure was around 6.5% of GDP in 2000 and rose to around 10.7% lately.⁴

World Bank data, albeit pre-COVID, showed that China’s healthcare spending was around 5.5% of GDP.⁵  Based on certain GDP growth assumptions, and incremental increases in healthcare expenditure, the sector could potentially upsize to US$2.2 trillion by 2025.⁶

Furthermore, the growing numbers of ageing people (Chart 1), usually cast as an economic headwind, are positive for healthcare providers: on current trends, China’s 60 and over population could hit 363 million by 2030.⁷

Chart 1: Aging population positive for healthcare industry

China’s population distribution by age group

Source: National Bureau of Statistics China, World Population Prospects 2019

One of the downsides of higher living standards are rich country medical conditions, such as diabetes and strokes. As Chinese living standards have risen, so has the incidence of these conditions (Chart 2).

Chart 2: Incidence of rich country medical conditions

Source: Highlight Capital

Unhappy as these trends are, they do mean that more healthcare investments and services will be needed.

Healthcare in China is rapidly becoming more consumer-centric, with people more willing to spend out-of-pocket, as well as demand a better customer experience and better whole health outcomes.

Consequently, innovative PE-supported business models can benefit vast areas of Chinese healthcare provision starting from birthing clinics, which are much sought after by its middle class, all the way to pharmacies, in-vitro fertilisation (IVF) services, and cancer treatment facilities.

Locals now prefer domestic consumer products companies

There was a time when foreign brands and products were associated with excellence and exercised a magnetic pull on Chinese consumers.

Those days are largely gone. To be clear, luxury global brands still command the loyalty of the wealthy, but for the greater part of the consumer market, including the vast middle-class, local brands are now preferred.

This stems from the fact that local producers have in many consumer categories moved impressively forward on the quality front and coupled that with competitive pricing. Additionally, it is far easier for them to build close bonds with local suppliers and distributors via China’s ubiquitous e-commerce platforms.

Take baby foods, for example: Nestle dominates the super-premium end of the baby food market, but local providers dominate everywhere else.

Footwear and active wear is another example. Nike was once all the rage. Now, however, Chinese consumers prefer brands such as Anta and Li-ning, the latter founded three decades ago by a champion gymnast.

Similar trends are observable in baby care products. Whereas global products were once preferred, Beaba, a domestic brand, has Chinese parents’ loyalty. They are winning because consumers judge their nappies to be of high quality, lighter weight, very cost competitive, and easily accessible online.

Finally, we believe that local consumer companies’ combination of quality-cost competitiveness and brand loyalty should make them more resilient in economic slowdowns versus foreign brands.

Clean/new energy gets PE backing too

In contrast with the political hesitancy that has been observable in countries like Australia and the United States on clean energy and the electrification of transport, there is no such hesitancy in China.

Beijing views achievement of technological superiority in clean energy and transportation electrification as part of its ‘leap-frog’ economic strategy.

Traditional theories of economic development posit that the path to prosperity for emerging countries is to step-by-step follow in the tracks of developed countries.

However, by leapfrogging a country, China in this case, aims to bypasses traditional stages of development to either jump directly to the latest technologies or explore an alternative path of technological development involving emerging technologies with new benefits and new opportunities.

As part of the leapfrog strategy, the government set a goal of having electric vehicles (EV) make up 40% of all car sales by 2030, and has in place a support program, including price-subsidies for EV buyers, to get there.

Not surprisingly, this has been a boon for the EV sector, including battery manufacturing where Chinese companies like BYD are acknowledged as being at the cutting-edge.

It is desirable for PE investors to gravitate towards industries of national priority, and thus we believe private equity investments in Chinese companies active in the new energy sector deserve attention.

Barry Dargan, Lead Portfolio Manager and CEO, Intermede Investment Partners

China combines extraordinary scale and the world’s most populous market of rising middle class consumers, with opaque but far-reaching political control by the Chinese Communist Party.

The extraordinary growth achieved by the country’s economy and businesses has made it fertile ground for Intermede’s bottom-up investment approach, with Chinese companies contributing positively overall to the relative performance of the global strategy since inception.

But as the influence of top-down forces on business fortunes has recently come in some cases to outweigh company fundamentals, the ability of investors to make investment decisions based on company specific factors has come under pressure.

