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Trinh

@Trinhnomics

Sep 26, 2019 • 25 tweets • 18 min read • Read on X

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The double Ds - demographic & debt - & how that leads to the triple Ds - DEFLATION.

Ready?

#demographics World population growth rates are expected to slow, w/ contraction in many places (think Europe, East Asia - Japan, China, South Korea, etc).

We will grow at the slowest pace than anytime since 1950. Growth rate peaked in 1965-1970 👈🏻

#demographics Breaking this down into regions - very clear that Asian population peaking & will fall.

Look at Sub-Saharan Africa. Note that this is a projection & we shouldn't take anything beyond 2050 too seriously. The UN revises this very often but still useful for trends.

#demographics Let's look at contribution to population growth by country. Ready?

#1 India 🇮🇳
#2 Nigeria 🇳🇬
#3 Pakistan 🇵🇰
#4 Congo 🇨🇬
#5 Ethiopia 🇪🇹
#6 Tanzania 🇹🇿
#7 Indonesia 🇮🇩
#8 Egypt 🇪🇬
#10 USA 🇺🇸

#demographics Most populous country by rankings from 1999 to 2050 (2100 is a bit far away here). By 2050:

#1 India 🇮🇳
#2 China 🇨🇳
#3 Nigeria 🇳🇬
#4 USA 🇺🇸

China population expected to decline while US still increases. Indonesia drops out of fourth place 😱

#demographics Countries where population will DECLINE by at least 1% b/n 2019 & 2050. Ready?

>-20% decline is full of European countries
>-15% is Japan 🇯🇵 - Japanese people becoming rare
>-5% Russia, Taiwan, Thailand - also becoming rarer
>-2% China 🇨🇳 👈🏻

USA not there !

#demographics This is the mother of all charts b/c economists care about working age population to see if the change of labor will be helpful or a drag to growth. In East Asia, that will FALL SHARPLY.

In South Asia, that will RISE. A complete juxtaposition.

#demographics Once upon a time in 1990, the world was very youthful. Not too many >65-year old around (life expectancy lower). Only the UK & Nordic countries had >15% of population >65.

Today, everyone has aged & made fewer babies & so silvering. By 2050, on Africa is young 👇🏻🌍

#demographics We are not replacing ourselves fast enough in Asia (not South Asia however) & Europe. Why? Not having enough babies. Speaking of which, I was obsessed about Archie the royal baby last night - only 1 though, need 1 more to replace both parents.

Birth below 2 👇🏻👇🏻👇🏻

#demographics We are living longer (80s👵🏻🥳) & expected to live longer - so treat your body well as u have to see it for a while. Anyway, not good news if u work for a pension fund or social security office. Haha.

Oh wells. Long silvering stocks?🤷🏻‍♀️

#demographics People voting with their feet? Net international migration during 2010 to 2020.

Look at the USA 🇺🇸 - off the chart!!! A lot of net + migration (I moved to HK in 2011 so -1). Germany big too.

Who sees net outflows? India & China. Also Venezuela. Biggest is Syria!

#demographics This chart is just so heart-breaking for Russia & Italy & good for the USA & the Americas in general & Australia too!

Okay, so if u got net +inflows of people & net +natural increase (births>deaths) = HOT PINK (e.g., 🇺🇸🦘🇦🇺)

If deaths>births and net outflow = BLUE

@BIS_org

All about #demographics 👇🏻👇🏻👇🏻 - they got statistics too on urbanization etc. Free to download. Have fun!

population.un.org/wpp/Publicatio…

Okay, #debt - the fun stuff! This is the @BIS_org turf. The quarterly bulletin! @HyunSongShin - my fav economist 🤓

bis.org/publ/qtrpdf/r_…

@BIS_org

@BIS_org @HyunSongShin #debt We know that debt is not the issue b/c that is asset on the other side of the balance sheet.

But debt can be debilitating if income can't grow faster than the debt. Economists look at debt as a percentage share of income. At the macro level, % of GDP

Private debt % GDP👇🏻

@BIS_org

@BIS_org @HyunSongShin Let's step back & think about this for a second for those not in finance. Say your annual income = 100. But u don't want to stay at 100, u want to grow to say 200 in 10yrs & so u borrow $ & hopefully invest to upskill & not consume &that ur new skills gets u to say 200 salary. OK

@BIS_org

@BIS_org @HyunSongShin When u take on debt, u make 2 assumptions: a) the investment will payoff in making you more productive (rise in income); b) interest expense + payment sustainable.

