Folks in today's video, we have lots to discuss. Number One: New evidence suggests that China's banking sector is in crisis mode. They made a ton of bad loans and it's blowing up in their faces. China Let out over a trillion dollars to developing countries over the last two decades and is seeing much of this debt turn toxic and they are not getting paid back as these countries.

Buckle Under the global economic crisis, this is a massive threat to China and they know it. They are actually injecting even more Capital into close to default countries. To stop this contagion from spreading and perhaps taking down their entire banking sector. we will show you the data and everything that you need to know.

We need to talk about China's real estate bubble. We need to talk about the impact that this is going to have on the Global Financial system. and we need to talk about why the wealthy in China are actually going and withdrawing their funds from the country and trying to funnel it into places like Singapore Why are they doing this all of a sudden? Is there something big happening? Is China planning something big just around the corner? or is there a big unraveling coming just around the corner? Well, we're going to discuss this. So China does.

This Thing Called Debt trap lending I Think that's a mean way to say it, but it's probably the most truthful. China lends huge amounts of money to high risk, often poor developing countries and then uses that to exert its influence over said countries. And over the last couple of decades, China has done this to the tune of over a trillion dollars based on whoever's estimate you're looking at under the guise of mostly helping countries to develop out their infrastructure and connect them closer to China and develop their overall economies once the money is Lent Not only do those countries get to build out their infrastructure, but China gets to help rewrite a lot of the rules in that economy to benefit them and of course, transform institutions and those economies to again be very friendly towards. China Say what you want about China But pretty smart way to gain influence, right? And they call this program the Belt and Road initiative.

Although there were loans made in similar ways before this program was even initiated, this program and similar loans have cost again around one trillion dollars. and in fact, this has made China the world's largest single creditor. However, a lot of these developing countries that they've learned to have been hit by this massive, massive global economic crisis. Obviously, the pandemic was the brunt of it and now we're going through another cycle where a lot of these countries just can't pay up.

And the problem is that while this was a smart move for China to exert more influence over all these countries, the fact of the matter is they gave too much money too quickly and a lot of this is now turning toxic and is completely blowing up in their faces. It's actually pretty insane to watch. Financial Times reports about 78.5 billion dollars of loans from Chinese institutions to roads Railways ports, airports, and other infrastructure around the world were renegotiated or written off. Completely written off between 2020 and the end of March this year according to figures compiled by New York-based research organization The Rhodium Group.

and in fact, the data on default is actually pretty startling. Let me read you some of this data: between 2001 and 2009, you had five defaults, countries that couldn't pay back China five, then 14 defaults between 2010 to 2019. But just in the last three years you've had 14 defaults, 14 defaults and these numbers are from the financial times. But the trend of countries defaulting right now is heating up and is set to exponentially grow, which is causing a huge headache for China which is already dealing with a lot of economic issues right now.

The countries that have already defaulted in the last three years include: Belarus Lebanon Ghana Sri Lanka Zambia Argentina Ecuador Suriname and Ukraine can't imagine why Ukraine would have defaulted. Maybe China should ask their buddies over in Moscow What's going on with that? And according to Oecd's risk assessment, well, China has mostly lent to the highest risk countries in the world. Here's the funny thing though, when you lend tons of money to high-risk countries with usually poorly run institutions, what do you think is going to happen Oftentimes they just simply aren't going to be able to pay you back. And similar to say, a predatory payday lender that lends out to high risk customers, while the insanely High interest rates cover for the ones that don't pay back.

But if the majority of those borrowese don't pay back, What happens? Well, all of a sudden the business implodes. It's the same thing with China They lent out tons and tons of money to high-risk customers. High-risk countries and a lot more than they had expected aren't able to pay back at all or at least aren't willing to pay them back. And a lot of the enforcement measures Within These Chinese contracts aren't really enforceable in these Sovereign lands, right? China Could say oh well, this is against Chinese law not to pay us back using blank, blank, blank stipulation in our contract and then the country's like what? but we don't recognize that ha ha ha.

