France Blasts China’s Export Economy, West ZERO Leverage, Japan Triggers U.S. Bond Crash

France Blasts China’s Export Economy, West ZERO Leverage, Japan Triggers U.S. Bond Crash

So the economic war has entered the twilight zone. Normally I would be saying that is the US making some outlandish move. After all the Americans still has some leverage left in a global game. They still have the reserve currency. They also have a gigantic consumer market. So you can still try to apply some pressure on the Chinese. But Europe virtually has nothing at all. Even JP Morgan is saying Europe is facing a real problem. The big bureaucracy there is driving business, investment and innovation out. In other words, Brussels is the problem here. Europe is facing too many headwinds. You have a tax sector that is severely outdated. Now, even in AI, the EU is virtually out of the game. Name me one EU AI company. Now, I bet you can’t. Amongst the deep seas in China and Czech GBTS in the US, Europe is nowhere to be found. We must not forget about the incredible pledge they have made to Ukraine as well. This is outside of trying to use the Russian reserves. The EU has agreed to commit up to 54 billion for Ukraine’s rebuilding until 2027. Where are they going to find the money? In 2025, Europe’s GDP will only grow by 1.3%. That is absolutely low compared to the global average. The US is at 2% while China is at 5%. Germany, France, and Italy will grow by an average of 0.5% only this year. And just 1% for the next 2 years. If they can’t grow fast enough, the US and China will leave them behind in the dust. Now, we have said many times here, Europe has a few choices to save their economy. Now, the most obvious is to frontr run the US and make a deal with Russia to get back their access to cheap Russian energy. Not just energy, they will need a whole gamut of cheap commodities. If not, making everything from EVs to airplanes is going to get very, very expensive. In the meantime, they will need to fill that shortfall with Chinese goods. But Macron just lost it and he’s lashing out against China. Here’s the bizarre warning that the EU may be forced to take strong measures against China. This could include broad-based tariffs. Now, Macron realizes the dependence on Chinese exports has gone nuclear. The trade deficit is simply incredible, which sounds the alarm for EU manufacturing. The industrialization is just getting worse. He also wants the ECB to tweak their monetary policy for growth. In other words, Macron wants cheap money to flood Europe’s economy. It’s pretty obvious why the EU was trying their best to use the Russian reserves. The economy is getting smashed and EU exports are getting less and less competitive by the week. But is it really China’s fault? Not really. The Chinese playbook of better industries and cheaper exports has been around for decades. It’s nothing new. The real issue is US tariffs that make the energy crisis for Europe even worse. Now, since April, EU exports have totally collapsed. It went from an average growth of 5% a month to a contraction of 1% a month. The deficit across the board is growing. In August alone, the EU had a trade deficit of nearly€6 billion in goods. They bought much more imports than what they exported out. This is a serious problem and you can’t blame China alone. What Macron really wants is for Beijing to invest more in the country. EU exports including France can’t be U-turned just like that. And if China itself can produce more effective products that are cheaper, why even buy from the EU? But he also fails to understand the problems facing Europe now that Experia seizure has spooked Beijing out. What if more Chinese companies get taken over with the flimsy excuse of national security? We aren’t even factoring in higher labor costs and higher energy prices. The risk of building factories in Europe is not small. Companies themselves could get sanctioned. Now, recent Chinese projects reflect that. The biggest investments over the last three years were done in Eastern Europe, namely Hungary, CL, Sanoda, BYD and Eve Energy. They have established automotive plants there. A big reason is Hungary still getting cheap energy from Russia, so input costs are lower. A bigger reason is Hungary’s political stance is more free trade, more friendly to China, and they do less block politics. It’s not that hard to understand. The expense of moving production overseas is immense and France has not switched China’s concerns. I find it funny when we see Macron running to his fans in China. Now, it’s heartwarming and it’s really hilarious. I’ve never seen him so happy before. Now, that’s great. That’s awesome. First time Macron is running towards happiness. But trying to threaten Chinese exports just won’t work. Europe needs to escape block politics and break away from group T in Brussels. The debacle with the frozen Russian assets is another reminder of this risk. And until that happens, Chinese FDI won’t flood into France and greater Europe. It will go into countries that think independently. Now, since the Russia Ukraine war, Hungary’s share of Chinese investments have gone from almost nothing to over 30% of the entire Europe. And this pattern simply won’t stop. There’s no way to arm twist China to lower the deficit by demanding more investment. You need to create the conditions for it to happen. Europe has to make investing in the region more attractive again. Sounds simple, but it’s not going to be easy. The West simply has no leverage left on China. Zero. The export machine is getting a tailwind from Trump’s terrorists. Now, as mentioned before, when the trade war began, countries only had one option left. To climb over Trump’s tariff walls, they need to lower the cost of inputs. And to bring down local inflation, they need to import cheaper goods as well. And this benefits China’s export economy. For Beijing, trade with the US has truly become secondary. And a big shout out to our sponsor today, Indigo Precious Metals. When it comes to buying gold and silver, I trust Indigo precious metals in Singapore. They have made investing in precious metals safe, fast, easy, and simple for both small and large scale buying. I’ve been stacking gold for over a decade now, and I’ve learned two things when buying. You want to buy authentic gold bullion, and you want to buy it at the lowest premium possible to stretch your dollars even further. And I’m glad to say I found both of this at Indigo Precious Metals. Indigo Precious Metals is a leading retailer in Singapore. They specialize in physical gold, silver, and platinum. They are my one-stop shop when it comes to buying bullion. Their prices are sharp, and they have the best brands on sale, and I can test the gold on the spot. So, if you’re looking to make your first gold purchase, Indigo Precious Metals is the best place to start. Whether it’s 