China's Losses Spiral - Joe Blogs

[TexasTowelie]

China’s exports are booming and the headlines look spectacular. A record trade surplus, shipments surging, and official figures pointing to strength just as many Western economies slow. On the surface, it looks like China is powering ahead.

But beneath the headline numbers, a very different picture is emerging.

Producer prices in China have now been falling for more than three years in a row, forcing companies to cut prices to stay competitive — particularly as tariffs, weak global demand, and intense price competition bite. Export volumes may be rising, but profitability is being quietly crushed.

When you combine falling selling prices with rising costs, the maths becomes brutal. Many firms are now selling more, but earning less — and in many cases, selling at a loss. Estimates suggest that more than half of Chinese businesses are now loss-making, surviving not on profits, but on debt.

We’ve seen this story before. China’s property sector followed the same path — growth funded by borrowing, margins evaporating, and problems hidden for years until the cracks became impossible to ignore. Now those same dynamics are spreading through manufacturing and industry.

Exports are rising. Profits are not. And debt is doing the heavy lifting.

The question is not whether this can continue — it’s how long, and what happens when it finally stops.

Chapters:
0:00 Intro
2:33 EXPORTS
3:24 PRODUCER PRICES
5:15 IMPLICATIONS
9:53 LOSSES