So u have a problem if: a) income declines; b) interest expenses rise; c) debt too high & principal payment rise👈🏻

@BIS_org

@BIS_org @HyunSongShin Let's look at the situation & assume that all these economies make 100 per year. In the Euro area, private debt is ~160; Off the chart in Sweden at 240.

In EM Asia, China private sector debt is 210 for 100 income, Korea ~150, Malaysia >120, Thailand ~120

India & Indonesia low

@BIS_org

@BIS_org @HyunSongShin This is what we call the STOCK of private sector debt. When you have a lot of debt & the debt is greater than your current income, 2 other elements are important:

Time horizon to repay the debt & interest expense on the debt (how fast it compounds relative to ur income) 👈🏻👈🏻👈🏻

@BIS_org

@BIS_org @HyunSongShin If the term of debt is SHORT-TERM, u're in a pretty hurry to pay it back, which is basically a lot of China's private sector debt. So u're constantly needing to roll over this debt as it EXCEEDS income.

When this happens, if ur income growth is weakening, u'd want RATES TO FALL

@BIS_org

@BIS_org @HyunSongShin Ur risk appetite to take on debt's contingent upon expectation of higher return or paying this back won't destroy ur future well being (economists call this smoothing consumption as u're rational). If profits fall, rates sticky, expectations of future worse, have a flow issue too

@BIS_org

@BIS_org @HyunSongShin This goes back to @michaelxpettis tweet yesterday on it is not a supply but a demand issue in China. I think it is both. When a system is too leveraged, it only make sense to increase risk if the reward of that risk is big enough as debt payment burden high already.

Debt 👇🏻

@BIS_org

@BIS_org @HyunSongShin @michaelxpettis What's going on with growth? Globally, in places where demographic challenges are massive (Europe, Japan, Korea, China) & debt is high (same group), there is a growth problem. This is esp an issue if a country like the US is less willing than before to be consumer of last resort.

@BIS_org

@BIS_org @HyunSongShin @michaelxpettis So demographic (adverse transition) + debt (debt as a share of GDP>2 times) = Weaker growth.

But do not underestimate central banks' resolve to fight this pull. How? Lowering interest rates. Japan. Europe. Korea. and China too when it has space to do so once it sorts out protein

@BIS_org

@BIS_org @HyunSongShin @michaelxpettis In all scenarios of the World Bank's long-term projection, China growth will decelerate below 6% 👇🏻👇🏻👇🏻

@BIS_org

@BIS_org @HyunSongShin @michaelxpettis Today, the Bank of Korea raised its concern regarding the STOCK of debt Korea has & the deterioration of earnings (exports in double digits contraction) on the repayment ability, although says still OK so far. That said, Korean households debt/disposable income is 159%.

👇🏻👇🏻👇🏻

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More from @Trinhnomics

Trinh

@Trinhnomics

Jan 7

Good morning,

I'm reading the RBI December bulletin, which has basically the best analysis on India. What's interesting is that while India recorded record high growth (+8.2%YoY), nominal GDP slowed massively to 8.7%. If we look at the recent high frequency indicators, they are not good. GST revenue is slowing sharply, electricity demand is negative, and petro consumption also very soft.

What that means is that we got rather weak nominal outcome of growth irrespective of strong real GDP growth. And that matters because it impacts government revenue, earnings and of course income.

The INR has been fretting this reality as export sags and thus exporters are not in a hurry to sell USD. Meanwhile, foreign investors are looking at the expected depreciation of INR vs USD while other FX appreciates and that means that while real yield in India is attractive, its return in EUR for example was negative last year for European investors.

So what's next?

Btw, if you want to see some positive demand indicator, you will find it in autos/two wheelers. GST reduction has boosted auto sales. But that is not all.

If you zoom out, India auto sales are one of the few bright spots in Asia for auto sales (China also high but given lower prices, profits sag).

Indian employment overall is weak (high informality) but the trend is positive. The one indicator I find interesting is this MGNREGA work demand, which falls sharply, which should be read as positive because it's basically a rural program that gives out meager pay for random rural projects.

Overall, what's key here is that consumption of autos is up (suggesting that some people are better off and buying more autos) and people are not desperate enough to want rural random payout by the government so India is clearly growing.

