Transcription
Hi guys. Uh, welcome back to my seat on these plane. 35,000 miles in the air or 35,000 ft in the air. Show you the window if I can. You can see some cloud.
So, I'm using my um laptop for this one. I used the phone previously. Can you hear me? Okay. So, I've linked up my mic, which is here. Um, I just wanted to make sure it's working. Somebody send me a message or or hit the thumbs up if you can hear me. Okay. Obviously, if you can't hear me, don't hit the thumbs up because you won't be able to hear me.
Um, but in this episode, there we go. What's somebody's name? People are just saying hi. Um, on my desktop, I can actually see things coming through. So, um, just had something with a crown number two on there. So, um I don't know what that means, but I think people are giving me uh live chats. Can you hear me? Okay. Can somebody just tell me that you can hear me? Just type a message, somebody. And then and then we'll be off and running. We got 12 thumbs up. Yeah. Good. You can hear me. Great. Okay.
Okay, so in this video I want to talk about what's going on in China because obviously we've been following China for the past five years almost that I've been doing this and there's been some really interesting data coming out on China today. So they've announced their 2025 outcome and it's basically bang on track at 5% growth GDP which is the target every single year 5% growth gets a little bit boring just growing 5% every year particularly when there's a big question mark as to whether or not it's actually achieving that 5% growth or if there's any profit in it.
I posted a video recently where we did an indepth dive into how you can achieve your topline growth and actually damage your bottom line. Because if you just continually cut your prices to make sales, if you're just offering the cheapest in the market all of the time, then there comes a point when you're not making any profit. And then if you cut your prices beyond that point, then you're making losses. And that is exactly what's happening with more than 50% of the companies in China at the moment. And that's not a sustainable business model because if you're constantly making losses, you're going to go bankrupt. You're going to become illquid. So it's one thing saying we've hit 5% growth. It's another thing saying has anybody made any profit? Have we got any cash to show for it? And I think that's the problem. So don't read don't believe everything you read in the press when you see that China hits its 5% GDP. Great. What does that actually mean in terms of cash flow, profitability, reinvestment into the economy? There are some major problems.
But interestingly, when you dig down into that 5% number for 2025, if you look at the final quarter, they only made 4.5% growth in Q4. So if you're talking about four quarters and you've got 5% and 4.5% in the final quarter, that means that there was a higher waiting in the beginning half of the year. So we've got this sort of downward momentum at the moment. So if that continues, then it would be very difficult for China to hit 5% for 2026, which is what the new target is.
But there are some other major problems that are starting to emerge which um have sort of masked the 5% target. I think um the first one I'd like to talk about is the property market which if you've been following me and the channel you'll know that that's been uh a big topic for China over the past five years. Since 2021 when the three red lines were introduced property has been on its knees to say the least in China. That was when all of the big property developers lost access to the debt markets and so they had to basically stop building and a lot of them have gone bankrupt. And we just had the figures out for the property market which shows that prices fell again in December and it was the fastest rate of price fall for five months. They're down 2.7% year on year. And as I talked about in a recent video, this is the third consecutive year we've seen price falls. And that becomes cumulative because if your property is worth $100,000 and it falls by 10% in the first year, then it' be worth $90,000 at the end of year, the first year. If it falls another 10%, it would then be worth 81,000. If it falls another 10%, it would then be worth 73,000. So it's not just looking at one year, you have to look at the year on year-on-year cut.
So property prices are down. property investment. So the money going in to the economy to cover property, which is the only way that China is going to fix the problem, that's down by 17.2% year on year. So that tells us that the situation is getting worse. It's not getting better. They haven't hit the bottom yet. Still got some way to go. And as we've discussed, the problem that we've got is that a lot of people in China put their life savings into property. A lot of people bought multiple properties at the height of the boom. They were buying all these unbuilt properties. Many of them have never been built. A lot of people have lost all of their life savings or basically paying mortgages on properties that don't exist. None of that is going to help resurrect the property sector. And the property sector over the past 20 years made up around about 25% of GDP. So China's lost that big chunk of GDP. Where's it going to get it back from? Well, it's not going to get it back from the companies at the moment because they've seen a 20% fall in their exports to the USA in 2025 as a result of the tariffs. The tariffs increased the cost of all the Chinese goods. Therefore, demand went down. They're now losing trade. They've gone to Europe and Africa to try to get those products elsewhere, but they're having to cut the prices to do so. So, they're making losses. So, business isn't filling the gap.
But one of the biggest problems that Russia that China is facing at the moment is what's going on with the population. Hold on. I'm just having a look at the messages that are coming here. Somebody's put me frustrated. Everything around my house says made in China and not the USA. That's from Gary. Okay.