1 ounce or 1 kilo, this is the reputable dealer you are looking for. So take action today. Click on the link below and enjoy a discount on your first purchase with the code sha fu. Start your gold stacking journey today. Now, China’s exports grew by nearly 6% in November. Yes, shipments to the US fell by 29%, but it’s inconsequential in the grand scheme of things. The world is still actively buying Chinese goods for the two reasons we talk about. The longer this trade war continues, the West, especially Europe, is going to lose more leverage. They’ll be forced to either buy more Chinese goods to survive or their companies will have to move to the US to survive. It’s a bit for survival. Meanwhile, China is starting to accumulate a crazy amount of wealth in the world. This isn’t investment money that can come in today and just disappear tomorrow. It’s pure earnings from trade. In the first 11 months of the year, China’s trade surplus hit an incredible $1.08 trillion. Is very likely China will end the year with 1.2 trillion in surplus. Once we get December’s numbers, Chinese companies are earning more, which means more firepower to innovate and develop better products. The Chinese government, the central government also gets more tax revenue. China is sitting on a boatload of money they can freely deploy. That means more money to chips and AI. More money will flow into bricks projects and of course more capital will hit towards buying gold. But the export machine of China can’t be stopped. US tariffs are ineffective because of Chinese supply chains and their strategy of selling to developing countries. Exports to the US fell by almost 30%. But Chinese exporters sold 10% more electronics and machinery products to the world. Exports to Africa surged by 28%. Sales to Southeast Asia also rose by 8.4%. Now the trend goes beyond just exports. China is starting to ramp up imports from the world as well. Imports grew by 1% in October and increase by 1.9% in November. And this introduces a big conundrum for the west. Yes, China sells a lot of stuff to the G7, but their consumer base is growing so fast that their own imports are rising too. And if we piss off China now, what will happen if Beijing counter terrorists? If a full clamdown happens, local industries will find a way to replace Western goods with Chinese variants. They won’t go without. There will be cheaper and probably more effective Chinese alternatives. Now, China’s pilot bureau has made boosting domestic demand a top goal in 2026, which means Beijing, they’re going to fire the stimulus bazooka. Everyone in the world is inflating away. Now, when China stimulates, this will increase domestic spending, which insulates them for further tariff threats. At the same time, we can expect a spill over into rising imports. So countries like France thinking of punishing the Chinese economy better think twice. And a prime example of this is Japan. Their economy is collapsing and they sped with China is highly unnecessary. Like Europe, Japan is sandwiched between brutal US terrorists, the Chinese industrial machine, and expensive energy imports. As a result, the crash is even worse than we all thought. Q3’s GDP has collapsed by a whopping 2.3%. It’s worse than the first estimates of 1.8%. Chances are, without a stimulus from the government, Q4 could turn negative. And should that happen, Japan would enter an official recession. That’s why tensions with China today are highly unnecessary. Over a quarter of tourist spending in Japan comes from Chinese tourists, probably more if you throw in those from Hong Kong. Now this fall in GDP isn’t just a technical number. There will be big repercussions for this. It gives the prime minister a cut blunch to steamroll ahead with her stimulus package. And understand how big this will be. It’s an 18 trillion yen package that’s worth almost 120 billion US worth. There will be direct subsidies, tax cuts and which support measures to directly inject money into the economy and this puts Japan in a big quandry. This also places the US on the brink of a bond crisis as well. Bond yields in Japan are flying up because of the stimulus. The 2-year bond yield has exceeded the 20708 levels hitting over 1% which is insane. Across the board, Japanese yields are going up because of the incoming stimulus. Meanwhile, the yen is still holding ground against the dollar. Why? Because the Bank of Japan has signaled rate hikes are coming really soon as well. Local and foreign demand for Japanese bonds could actually increase. Now, of course, this isn’t good for Japan’s debt problem. How could it be? But that’s another problem for another day. Tokyo has chosen to destroy the future to save the economy here and now. The immediate danger is actually to the US bond market. Japanese investors, they have trillions in overseas assets that includes US treasuries. If bond yields in Japan keeps rising and the yen stays strong or even appreciates, it’s going to be game over. Now, across the board, yields in the US are rising. This is despite mumblings of the Fed cutting rates in December. Once again, long-term rates are not dependent on the fed cards. They are function of supply and demand. Scott Bassin keeps increasing the supply. Meanwhile, Japan’s pivot is threatening to collapse global demand for US debt. The 30-year yield, for example, is about to crack 5%. The US 10-year yield is about to crack 4.2%, which was the previous ceiling in September. A new US bond crisis is developing courtesy of Japan. How is the United States going to rebuild supply chains or fund the AI race sustainably? As bond yields go up, boring cross across the country, they’re going to reach terribly high levels. It’s not just big tech building data centers that at risk. Main Street is also going to feel the squeeze of the coming bond crisis. The US is caught between the rock and a hard place to bring yields down. Besson can always issue less debt. But if it does, government spending will collapse. That’s 35 to 40% of US GDP dropping. We’ll probably have an instant recession just like that. We are now at the inflate or collapse part of the story. There’s no retreat, guys. The boats have been burnt. Ladies and gents, more money is needed to keep the shell game going. But let me know what you think. Will China really invest more in France? And will Japan trigger a new US bond crisis? Let me know in the comments below. Stay safe. Be sure to smash the like button and subscribe as we navigate through this crazy times.

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In a bizzare twist, France is now warning China’s economy about their trade surplus. However, the West has totally lost the plot. China’s trade surplus shows that the trade war has collapsed. Meanwhile, Japan’s crash has confirmed the unthinkable for US bonds.

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