Tensions in US-China relations that began rising during the Trump presidency have sharpened further in recent months, with speculation about China’s intentions towards Taiwan further heightened by Nancy Pelosi’s visit to the island in August, and subsequent extensive military exercises by China in the Taiwan Strait.

All of which takes place against a domestic Chinese background with Xi Jinping currently expected to seek elevation to an unprecedented third term as party leader, as well as the title of ‘Chairman’, which had been pointedly left unused since the Mao era.

Xi’s tightening grip on the levers of power in China has been accompanied by harsh crackdowns on business sectors deemed to be unaligned with his ‘Common Prosperity’ drive, including education, ride-hailing, gaming, and internet platform businesses.

Additionally, the zero-COVID policy has driven ongoing mass scale lockdowns of Chinese cities, impacting commerce and consumer confidence.

Cracks are beginning to show in both official GDP growth numbers, and in the crucial property sector which has seen widespread organised protests by unhappy investors in stalled apartment projects, while large developers struggle under vast debt loads (equivalent to approximately a third of a trillion US dollars in Evergrande’s case).

All of which has seen a shift in what has determined the fortunes of Chinese companies from business fundamentals, to harder to predict top-down forces, with any positive current market commentary on China often focussing more on the potential for increased investor flows via the Hong Kong Stock Connect program to prop up valuations, than the sort of positive fundamental newsflow that we seek for portfolio companies.

Reflections on two former portfolio holdings

So how has this affected Intermede’s approach to China? The changing background can perhaps be briefly explored through a brief history of two investments in China.

The first, Meituan, was purchased following a 2018 trip to China by our investment team that made clear the ubiquity of the super app, which had quickly grown to become China’s largest food delivery service, then moved into adjacent (and often more profitable) business areas including travel booking, ride hailing and other leisure activities.

The shares performed strongly, rising fourfold from our initial purchase price in September 2019 to our point of exit in January 2021.

The eventual sale was driven by a basic aspect of Intermede’s investment approach, namely valuation discipline. While we felt the business was continuing to perform quite strongly on a fundamental basis, market optimism was running ahead of those fundamentals and the business was priced for perfection, and so we exited the position.

The second position, Alibaba, was purchased in 2015 after the company’s share price dropped below its recent IPO price during that summer’s China growth scare. We felt the business’s fundamentals were very attractive, offering the most attractive available direct large-scale access to rapid growth in Chinese online consumption, monetised via the company’s dominant TMall and Taobao online stores, and took a materially sized position, which contributed very positively for our clients until 2020.

However, the subsequent impact on Alibaba of the changing political climate was both material and unprecedented.

State actions that impacted the company’s fortunes included the enforced cancellation of the IPO of Ant Financial, the prolonged disappearance of the company’s founder Jack Ma after he publicly questioned regulatory authorities, and the government mandated creation of an RMB100 billion (~US$15 billion) ‘social prosperity’ fund that raised the risk of the company being treated as a social utility by the government.

During this period the Alibaba investment contributed negatively to portfolio performance, and we exited the position in the second quarter of 2022.

So how does a bottom-up manager like Intermede respond to a changing investment landscape, in which fundamentals play a smaller role in driving investment outcomes than previously?

As in all challenging investment situations, we seek to respond with humility, acknowledging when the balance of risk or the number of ‘known unknowns’ has changed, and letting our fundamentally driven assessment of risk and opportunity for individual businesses determine overall portfolio exposures.

In this context therefore, we now have a materially lower exposure to China than had been the case previously, holding just one business (Tencent), and with the portfolio’s overall China weight now around a third of what it was at the 2019 peak.

But that said, we continue to follow several Chinese companies with close interest, and if recent history has shown us anything, it is that the political landscape can change fast, and if the risk of government control recedes and valuations are attractive, we may step back in to one or more of these businesses operating in what remains one of the world’s fastest moving and most dynamic economies.

Nick Pashias, Head of Antares Equities

Since Deng Xiaoping’s announcement of the Open Door Policy in December 1978, industries and companies around the world have seemingly come to view China as a kind of short-cut or one-stop-shop to success: sell enough of whatever you have to China, and you’ve got it made.

As recently as last year, Australia’s resources companies benefited from sharply higher commodity prices, resulting from strong Chinese demand. But there are reasons to be more cautious, going forward.