So this is kind of blowing up in their faces and they have to figure out how to continue to grow influence and push their agenda in these areas without losing all of this money and risking their own Banks Collapsing And make no mistake, this is such a large sum of money that this could totally totally collapse large segments of the Chinese financial banking sector to the point that China is now sending defaulting countries or near defaulting countries even more money. They're sending what's called rescue loans which are essentially bailouts according to the financial times. Beijing has extended an unprecedented volume of rescue loans to prevent Sovereign defaults by big borrowers among about the 150 countries that have signed up for their program. So China went into this lending project thinking that these loans would help them increase their influence and power abroad.

and it has. But they lent out too much money too quickly and so now they're taking the L on many of these transactions and it's not looking pretty. Chinese Rescue lending is overwhelmingly directed at countries that already have high levels of debt to China Beijing is ultimately trying to rescue its own Banks That's why it has gone into the risky business of international bailout lending. so China Thinking they could grow their influence, lent out money.

But what ended up happening is they got themselves entrenched in all this toxic debt which now is unraveling. China Proper mainland China Now has to deal with bailing out all these countries in order to make sure that at the end of the day they have some semblance of a possibility of being paid back. China Right now, they're making the calculus that hey, we're so raveled up in these other countries that we have to send even more money to make sure they don't become unraveled because that's going to be way way worse for us. Lending more to these countries is better than having these countries just completely default on all the debt they've already gotten from us.

Now this is becoming a massive, massive problem for China But it is specifically a massive problem because of the much bigger underlying debt problem that China has, which is specifically in their real estate market. China has been one of the biggest economic success stories over the last 20 30 years because of insane, insane levels of easy money, insane levels of risk on debt that the state-controlled banks have been giving out to push their agendas and to build out their economy at a rate that few other countries have ever come close to. Problem though, is that a lot of this high-risk debt? Well, it wasn't given with any real thought behind it, it was just thrown at the economy to make it grow. and now a lot of developers and other Roes can't pay it back for more.

could watch. The Chinese government has been engaged in a decade-long campaign to Stave off a financial crisis triggered by excessive debt growth, an effort that has critically damaged its 10.7 trillion real estate debt market and set the stage for a political showdown between local and Central governments as the country attempts to navigate sharply slow in economic growth and new geopolitical headwinds. So you have the situation where local governments right now in China In this massive country of China, That's controlled by a central Authority but you have lots of powerful little local governments that follow the central Authority's directives, but manage their own communities. and they have so much debt right now that they can't even follow basic priority incentives and priority directives from the top people.

A lot of these governments are at risk of not even being able to operate without bigger bailouts from Beijing. And in order to understand bigger picture, why this is all such a big problem and why debt is just such a massive massive issue for the global stage. And not just China, You have to go and you have to Google The biggest banks by total assets Number one, number Two, number Three, number Four, number Fourteen, and number 18 are all Chinese Banks And really, these are all just one. Mega Bank The Bank of the CCP or really, the Bank of Gigi Ping and you add up the total assets and you're looking at a bank that's like 5x JPMorgan Chase right? That is a lot that is a lot of capital And these Banks Here they were directed by CCP lenders to lend tons and tons of money out to construction, to developers in residential, and Commercial loans to buyers in foreign development, Aid to developing countries, so on, and so forth.

And now that many of these debtors can't pay them back, it's creating this: Dynamic where China is risking an implosion to their entire state-controlled banking system. now in the Us where we have more I Don't want to say completely, but we have more free market based systems. You lend money out and you risk your capital or your client's capital on a principle of risk versus reward. And sure, that's not a perfect system either.

But individual. Banks Choose risk versus reward when you have a CCP that's basically controlling and directing the entire banking sector of a country. While a lot of times CCP Priorities Political priorities aren't going to be in line with what makes the most business sense and what is going to create the longest term stability in the sector. Market Watch reports: China's political class ignored the financial risks that accompanied such had long growth because of the benefits of rising output and employment.

