Four Reasons China is Betting On Europe (And Will Lose)

Tyler Durden

But… if Europe collapses:

1) China loses its largest export market (Chinese economy breaks down)

2) China unemployment skyrockets along with civil unrest

3) The US Dollar rallies evaporating profit margins at Chinese export companies (Yuan is pegged to the US Dollar and so will strengthen) which results in even more unemployment

4) China’s $700 billion or so in Euro-based assets implodes
China has begun stepping in to buy up European sovereign bonds because allowing a default in Europe will trigger a global systemic collapse that will destroy China’s economy.

The EU accounts for roughly $400 billion of China’s exports, making it China’s single largest export market. So if Europe collapses, China’s economy takes a BIG hit. Remember, China is a centrally controlled economy, NOT a dynamic open market economy.

Put another way, the entire China “economic miracle