But on an aggregate nominal basis, the GST revenue is most telling because it means that weak GST means government will need to increase FINANCING volume, which means more borrowing, and so this growth of auto consumption has costs to the government.

Finally, while weak electricity and petro demand is blamed on earlier onset on winter, I reckon industrial production may be slowing...

Read 8 tweets

Trinh

@Trinhnomics

Jan 6

Good afternoon,

Have you read Trump's team National Security Strategy or Donroe Doctrine?

Shall we read together? It has four sections.whitehouse.gov/wp-content/upl…

First section is easy if you read the Miran paper. Basically it talks about where America went wrong, as in miscalculated ability to shoulder global burdens that divorces from Americans' national interest.

Where did they go wrong? First, massive welfare state, huge military, intel, aid complex. Second, misguided idea on globalism and free trade that hollowed out the middle class. And a lot of US institutions don't support national interests but transnational interests that undermine sovereignty.

Second section is where President Trump comes in for a much-needed correction. To get there, they ask the question of what SHOULD the US want.

Basic answer is obvs survival of the state as an independent republic and the rights of citizens & protect them from military attack, foreign influence, predatory trade pratices, drugs, etc.

Want to tighten legal and illegal borders.

Build infra to protect from natural disasters and foreign threats.

Train, equip, field world's best military to advance interests.

Nuclear deterrence (Gold Dome?).

World best strongest, dynamic most advanced economy. Broad-based security.

Want an industrial base, energy sector, soft power on top of hard power, and American spiritual and cultural health (traditional families).

Read 13 tweets

Trinh

@Trinhnomics

Oct 24, 2025

https://x.com/Trinhnomics/status/1981537465157538079

"The new approach is rooted in a core belief in Beijing: that Trump is fundamentally transactional, not ideological. Policymakers believe they can use Trump’s zest for a deal to neutralize the China hawks in his administration."

But Trump is a trade hawk. He has had the same view since the 1980s no matter what the "experts" have said. He is ideological in this point of view. He sees manufacturing as key to economic strength, the same as Xi actually.

https://x.com/Trinhnomics/status/1981537465157538079

Interesting to look at Xi and Trump meeting to compare Stalin and Franklin Roosevelt meeting at Yalta. Stalin had UK spies telling him all about the "red lines" for the UK and the US. So he came to the meeting totally prepared. Stalin was willing to give the US the "red lines" but in return, he took everything else, including territories in Japan, a foothold into Asia via China, and finally Eastern Europe, including Poland, where Churchill was busy drinking and talking too much to achieve much. This paved ways for Mao and the Communists to emerge in China. And the rest is history.

So does Trump have "red lines" that Xi know? If so, to get that, what would Xi ask in return? Interesting to see this playing out. Irrespective, we are entering strategic decoupling at great speed deal or no deal.

Another interesting fact to compare Franklin vs Stalin meeting was to look at Xi vs Trump's background. Trump came from wealth and has pretty had a pretty cushy life vs Xi whose father was part of the founding members of the communist party but was purged from the CCP and sent to work in factory. Xi essentially suffered as a child and teenager and grew up in China's tough decades.

Meanwhile, Trump grew up when the US dominated the world & still does but going through a tough transition. And so they both see the past and future in a different lenses.

Still, I think to think that Trump is only transactional and not ideological is not entirely true. He fundamentally believe in manufacturing and strategic autonomy and sees the US globalist agenda as a threat to national security, especially dependency on China for US defense supply chain. Lighthizer in the latest FT lunch interview also commented the same.

Read 4 tweets

Trinh

@Trinhnomics

Oct 15, 2025

https://twitter.com/stevehou0/status/1978379197115519049

Good question. Let me just answer this with below tables.

First, whatever China lost in market share in exports to the US, Vietnam has gained. The best example is in mobile phones.

Now, is it REROUTING? As in just Chinese phones that are then trans-shipped to the US?

https://twitter.com/stevehou0/status/1978379197115519049

First, we have to realize that Vietnam went through two stages of FDI.

The first stage is driven by NORTH ASIANS that are basically fed up with geopolitical tensions and too much competition from China (think Japan in 2010 w/ rare earth and South Korea with THAAD but even before) and so what do they do?

They MOVE their production base slowly out of China into where? Well, for South Korea, it was Vietnam.

Samsung Electronics moved into Vietnam in the early 2000s to the point now more than 50% of their stuff is exported out of Vietnam. But not only. Many other Korean stuff.