Here’s just one data point to mull over – reduced ‘sugar hits’ evidenced by the trend towards smaller economic stimulus as proportions of GDP (Chart 3).

The decades-long model of pushing the economy upward with another shot of fixed asset investment is reaching its limits. The marginal utility of the next new highway, airport, dam, or city is declining, and policymakers recognise this, and this is showing up in smaller old-school stimulus programs.

Chart 3: Economic stimulus getting proportionately smaller

The line chart shows the change in 12-month Chinese credit levels, divided by nominal GDP, and then takes the delta (changes in the relationship between the two) of that series.

As of 30 June 2022
Source: Bloomberg

What to do about this, so that China doesn’t fall into the ‘middle-income trap,’ is a historically important issue.

In a middle-income trap, wages in a country rise to the point that growth potential in export-driven, low-skill manufacturing is exhausted before it achieves the innovative capability needed to boost productivity and compete with developed countries in higher value industries. Consequently, there are fewer avenues for further growth. Arguably, this is now China’s situation.

Time for reflection as structural headwinds hit

Powerful structural tailwinds, the most notable being a large and growing population with rising incomes driving consumption (as well as production), are turning into headwinds that are crimping China’s prospects. Other trends, like urbanisation, which drives raw materials demand, are derivatives of population growth.

Because of this, we think that now is the time for reflection as China, looking ahead, is unlikely to be the country and market we have become accustomed to in our investment industry careers.

The quote, “Demography is destiny” is widely known and even if it is an overstatement, demography is very important to the development of economies, and countries.

It’s easy to get drowned in statistics when it comes to demography, but here are a few worth noting:

• The Seventh National Population Census,⁸ published in 2021, revealed that only 12 million babies were born in 2020, the fewest newborns since the horrific Great Leap Forward related famine of 1961.⁹
• China’s working-age population, aged 16-59, is contracting, falling by 40 million workers since 2010 to less than 900 million today.¹⁰
• China recorded a net increase of just 480,000 people in 2021, the lowest ever official rate.¹¹
• The Shanghai Academy of Social Sciences team predicted an annual average population decline of 1.1% after 2021, pushing China's population down to 587 million in 2100, less than half of what it is today¹²  (Chart 4)!

Chart 4: Population may more than halve by 2100

Forecast for China’s population

Source: United Nations World Population Prospects 2022

As it is, China’s population growth may reach a tipping point soon (Chart 5), where the mortality rate outpaces the birth rate, and the population begins to decline. No wonder it’s now being said of China that the country is going to become old before it becomes rich.

Chart 5: Deaths predicted to exceed births soon

Annul number of death and births in China

Source: United Nations World Population Prospects 2022

Hard to turnaround demographic trends

Shortly after the 2021 census results were released, the government announced that China was moving to a “three-child policy” and ending the penalties once levied on couples that had more than two children.

The leadership emphasised that “proactively responding to the aging population directly relates to the country’s development and people’s well-being,” and is necessary to “safeguard national security and social stability”.¹³

But policy changes are unlikely to easily solve China’s demographic problem. The easing of the one child policy to allow two children per couple in 2015 did not translate to an increase in births, and so it’s uncertain that increasing the limit to three children will have much impact.

China’s population has reached a level of education and income where having larger families has lost its appeal. That is because there are many other factors keeping the birth rate and fertility down, some of which are trends seen in many industrialised and newly industrialised countries.

Increased participation of women in the workplace and changing attitudes toward marriage means people are less inclined to have children. Additionally, the rising cost of living and changing expectations toward quality of life and lifestyles means that people are less willing – and capable – of taking on childrearing responsibilities.

Chinese families speak of devoting ‘six pays’ per child – four from each grandparent, and two from each parent – to give a single child the greatest chances in life. The appetite for larger families has seemingly gone. These trends will affect China’s productivity, and future growth of its economy and maybe even its ability to ever surpass the United States economically.

Real estate doldrums

Meanwhile, the world’s biggest asset class, the Chinese real estate market (Chart 6), has been in the doldrums with sobering implications for everything from consumer spending all the way to commodity prices.

