Name: China's Economy Is Collapsing, And Its Far Worse Than You Expect
Uploaded: 2025-08-11T18:16:03.000Z
Duration: 15 min
Description: Thousands of YouTube videos with English-Chinese subtitles! Now you can learn to understand native speakers, expand your vocabulary, and improve your pronunciation...

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The Chinese economy is on the brink of catastrophe and Donald Trump just made it much worse.

The Chinese economy started to slow down since 2020 and they cannot possibly afford a trade war with the most powerful economy in the world and Donald Trump knows that.

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He started the trade war with a baseline of 10 percent tariff and then increased it by another 10 percent and finally added an additional 34 percent.

Beijing, which is the second most powerful economy in the world, cannot possibly just watch how it's getting humiliated, so they responded to Trump with a 34 percent tariff.

Donald Trump took that response and added an additional 50 percent tariff on China.

So that raises a total amount of tariffs on China to 104 percent.

So your next iPhone, which is most likely going to be produced in China, is going to double in prices within the next couple of weeks, probably the next couple of months.

And a lot of things that you buy in the US are being manufactured in China.

The moment they enter the United States, the producer or the manufacturer or the importer of that product will have to pay 104 percent in tariff to the US government and that cost will be added to the consumers, which means that your next iPhone is going to cost at least 1800 dollars, if not 2000 dollars.

If China responds with the exact same measures and increases the tariffs on the United States to 104 percent, Donald Trump can use that as an excuse to further increase the tariffs on China to 200 percent, 300 percent.

And this can turn into an infinite loop where each side increases the tariff on the other side where tariffs are going to rise to 1000 percent, 2000 percent.

So your next iPhone isn't going to cost 2000 dollars but rather 10000 dollars.

Maybe that is the response that Donald Trump wants to achieve so that Apple is going to find out that manufacturing iPhones in the US and selling them for 3000 dollars is much much profitable than getting them from China to the US and pay 1000 percent in tariffs.

So here in this video, let's find out how Donald Trump is about to destroy the Chinese economy and does China stands a chance to survive this catastrophe.

Give this video a thumbs up and let's get right into it.

China is an export-driven economy, which means that it exports much more than it imports and you can clearly see that in the data.

It exports around 3.5 trillion dollars worth of goods and it imports 2.7 trillion dollars worth of goods.

And that leaves China with around 900 or 857 billion dollars worth of extra goods that it actually produced.

And that means that over time, it can accumulate that money and invest it everywhere.

It can invest it in US government bonds, they can invest it in the European countries or maybe even within the entire China.

And that resulted in a massive economic growth over the last 30 to 40 years.

It went from one of the poorest countries back in 90s, 80s and 90s to the second world's largest economy and right now is competing with the United States.

And that is all because it's an export-driven economy.

It builds everything, it manufactures everything, everything you want to be manufactured can easily be done in China.

Even the most powerful company in the US is manufactures all of its iPhones in China.

It tried to diversify and go to Vietnam, India, but that is going to take years if not decades and it doesn't mean that they can do it as cost-effectively as they can do it in China.

If you actually make much more money and you spend much less than you are actually earning, you will be left with an extra income that you can invest.

Let's say you are making a million dollars but you are spending 500 thousand dollars.

Every single year you are saving 500 thousand dollars and over the course of 20 years, if you save and invest every single penny, you will be left with extra few million dollars and at the end of the tunnel, your net worth is going to exponentially grow by itself even if you are not going to invest anything.

And that's what the United States want to fundamentally change.

If we want to destroy China's strategy, then we need weak US dollar and a strong yuan.

Because the Chinese currency is much weaker than the dollar, the Chinese exports are going to be much more cheaper than the US exports.

And that means that the US companies or the US products cannot possibly compete with Chinese products.

US costs cannot compete with Chinese costs.

And that's why over the last 20 to 30 years, every single time as the Chinese yuan gets stronger and stronger, the Chinese communist party purposely manipulated the currency in order to make sure that the currency stays weak in order to make sure that the exports keep boosting.

Yes, that keeps your population slightly more poorer because imports are going to be much more expensive.

But the goal of the country, but the goal of China was in order to keep growing its economy because of its exports.

And those exports don't simply just go to the United States, but the entire world, European Union, Latin America, Africa, Asian countries.

Currencies are being traded in the market just like any other commodity.

The stronger is demand for a particular currency, the stronger it gets.

The weaker is demand for a particular currency, the weaker it gets.

On the other side, you have the supply of that currency and the supply of that currency is mainly made by the central bank of that particular country.

And as more people around the world would want to buy your products and goods and services, the demand for your product, for your currency is going to increase, which is going to make it stronger.

But a strong currency will make your products much more expensive.

So you can artificially manipulate your currency in such a way where you actually make and keep your currency weaker in relation to other countries.

And that means that your exports will still remain price competitive and your economy keeps growing as the demand for your goods and services will stay high because they are much more cheaper than your competitors.

And the United States cannot do that because the United States works in a free market, which means that the value of the dollar is going to be determined by the market and not by the US government.

And that is the goal of this trade war, to make sure that China keeps buying from the US as much as the US buying from China.

And secondly, prevent China from manipulating its currency.