So as we know here in the US as well, if you want to create insane growth in an economy, just borrow a ton of money, print a ton of money, and throw it everywhere. You're going to get growth. It's going to be fantastic. and that's very, very funsy.

Until the bill comes due, a certain day comes when you've become over leveraged and you just can't handle it anymore and things start breaking. So this is a massive, massive problem for China a country whose biggest wealth appreciation has been in that real estate market and was largely pumped by their Easy Money policies. and even more so pumped by the fact that the CCP has essentially created this Dynamic where speculators expect them to just bail them out at any point in time. Sounds like it's the same thing we do here in the US but they're too whole other extreme extent, right? Speculators are like, okay, well I can take this risk because at the end of the day, hey, China controls the financial system.

The problem here is this has created a lot of adverse incentives and has created a lot of valuations in this real estate market that can completely implode on a dime. So when you have all the debt against that real estate, well, all of a sudden you're in a very, very big house of Cards that could come tumbling down at any point. and with all this turmoil growing in China a lot of wealthy people are moving their money out as fast as possible. Whether that's to hedge against a future Financial collapse or more CCP crackdowns on wealth or potential sanctions if China decides to mess with Taiwan Facts of the matter is that wealthy people are trying to figure out how they can get their Capital out as fast as possible and they say where they're a smoke, there must be fire, right? if tons and tons of people are taking their Capital out now, Well, there must be a reason for that sudden Exodus right? And quite frankly, China is not the easiest country to remove capital from.

Because there's a lot of capital controls, you have to figure out how to finagle your way out of China Usually by saying that you have new businesses in Singapore you have businesses in Australia You have businesses in other places that need your Capital You take it out, you start a family office there and then you say yeah, that's a new business that we're running. but a lot of countries are urging Banks not to tell China and not to report where their money is coming from because that could risk a lot of their clients capital or it could really anger China and the diplomatic relations that that country has with China The Financial Times reports Singapore has asked the world's biggest banks to avoid discussing the origins of the significant sums of money flowing into the city over the past year as wealthy Chinese funneled billions into the Asian Financial Hub. So why are China's Elite trying to get their Capital out of China Probably because they see further unraveling coming. Probably because they see more heightened tensions between China and the West Probably because they think the global economic crisis is going to get worse and they don't trust their capital in China which is of course, again, burdened with insane debt that was lent out without good risk assessment.

Or maybe it's because China's increased push towards the Marxist common Prosperity guidelines are incredibly toxic to Capital preservation. But in any case, right now we were seeing is a China that is very, very burdened by Insane levels of debt that was mostly given out unilaterally through CCP priorities. Something that could really blow up in their face at the same time that they're trying to exert more and more dominance on a global stage. We'll see what happens, but this is something that's going to be very, very fascinating to watch because how this plays out is going to dictate who the leaders are in this world.

In 10, 20, 30, 40 years from now, are we going to get the so-called New World Order Is it going to be a rebalancing act? We'll see what happens. Let us know your thoughts down below. Do you see these debt crises as big threats to China? Or do you think that they'll use it to their advantage? How do you think the West should respond to China's encroachment on a lot of these developing countries and the excessive lending that they're doing to a lot of these countries with a lot of policies that are specifically in place to rewrite some of those rules to be favorable to China. Do you think the West should be doing something like that? Many of these countries go to China for loans and not the West because the West has put up a lot of red tape.

The West has a lot more risk assessment. Banks Don't want to lend to lot of these developing countries right because of the high risk associated with that. However, if you look at U.S history after World War II Obviously we have the Marshall Plan which was a similar sort of situation that increased U.S Influence in Europe China is now playing that same game in other areas of the world and trying to build influence like we had 60, 70 80 years ago. Neither at the end of the day were ultimately paid back, but still some sort of tangible benefit there goes to the country.

So things to think about. What are your thoughts on this? Let us know down below. We love hearing from you and have a great rest of your day. we'll see in the next video.