Chart 6: Chinese real estate is the world’s largest asset class

Source: WFE, CEIC, Japan Cabinet Office, Halifax, Goldman Sachs Global Investment Research

Rental yields in cities like Beijing, Shanghai, Shenzhen, and Guangzhou are sub-2%¹⁴ and either rents are going to have to go up or property prices are going to have to fall to bring rental yields closer to more ‘normal’ levels. With rents unlikely to go up, this leaves falling prices as the lever to adjust the market.

What’s ahead looks like more bad news for Chinese banks, property developers, and well as property buyers who have grown up on expectations of real estate as a sure-fire bet on ever-rising prices.

Steel intensity: raw materials demand implications

The iron ore price, which is a derivative of steel demand, is one gauge of China’s economic pulse, from an Australian perspective. Subsequently, there is a lot of conjecture on how much higher China’s steel intensity may grow.

South Korea is an outlier among industrialised countries for the very high intensity of its steel demand (Chart 7) but that discrepancy owes to the fact that the country is a large capital goods exporter.

South Korea reached 1,200 kilograms per capita steel and 19 kilograms per capita copper around GDP per capita of US$22,000-$25,000¹⁵. On this basis, it’s probably unwise to assume that China’s intensity of steel demand will end up at South Korean levels.

For China, the implications of GDP per capita income doubling from current levels of ~US$11,000 are less clear cut, given consumption per capita is already around developed country peaks (Chart 7). One upshot is that it’s fair to assume that future growth in Chinese steel intensity will fall short of the breakneck pace of the past few decades when China was in catch-up mode.

Chart 7: How much further can China’s steel intensity grow?

Kilograms per capita steel consumption

As of 1 January 2021
Source: Macrobond, Bloomberg, Macquarie

Investible time-horizon versus the very far future

The distant future – the eight decades to 2100, which is what some of the demographic data quoted in this commentary covers – makes it difficult to be optimistic about China.

However, most investors do not allocate capital on an eight-decade time horizon, and so it’s important to have some sense of proportion when making assessments of timescales.

Five to ten years is a more realistic long-term investment horizon, and the picture over this period is more balanced. On this investible time-period, we think that industries, such as iron ore, and ferrous metals more generally, can still look forward to incremental increases in demand, but the episodic thumping price and demand rises experienced over the past three decades, as China rapidly urbanised, are likely to be rarer.

The window to China’s days as a short-cut to or one-stop-shop to success are closing.

Ben McCaw, Senior Portfolio Manager, MLC Asset Management

China currently finds itself in a ‘something’s gotta give’ situation. On one hand, there is a health and social stability policy, that’s zero-COVID. Alongside this is a gross domestic product (GDP) growth target of around 5.5% for 2022.¹⁶

Plainly, the two policies are in conflict and that’s why ‘something’s gotta give.’

Economic growth requires normal functioning national life, but abrupt large-scale restrictions – like that imposed on Shanghai, in early June, across a city of 25 million people, and more recently where a million people, in a suburb of Wuhan, were placed under lockdown – clash with economic goals.

To outsiders this can seem perplexing, but delve a little deeper, and there is a rationale, and it involves more than the Chinese Community Party’s (CCP/the Party) or President Xi’s prestige.

Given that zero-COVID has, in effect, been official policy since the pandemic’s outbreak, the government can argue that it is being consistent. Moreover, the country can claim strong success in minimising deaths and infection rates (Chart 8) compared to Western countries, both on an absolute as well as relative basis.

Chart 8: Zero-COVID has succeeded in minimising deaths and infections

COVID-related comparison: China vs select countries

*Deaths per 100,000 people
Source: Johns Hopkins University & Medicine, Coronavirus Resource Centre. Figures as of 5 July 2022

Deaths and case numbers have been remarkably low considering China’s vast population and the CCP has trumpeted this as a source of national pride made possible by the Party’s wisdom and effectiveness.

But China isn’t sticking by zero-COVID simply for political or national glorification reasons. There are practical considerations too.

China’s home-developed Sinovac vaccine is less effective against COVID-19 strains than well-known global vaccines, such as those from Pfizer, Johnson & Johnson, and AstraZeneca. Consequently, restrictions and lockdowns have become the default way of protecting people’s health.

Furthermore, though China’s health system has developed impressively it is still short of being world-class for a population of around 1.4 billion, particularly against the backdrop of the pandemic.

