Bill Cara

Investors beware: China’s long-running economic boom is over. A lost decade ahead.

June 25, 2023

Recent economic data for China should be a concern to any individual or fund that is invested in China. For starters, the real estate bubble has popped. The biggest real estate projects have failed. Manufacturing is weak and industrial company profits are in continuous decline. Exports are declining. Foreign Direct Investment has collapsed. The May-June data cannot be denied.

Moreover, the most recent China economy YouTube videos are frightening. The danger signals cannot be ignored. Here is a sample from June, allegedly anti-CCP, but supported by the investor and economic data I present below:

That investors are losing capital in China cannot be denied.

The VettaFi ETF database shows 24 of 24 equity funds down this year. The three biggest ones at US$5 billion and up in market cap are down -6.1%, -4.5%, and -11.4% over the first half of 2023.

MCHI, China’s broad market ETF, peaked in February 2021 and in the 28 months since has dropped about -50%.


Depressing economic data as shown here is the reason for investors selling China:

Once booming Foreign Direct Investment (FDI) in China has been in a state of collapse since April 2021. Foreign companies and investors are no longer very interested in China. The data may soon become negative.

China’s Industrial production dropped from an YoY increase of +5.6% in April to +3.5% in May.

China Manufacturing Purchasing Managers Index (PMI) has continuously dropped from February (52.6) March (51.9), and April (49.2) to May’s 48.8.

China YoY Exports have collapsed from March (+14.8%), to April (+8.5%) to a negative in May (-7.5%).

China Trade Balance difference in value between imported and exported goods and services had a massive decline in May to US$68.1 Billion from $90.2 B in April and $116.9 B in February.

China Producer Prices have been plunging since November 2021, and turned negative last November. And each month, these prices are falling more.

China Consumer Price inflation is not a problem. Deflation on the near horizon is the problem.

China single-family house prices have been in decline for a year. The biggest investment by Chinese investors has turned out to be a disaster as mortgage payments cannot be made.

Bank loans to individuals and companies are still far too high.

China Thomson Reuters IPSOS Primary Consumer Sentiment Index (PCSI) peaked in April at 82.25, fell in May to 76.54 and was just reported at 69.14 for June.


Investor and economic data for China cannot be ignored. That country is in greater financial difficulty than most investors in Europe and America realize. There are serious social unrest and potential for war implications. I am personally hopeful these extremes can be avoided for the benefit of all of us. As an investor, however, I will be monitoring the data.