Also Japanese etc. So what you see in the telecom here is not CHINESE PHONES but KOREAN PHONES.

The second wave of course is Chinese outward FDI themselves and also increasingly EUROPEANS.

Anyway, let's talk about phones.

For phones, the key thing I want to show here is that while Vietnam exports have grown a lot, over time, the IMPORTS of that have DECLINED.

And they have declined everywhere. People that look at China all day long think Vietnam only trades with China.

No, Vietnam is a relatively big trader for its small economic size so it TRADES WITH MANY ECONOMIES, the US and also South Korea etc.

Long story short here is that Vietnam is importing less of inputs while exporting more and that tells you that overtime supply chains are DEEPENING THERE FOR THAT ITEM. And it's not transhipment.

But what's RISING in imports FROM EVERYONE? WELL, capital intensive stuff. Vietnam is importing a lot of machinery etc from EVERYWHERE.

Note that it imports a lot from South Korea and Japan, Taiwan etc as well as China.

Read 6 tweets

Trinh

@Trinhnomics

Oct 15, 2025

Did you know that Vietnam's Q3 GDP grew 8.2%YoY and Q2 was 8%? It is one of the few countries in Asia where manufacturing share of GDP is rising even as Chinese imports flood the market. Why?

“In contrast to other countries that are stuck in political paralysis, Vietnam has moved very swiftly to secure lower tariffs and reform its economy to increase productivity and competitiveness,” @Trinhnomics , a senior economist at Natixis SA, said. “This has allowed Vietnam to emerge as a winner under Trump 2.0 despite high tariffs because it’s favored as a foreign direct investment destination for those wanting to diversify away from worsening US-China tensions.”

bloomberg.com/news/articles/…

Look at manufacturing across Asia and what do you see? Its down for India, Malaysia, the Philippines, Thailand, Indonesia.

But not Vietnam. It's up. The fact of the matter is Vietnam faces a widening trade deficit with China but at the same time it has turned that into an overall trade surplus, which means that Vietnam value add has risen over time.

And you can see it clearly in its manufacturing share of GDP or global market share. Has been slowly steady climb.

This year, in 2025 manufacturing output surged 9.92% in the first nine months of 2025 from a year earlier, with around 77% of companies surveyed by the National Statistics Office saying export orders were higher or at the same level, a sign that US buyers are shrugging off the tariff hit for now.

What is Vietnam doing right? Well, first, the most important thing is that it wants manufacturing above all else. Vietnamese people need formal jobs and by prioritizing that, Vietnam is now focusing on the next leg of development, which is how to ADD MORE VALUE.

Blink and you will miss the biggest reform story of Asia. Vietnam literally redrew its map & made one of the biggest structural reforms in decades.

Read 4 tweets

Trinh

@Trinhnomics

Oct 13, 2025

Rare earth is in the news again. Of course it is not rare, just that you gotta dig deep and then obvs process it. That entire process is polluting, costly and the output itself doesn't yield a lot.

That's how China has captured the market. It's willing to do polluting working and basically sells more not a lot. But having cornered that market, it also sees it as leverage, which it has used since 2010 (with Japan). The weaponization of supply chain is what we call it.

The free market economics of it makes sense for people to just leave it to China to do rare earth & then focus on the more market profitable business. Until, well, dun, dun dun.

So how should a firm or government view rare earth? Should you go and pay HIGHER price than what the Chinese rare earths are going for to then secure resilience of supply chain?

Most say, well, "Nah." That is a costly move because well, others will outcompete you with cheaper Chinese inputs while you go dig and refine your rare-earth magnets. Not an economically worthwhile endeavor.

But not everyone has taken that decision. Here is a story of a company that didn't: General Motors.

Here I summarize the great reporting of the WSJ Jon Emont and Christopher Otts.

As you know, we have known this issue for a long time & Japan knew about it since 2010. So the Japanese usually have about 1 year of this stockpile, just in case. Not the Americans.

The car industry is pretty dependent on rare-earth magnets. GM decided that Covid shocks, which left it with semiconductor shortage, that it should secure non-Chinese rare earth magnets.

This sort of decision takes years to bear fruit so it is one with risks. Why? Well, your competitors can buy cheaper Chinese rare earth while you are trying to get more expensive non-Chinese.

wsj.com/business/autos…

Read 7 tweets

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