Um, back to the population. So, China used to be the biggest population in the world, 1.4 billion. Recently overtaken by India. Now, um, I know there's a lot of people in the messages have been typing now saying it's not 1.4 billion, it's 800,000. I'm not getting into that debate. A lot of people seem to think it's a myth that China has 1.4 billion. Anyway, I'm just going with the official statistics. However, the 1.4 4 billion is on its way down. We've just seen the the population data for 2025 and it's the fourth consecutive year of population decline and there are some really worrying stats here. So the the number of births were 7.9 million in the year but the number of deaths were 11.3. The birth rate is at its lowest rate since well it's at the birth rate itself which is 5.6 Six births per 100 1,000 people is the lowest in Chinese history. The number of births 7.9 million is the lowest since 1738. Uh that was when the population was 150 million. So basically it's 10 times more now. So those numbers are really worrying. The death rate is up at a uh the highest level since 1968 to eight deaths per 1,000.
So the population is declining but in addition to that it's also aging. So now 20 at the moment there are 23% of the population are over 60. And the reason why that's important is because up until recently the retirement age the official retirement age in China was 60. So once you hit 60 that was it you were retired. So it's got a lot of people who are not working and it's forecast that by 2035 so in nine years time there will be 400 million people retired in China. Now when you do the calculation 400 million if you've got a population of 1.4 billion that's a big chunk of people who the state is basically needing to support on the you know pensions and social security and healthcare wise. So, it's not going to get any better because they've got a lack of people coming through because of the one child policy that was in place for a long time. A lot of people have only got one child, but it's changed the mentality in China. A lot of people are now interested in living their own life, having more fun. The birth the marriage rate is also down hugely and marriage rate and birth rate are intrinsically linked. So, this isn't going to turn the corner anytime soon. We're not going to see a whole wave of people entering the jobs market in China to make up the difference with all of the problems because one of the issues that it's facing right now is the fact that domestic demand has been in the doldrums for a long time. We've seen deflation over the past 12 months. It's starting to recover. So prices are going up, but not for companies. We've seen the the purchasing price index. So the factory gate prices have been going down for more than three years. So, we've got some really big fundamental problems happening in China right this moment and I can't see how they're going to fix it.
It's one thing saying we're going to hit GDP of 5% growth every single year. Fine. But if you're not making profit and you're not actually growing your sales overseas through traditional methods of improving quality and, you know, gaining a reputation. all you're doing is cutting the price to the lowest level to get more sales and that's just going to kill your profits and that's what's happening in China and this is the second biggest economy in the world. So, it's a real big problem for everybody and I don't think it's going to turn around anytime soon.
But, I wanted to bring you up to date on the latest information. Uh, and also just to do this live stream, I just thought it was an interesting experiment. I've got some got loads of quotes up the side here. So, um, yeah, people hit the like button. Somebody's just said, Aaron has just said. So, we're up to I'm on 52 likes at the moment. The likes do actually help with the algorithm. So, if you're watching right this second, that thumbs up sign that's somewhere on the screen. If you could just bop that now, then um hopefully we can get the likes up to 100, let's say. So, 53 at the moment. It says that there's 181 people watching. So, if half the people do it, then we'll get to 100 pretty quickly. and then uh hopefully, you know, it'll gain a bit of momentum and people will enjoy. But I I like this idea of live streams. Um I mentioned in a recent video that I'm looking to change my working practices to make things more fun because you know it can be a bit of a grind on YouTube and um if you're just making videos and uploading them, it's very static. You don't get any interaction. So it's quite nice to see people online. Right now there's some hearts going up the side. Um we're up to 90 likes now, 93. So that's great. Um and it's just Yeah, somebody's just mentioned in the quotes that um China did make a trade deal with Canada recently and that that has been right that um partly as a result I think of what's going on in the US and tariffs and all the issues. We're over 100 now. Thank you very much to everybody that's hit that like button.
Um, yeah with the tariffs and the the relationship between China um and Canada is sort of improving because of the USA's relationship with Canada is you know not going in exactly the right direction from Canadian perspective. So I think um Canada have decided to reach out and there was a deal where there's going to be some canola going from Canada and certain I think electric car tariffs have been reduced significantly to around about 6% which the US has been very dismissive of. They've sort of said that was a big mistake by the Canadian car industry. Only time will tell. But it shows everybody that although the US market is important, it's not the only market in the world. So Canada has reached out to China. It's done this deal. I'm sure there'll be more announcements from that agreement at some point in the near future. But you know, Canada has got some of the largest oil reserves in the world. China needs to find somebody else to buy oil from because it's stopping buying from Russia. It's stopping buying from Venezuela because that oil is going to the US. So I think it probably will buy more oil from Canada in the near future. So, it's probably a good idea from Canada's point of view to get preferential trade terms, get some guaranteed sales of that oil, but still won't fix the problems in the Chinese economy.
So, um, just wanted to bring you up to speed on this. Here I am in my pod. Thank you very much for watching and I will see you again on the next live stream. If you want, uh, if you got any suggestions for uh, ideas, just send me a message, see what you think. And, um, I will see you again soon. But, thank you very much. You're up to 109 likes, which is great. And uh I will see you on the next one. Cheers.