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| Auteur principal: | |
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| Format: | Recurso digital |
| Langue: | anglais |
| Publié: |
Zenodo
2025
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| Accès en ligne: | https://doi.org/10.5281/zenodo.17962966 |
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- <p><strong>Abstract</strong></p> <p>As early as 2021–2023, repeated warnings on Chinese social media about the catastrophic</p> <p>interaction of COVID “zero-tolerance” over-defense, unchecked real-estate and LGFV debt</p> <p>accumulation, and the emerging predatory liquidity in the A-share market were systematically</p> <p>censored and accounts permanently banned. By late 2025, every prediction has materialised:</p> <p>manufacturing PMI 49.2 and non-manufacturing PMI 49.5 (November 2025), true youth</p> <p>unemployment exceeding 25%, record retail margin debt of RMB 2.29 trillion, and institutional</p> <p>quantitative funds harvesting desperate households with +28% returns against retail losses of −22%.</p> <p>This paper documents how these once-silenced mechanisms have fused into a self-reinforcing</p> <p>downward spiral that has inverted the capital-allocation function of China’s equity market.</p> <p>Household savings are no longer financing growth but are systematically destroyed to generate</p> <p>institutional profits, while the real economy starves. Calibrated scenarios show that sustained dual-</p> <p>PMI contraction and LGFV contagion could destroy an additional RMB 15 trillion in household</p> <p>wealth and drag global growth by 2.5 percentage points cumulatively through 2028 (IMF Dec 2025</p> <p>update), with severe fractures in semiconductor, automotive, and pharmaceutical supply chains.</p> <p>Absent radical excision of predatory liquidity and resolution of off-balance-sheet debt, China’s self-</p> <p>degenerative spiral—born of policy-induced scars and deliberate silencing of early warnings—now</p> <p>constitutes the most serious global systemic risk of the decade.</p> <p><strong>Keywords:</strong> China structural risk, predatory liquidity, retail wealth destruction, COVID over-</p> <p>defense, LGFV debt, dual-PMI contraction, global spillovers</p> <p><strong>JEL Classification:</strong> G12, G15, G18, E24, F42, O53</p> <p> </p>