Post by Jeeson Augustine

Is International #banks causing an invisible problem? #China is caught in a vicious cycle economists call "#involution" - a relentless, self-defeating competition where firms slash prices not to win markets, but merely to survive. #BYD, once celebrated as a green energy champion, now epitomizes this trap - cutting EV prices to the floor, bleeding margins, yet kept alive by banks unwilling to pull credit lines on a nationally strategic asset. This is the anatomy of a #zombie #firm: technically insolvent in spirit, operationally sustained by political will and financial forbearance. China's industrial overcapacity is no longer a domestic headache - it is becoming a weaponised #export. The first domino fall will be felt in #Hong #Kong, #Singapore, and #Malaysia. Hong Kong's financial arteries are deeply intertwined with mainland corporate debt; Singapore's banks hold significant exposure to Chinese real estate and trade finance; Malaysia sits downstream as a manufacturing proxy and commodity supplier to China. When Beijing's deflationary spiral deepens, these economies absorb the shockwave through suppressed export prices, shrinking trade volumes, currency pressure, and - critically - credit contagion as international banks quietly reassess their China-linked #portfolios. The real danger is the quiet complicity of global #banking. By maintaining open credit lines to Chinese overcapacity champions, international #lenders are effectively subsidising the export of deflation. German automakers, South Korean chipmakers, and Southeast Asian manufacturers are already feeling the price compression. The countries most exposed — those trading heavily with China, hosting Chinese FDI, or competing in the same export categories — are the ones who will catch the cold first. Involution, once a sociological metaphor, is fast becoming the defining #macroeconomic contagion story of 2025–2026.