China 3 "D": Debt, Deflation, Demographics

By:

Edward Veterans

On

30/10/2025

Reading time:

12 min

Summary:

1) Debt

Official Debt for China represent 88% of the GDP, compared to 121 for the US. But be careful the devil is in the details. 88% is the level contracted by the central state, but it does not take into account the private debt. This private debt is estimated to 192% of the GDP, with a total public + private debt around 300% !

2) Deflation

Chinese economy is very competitive and there are always a lot of plants, factories producing at full speed. The Communist Party gives the guidance for certain sectors, and immediately there are a lot of producers. It happened for solar panels, steel, EV, batteries, each time they are in overcapacity. The overcapacity for the Chinese economy is structural, something to have in mind. As there is too much production, prices fall, as well as profitability.

3) Demographics

A lot of analysts always mention demographics as the Achille heel for China. However we are more measured on this subject. Today Chinese population is 1,4 Bln people, same as India. It should decrease, indeed, but there are ways to compensate : the law on number of children has been changed, workforce is educated and can improve its productivity with AI & robotics.

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The Acceptance Meditation

Those clouds are really dark, aren’t they? And look at how those hills are disappearing ahead, where that suddenly bone-cold wind is coming from.

It’s OK, though. Take a deep breath – and – just – release it. Feel it travel out of your body, from your deepest place to your emptiest place. Feel the air passing, watch it go with your inner mind’s eye – until only you remain calm and still and ready for anything.

Was it Billy Graham who said, “Without dark clouds in our lives, we would never know the joy of sunshine”? Well, good for him. And didn’t he live in
North Carolina, where it’s generally pretty warm all year round – at least 20 full degrees warmer than here?

It’s raining proper hard now. But that’s OK too. Let it pass. Let it be. Allow it and accept it. You can always choose to do that. After all, discomfort always passes in time. Misery is just a matter of attitude. You can’t control what happens to you. You can only control your response to it. And maybe your response right now is, “I shouldn’t have got my waterproofs from that metal bin in Primark.”

You’ll know next time. Still, today we are complaining about the food on our plate, not that in the fridge.
You know you’ve got at least another six hours of walking ahead of you, and this rain isn’t going anywhere. And you can feel the skin of your inner thighs starting to squeak and chafe with every step. Where did you leave that little tub of Vaseline? Take another long, deep breath in through the nose.
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The air smells so fresh, doesn’t it? Like those times in your life when you remember it rained for days and you wished you’d been born literally anywhere else in the world. But take the air in, take it deep, like something between a gift and a curse. Take a big gulp. The rain doesn’t have it in for you. This isn’t personal. The BBC Weather app told you this very morning it would be lovely all day; hence you decided to keep walking after lunch. It isn’t the rain's fault; it’s the BBC’s.

Keep telling yourself that. Yeah. And as you do so, let that deliciously crisp, invigorating, cold, wet, vicious, hateful air into your lungs – and then scream every single terrible word you know. Keep doing that. Keep that virtuous cycle going. It won’t make you feel calmer, but it might warm you up a bit.

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