So, managing, or more accurately, minimising hospitalisations, is important. And the best way of doing so, from the government’s perspective, is prevention by lockdowns.

A different stimulus versus 2008/09

All of this has led to a catch-22 situation where the longer zero-COVID remains, the greater the need for economic stimulus. However, economic stimulus cannot be truly effective while zero-COVID stays in place.

The government unveiled in March a RMB 1 trillion (US$140.2 billion) stimulus package equivalent to about 4.5% of GDP, which followed an unsettling 6.8% year-over-year contraction in GDP in the first quarter of this year.¹⁷

If the spending number seems a little light compared to what was rolled out during the GFC, that’s because it is. Back in late 2008, China introduced the largest stimulus package in the world totalling RMB 4 trillion (US$586.7 billion), amounting to a whopping 12.5% of the country’s GDP.¹⁸

The contrast speaks volumes about the differences and complexities of the country’s present situation compared to the earlier economic crisis, which as it turned out was barely a crisis for China.

Last year, debt reached an all-time high of nearly 290% of gross domestic product,¹⁹ and Beijing has identified this ballooning figure as a potential threat to economic stability. Understandably, policymakers are loath to add much more leverage to an already highly leveraged economy.

Support for SMEs part of tackling social inequality

The authorities also appear to have come to the realisation that the old playbook of boosting growth through debt-financed infrastructure and real estate investment has reached its limits.

The most recent stimulus emphasises support for small-to-medium enterprises (SMEs) through tax concessions and generous lending conditions, and is lighter on funding the kind of shovel-ready projects of yesteryear.

Greater support for SMEs is also consistent with encouraging a shift toward consumption, tackling social inequality, and rekindling innovation and productivity growth.

Jolting as last year’s crackdown on the tech sector, high-profile individuals, including wealthy entertainment industry figures, and private education providers was, to foreign eyes, those actions can be viewed through the tackling social inequality lens.

In former Australian ambassador to China, Geoff Raby’s observation at the time: “the widespread crackdown is a response to popular sentiment about inequality and unfairness.”²⁰

Struggling property industry not good for iron ore prices

There is no shortage of commentary on the stresses in China’s real estate industry with attention on everything from high-profile property developer Evergrande defaulting on its debts to a mortgagors′ revolt as homeowners refuse to make loan repayments while property prices fall.

Here are two other ways of exposing the issue. Firstly, home sales by volume fell 34.5% on year in the first five months of 2022,²¹ reflecting a trend that had been underway since last year (Chart 9).

Secondly, Moody’s issued 91 downgrades for high-yield Chinese property developers in the past nine months.²² It issued only 56 downgrades for such companies in the 10 years ending December 2020.²³

Chart 9: House prices has been falling for a year

China newly built house pieces year-on-year changes

In China, the Housing Index is measured by year-over-year change in the index of newly built residential buildings in 70 medium and large cities. The index is calculated in weighted average method and the weight of each city is based on the population.

Source: National Bureau of Statistics China, triageconomics.com https://tradingeconomics.com/china/housing-index

With property accounting for around 70% per cent of Chinese household wealth²⁴ authorities’ struggles to stabilise the sector threatens domestic spending, economic growth, and social unrest.

The knock-on effect of the real estate industry’s travails is that China’s consumption of crude steel fell 14% in May compared with last year,²⁵  translating to iron ore prices down about 45% this year.²⁶  Clearly this is not good for Australia’s iron ore miners who thrived on the back of last year’s thumping price gains.

Admittedly Australia’s premier iron ore producers like BHP and Rio Tinto should fare better than most thanks to their mines being low on the cost-curve, but the afterglow from last year’s price boom is fading. While the property sector’s weakness weights on the Chinese economy at large, an iron ore price feast like last year’s will remain distant.