And the Chinese, as Chinese yuan gets stronger, keep it that way so that American products are going to be much more price competitive compared to Chinese products.

But this is not the first time that the United States is following such a strategy.

After world war 2, the US and Japan became very close allies and they reduced all tariffs.

But because Japan was a much poorer country compared to the United States, Japan started massively producing everything and selling it in the United States.

And as a result of that, the Japanese economy started growing tremendously and by 1980s or late 1980s, the gap between the US and Japan started to shrink and people started thinking that Japan is going to overtake the United States as the world's largest economy.

How do you think the United States was filled with Japanese cars?

Nissan, Toyota, Mitsubishi, Suzuki and a long list of other Japanese car manufacturers literally flooded the entire United States.

And American car companies couldn't possibly compete with Japanese because Japanese cars were simply much more cheaper.

The same thing goes with electronics, Sony, Toshiba, Canon, Casio flooded the American consumer markets and US companies started going out of business.

Ronald Reagan, who was the president of the United States back in the days, wanted to fix the problem by weakening the dollar and strengthening foreign currencies, especially the Japanese Yuan.

And that means that everybody suddenly is going to massively sell the US dollars, the local currencies.

And as a result of that, the dollar was devalued by 51% or the Japanese Yuan got stronger by 51%.

Suddenly, the Japanese products that used to come from Japan into the US became 50% more expensive.

And that meant that American consumers stopped buying expensive Japanese products and shifted and started buying cheaper American alternatives.

And that boosted American manufacturing, that boosted American companies.

On the other side, it drove out of business a lot of Japanese companies.

Prior to 1985, when that agreement took place, the Japanese economy grew so fast that it almost overtook the US economy.

When everybody starts making a lot of money, they start buying real estate.

And the Japanese real estate market turned into a bubble.

The imperial palace in Tokyo, which is literally a tiny piece of land, got much more expensive than the entire land that was in the entire California, which is the wealthiest state in the entire United States.

And since Japanese products got much more expensive in the US and they started losing market share, prices started to go down.

And that real estate bubble burst and it collapsed the entire economy.

And since 1995, when the bubble burst, the Japanese economy hasn't recovered yet.

Their GDP back in 1996 was 5.2 trillion dollars, today it's 4.2 trillion dollars.

First they called it the lost decade, but it turned into the lost 3 decades.

So if China agrees to devalue its currency as the United States wants it, it could turn into a Japan 2.0 where the Chinese economy is going to stagnate.

Because the deflationary mindset is much more dangerous than the inflationary mindset.

So the question is that, will China end up like Japan?

Today Chinese companies have flooded the entire world.

In fact, most of Chinese car companies are not allowed to sell their cars in the United States and they have already a 100% tariff way before 2020 because they manufacture their cars at a fraction of the price that the US cars are manufacturing.

And if all these tariffs will be eliminated, the entire US market will be flooded with cheap electrical car companies and that will take Tesla out of business, that will drive Chrysler out of business, that will drive Chevy out of business.

The GDP growth of the Chinese economy has already been going down.

The only year that was great for China recently was 2020 and that's 2021 I would say and that's because it recovered from covid.

But since then, the expectation went anything from 5% and is going down to around 3%.

But with this trade war, the GDP growth could actually be much lower than that, they can go to 2%, 1% or maybe 0% and if the bubble bursts, it could actually turn the entire situation into a deflationary mindset.

And what is more astonishing is that, like back in the days when Japan turned into a real estate bubble, China has also a real estate bubble that is about to burst and it could be much worse than the Japanese real estate bubble.

China right now is sitting on anything between 65 to 80 million empty houses all across China.

So if the Chinese economy starts to massively slow down, that can push more people to sell their houses.

House prices have already been going down for the last couple of years and if they go down much faster than that, and the only reason they would go that much is because people will start massively selling their houses.

But still, the economy is still stable to a certain extent.

But if the Chinese yuan is going to be much more overvalued compared to the dollar and the Chinese exports start to slow down and that will drive the economy into an economic crisis, that could push people to start massively selling their houses and that could turn into Japan 2.0.

That's probably the most dangerous thing that could happen to the Chinese economy because if it turns into Japan 2.0, we are looking into the next 10, 20, maybe 30 years of stagnation.

But the worst case scenario is if the United States and the European Union are going to come to an agreement and establish a free trade agreement where there are not going to be any kind of tariffs between the European Union and the United States.

That is a real possibility because before Trump came into the office, there were a lot of tariffs that the European Union had.

And if Trump can negotiate something with the EU where there are zero tariffs and both of these countries would put tariffs into China, that could eliminate the entire Chinese market.

And that's because the United States on one side and the entire European Union represents something around 30 or maybe more than that of the Chinese exports.

There is nobody on earth that can replace the United States and the European Union for China.

Yes, China trades with the rest of Asia, China trades with Africa, Middle East and Latin America but the United States is first of all the world's largest consumer market and the European Union is the second world's largest consumer market.

So these are the two markets where you sell most of your products.

If you lose them, you are suddenly losing hundreds of billions, probably almost a trillion dollars worth of trade and you will no longer run a trade surplus just like you did over the last 40 years and you will not have all of that extra money in order to invest in yourself and invest in new projects that will actually get you such a high interest rate.