Nicolas Bouzou 2:36 p.m., January 05, 2022

Every morning, at the microphone of Europe 1, the economist Nicolas Bouzou presents his analysis of economic news.

This Wednesday, he dwells on the situation in China, where the economy is suffering from the government's zero Covid strategy. 

EDITORIAL

It is wrong to say that China is the big winner economically from the crisis.

There are several factors that are problematic.

I will mention a few: overcapacity in terms of offices, overcapacity in terms of housing.

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It should be noted that housing represents 80% of the wealth of Chinese households, and 40% of bank loans are guaranteed by real estate.

These are figures from the insurer Allianz.

The catastrophic consequences of an office or housing crisis on the banking system are therefore fairly well considered.

The other problem in China is demographics. We have a decline in the workforce. In addition, of course, there are political uncertainties. In terms of foreign policy, this is for example Taiwan. In terms of domestic policy, investor David Baverez, who knows China very well who lives in Hong Kong, theorized the conflict between the two Chinaes: open China, that of the prime minister, and closed China, that of the president. Xi Jinping.

The Chinese economy is still facing strong uncertainties and should slow down very sharply by the end of the year.

Without forgetting the impact of the health situation on it.

We can clearly see that Chinese vaccines, in particular the Synovac vaccine, do not work against the Omicron variant, even as China continues to follow a zero Covid strategy.

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This means that you potentially have 1.4 billion people who are not immune with an increase in confinements which will inevitably have an economic impact.

China still remains the workshop of the world.

We are facing a disorganization of Chinese production which will accentuate the supply problems for our industries which are already important.

It will increase costs, especially our industrial costs.

This risks having repercussions on inflation, which is already relatively high in France (around 3%).

If we were a little clever, it would be an invitation to accelerate reindustrialisation, to regain economic autonomy.

It would be a great subject for the French presidency of the European Union.

It could even be - one can always dream - a good subject for the French electoral campaign.

That would be the case if we had a campaign worthy of the name and if we were interested in substantive issues.

But it is not yet done.