¹ https://www.abc.net.au/news/2022-03-15/china-faces-significant-hurdles-to-become-biggest-global-economy/100912398, 15 March 2022

² https://www.theguardian.com/business/2021/dec/28/from-economic-miracle-to-mirage-will-chinas-gdp-ever-overtake-the-us, 29 December 2021

³ Australia, China and the Global Financial Crisis, Michael Priestley, Economics Section, Parliament of Australia, Parliamentary Library, https://www.aph.gov.au/About_Parliament/Parliamentary_Departments/Parliamentary_Library/pubs/BriefingBook43p/australiachinagfc

⁴ Current healthcare expenditure (% of GDP) – Japan, https://data.worldbank.org/indicator/SH.XPD.CHEX.GD.ZS?locations=JP

⁵ Current healthcare expenditure (% of GDP) – China, https://data.worldbank.org/indicator/SH.XPD.CHEX.GD.ZS?locations=CN

⁶ Source: Highlight Capital estimate based on World Bank and IMF data

⁷ Source: Highlight Capital estimate based on National Bureau of Statistics China, World Population Prospects 2019 data

⁸ Main Data of the Seventh National Population Census News Release, May 11, 2021, http://www.stats.gov.cn/english/PressRelease/202105/t20210510_1817185.html

⁹ Can China’s Communist Party defuse its demographic time bomb? Dexter Tiff Roberts, December 21, 2021, https://www.atlanticcouncil.org/blogs/new-atlanticist/can-chinas-communist-party-defuse-its-demographic-time-bomb/

¹⁰ Ibid

¹¹ 2021 China demographic trends – what the latest data says, Arendse Huld, February 2, 2022, https://www.china-briefing.com/news/china-demographic-trends-2021-what-the-latest-data-says/

¹² China’s population is about to shrink for the first time since the great famine struck 60 years ago. Here’s what it means for the world, Xiujian Peng, May 30, 2022, https://theconversation.com/chinas-population-is-about-to-shrink-for-the-first-time-since-the-great-famine-struck-60-years-ago-heres-what-it-means-for-the-world-176377

¹³ Can China’s Communist Party defuse its demographic time bomb? Dexter Tiff Roberts, December 21, 2021, https://www.atlanticcouncil.org/blogs/new-atlanticist/can-chinas-communist-party-defuse-its-demographic-time-bomb/

14 Source: Savills UK data referenced in BCA Research report Is the global housing bubble about to burst, Dhaval Joshi, July 25, 2022

¹⁵ Commodities Comment: Metals consumption per capita, reviewed, July 13, 2022, Global Macro Strategy Department of Macquarie

¹⁶ China sets GDP target of ‘around 5.5%’ for 2022. Evelyn Cheng, March 4, 2022, https://www.cnbc.com/2022/03/05/china-on-deck-to-reveal-its-2022-gdp-target.html

¹⁷ China's fiscal stimulus is good news, but will it be enough? Tianlei Huang and Nicholas R. Lardy, May 26, 2022, Peterson Institute for International Economics, https://www.piie.com/blogs/china-economic-watch/chinas-fiscal-stimulus-good-news-will-it-be-enough

¹⁸ The fiscal stimulus programme and public governance issues in China. Christine Wong, OECD Journal of Budgeting, Volume 2011/3, OECD 2011, https://www.oecd.org/gov/budgeting/Public%20Governance%20Issues%20in%20China.pdf

¹⁹ These charts show the dramatic increase in China’s debt, Yun Nee Lee, June 28, 2022, https://www.cnbc.com/2021/06/29/china-economy-charts-show-how-much-debt-has-grown.html

²⁰ Xi Jinping wards off China-style populism. Geoff Raby, September 6, 2021, https://www.afr.com/world/asia/xi-jinping-wards-off-china-style-populism-20210905-p58p0l

²¹ China’s steel mill owners are in a bad mood as demand takes a hit. June 27, 2022, South East Asia Iron and Steel Institute, https://www.seaisi.org/details/21068?type=news-rooms

²² China’s property troubles have pushed one debt indicator above levels seen in the financial crisis. Evelyn Cheng, June 16, 2022, https://www.cnbc.com/2022/06/17/moodys-china-real-estate-troubles-sent-debt-indicator-to-record-high.html

²³ Ibid

²⁴ Explainer: What’s going on in China’s property market? Arendse Huld, January 14, 2022, https://www.china-briefing.com/news/explainer-whats-going-on-in-chinas-property-market/

²⁵ Iron price US$ price change as of July 27, 2022 , https://tradingeconomics.com/commodity/iron-ore

²⁶ Can China’s Communist Party defuse its demographic time bomb? Dexter Tiff Roberts, December 21, 2021, https://www.atlanticcouncil.org/blogs/new-atlanticist/can-chinas-communist-party-defuse-its-demographic-time-bomb/