In the previous two segments of this research post PART I, PART II, we’ve hypothesized that the recent Chinese economic data and the resulting global shift to re-evaluate risk factors within China/Asia are prompting global traders/investors to seek protective alternative investment sources. Our primary concern is that a credit/debt economic contraction event may be on the cusp of unfolding over the next 12~24 months in China/Asia. It appears that all of the fundamental components are in place and, unless China is able to skillfully navigate through this credit contraction event, further economic fallout may begin to affect other global markets.
One key component of this credit crisis event is the Belt Road Initiative (BRI) and the amount of credit that has been extended to multiple foreign nations. We don’t believe China will run out money by the end of March and we don’t believe any crisis event will come out of nowhere to land in China within a week or two. Our concern is for an extended downturn to decrease economic opportunity by 5~12% each year for a period of 4~7+ years. It is this type of extended economic slowdown that can be the most costly in terms of political and economic opportunity. An extended downturn in the Chinese and Asian economies would create revenue, credit, debt, and ongoing social servicing issues.