What if China falls into a Japan-style balance-sheet recession?
China slides into a Koo-style balance-sheet recession as households and firms prioritize debt repayment over spending despite zero-bound policy, trapping the economy in weak demand for years.
how we built this number — every step
The class rate is measured from our dated, sourced event library (decade-normalized Poisson — the full table is public at base_rates.json). The variant’s share within its class is the analyst’s editorial call, published so you can audit it. A wider range means thinner precedent. Full recipe: methodology · scored at Reality Check.
The butterfly cascade
How this trigger trickles across markets, left → right — the root shock, its first‑order moves, then the ripple effects. Drag any node; tap a market for its real price history.
Resolution timeline — how this probability is moving
Our model's odds (gold) over time vs the crowd's (Polymarket, blue), from the past toward the 1–3 years horizon. Each dot is a real macro event that nudged the probability — green pushed it up, red pushed it down. Tap a dot for the source. The gold path is an illustrative reconstruction anchored to today's estimate — real dated events, not a live re-estimate history.
What it would mean
If this plays out, it is a risk-off shock. China slides into a Koo-style balance-sheet recession as households and firms prioritize debt repayment over spending despite zero-bound policy, trapping the economy in weak demand for years. The trigger decomposes into signed root‑shocks — China growth ▼ · Consumer spending ▼ · Inflation surprise ▼ · Recession signal ▲ — which propagate through our causal graph to the markets below.
If it happens — the markets it would move
Biggest moves first. Projected moves are cascade-model priors; hist A–B% = what comparable past events actually did (measured abnormal returns), and model prior · unmeasured marks markets with no analogue backing yet. Tap any market for its price history.
| Market | Class | Projected move | |
|---|---|---|---|
| 1 | Freeport (copper) FCX 📈 chart | Equity | ▼ -0.7% hist -4.29–+1.65% · other way +2.46% (n=11) |
| 2 | Copper XCUon Hyperliquid 📈 chart | Commodity | ▼ -0.6% hist -1.49–+0.33% · other way +2.75% (n=11) |
| 3 | China internet KWEBon Hyperliquid 📈 chart | Equity | ▼ -0.5% hist -2.22–+0.95% · other way -2.56% (n=10) |
| 4 | Alibaba BABAon Hyperliquid 📈 chart | Equity | ▼ -0.5% hist -1.35–+0.39% · other way -0.56% (n=10) |
| 5 | Financials XLF 📈 chart | Equity | ▼ -0.4% hist -0.57–-0.01% · other way +1.03% (n=11) |
| 6 | MicroStrategy MSTRon Hyperliquid 📈 chart | Equity | ▼ -0.5% hist -2.09–+2.9% · other way +6.92% (n=11) |
| 7 | Aussie dollar AUD 📈 chart | FX | ▼ -0.4% hist -0.88–+0.15% · other way -0.61% (n=11) |
| 8 | Solana SOLon Hyperliquid 📈 chart | Crypto | ▼ -0.4% hist -17.03–+9.04% · other way -6.09% (n=10) |
| 9 | Nasdaq 100 NDXon Hyperliquid 📈 chart | Index | ▼ -0.4% hist -1.3–+0.26% · other way -0.54% (n=11) |
| 10 | Hyperliquid (HYPE) HYPEon Hyperliquid | Crypto | ▼ -0.3% model prior · unmeasured |
| 11 | Volatility (VIX) VIXon Hyperliquid 📈 chart | Vol | ▲ +0.3% hist -3.63–+1.71% · other way -2.26% (n=11) |
| 12 | Chinese yuan CNY 📈 chart | FX | ▼ -0.3% hist -0.4–-0.01% · other way -0.19% (n=11) |
| 13 | S&P 500 SPXon Hyperliquid 📈 chart | Index | ▼ -0.3% hist -0.42–+0.44% · other way -0.53% (n=12) |
| 14 | High-yield credit HYG 📈 chart | Rate | ▼ -0.3% hist -0.37–-0.05% · other way +0.04% (n=11) |
Probable recommendation
Historical precedent — what analogous events actually did
Across 20 analogous events (overlap‑weighted), as abnormal returns — market beta stripped, so it's the event's own effect, not the market backdrop. Shown at 20 days (persistent) and 5 days (immediate); ↺ fades = the two horizons disagree. Confidence = consistency × sample × significance.
| Asset | History says | Abnormal (20d · 5d) | Hit | n | Confidence | vs cascade |
|---|---|---|---|---|---|---|
| SOL SOL | SHORT | -16.8% · 5d -22.6% | 78% | 9 | 0.41 | ✓ matches cascade |
| ETH ETH | SHORT | -12.2% · 5d -12.0% | 73% | 11 | 0.38 | ✓ matches cascade |
| US dollar DXY | LONG | +0.7% · 5d +-0.0% ↺ fades | 70% | 20 | 0.36 | · |
| XLE XLE | SHORT | -0.2% · 5d -2.4% | 62% | 16 | 0.24 | ✓ matches cascade |
| CL CL | SHORT | -2.9% · 5d -2.6% | 62% | 16 | 0.22 | ✓ matches cascade |
| XLF XLF | SHORT | -0.3% · 5d -0.8% | 62% | 16 | 0.21 | ✓ matches cascade |
| XCU XCU | SHORT | -1.1% · 5d -2.0% | 62% | 16 | 0.19 | ✓ matches cascade |
| AUD AUD | SHORT | -0.6% · 5d -0.5% | 62% | 16 | 0.19 | ✓ matches cascade |
| Gold XAU | LONG | +1.2% · 5d +0.6% | 62% | 16 | 0.19 | ✓ matches cascade |
| Volatility VIX | SHORT | -3.6% · 5d +3.7% ↺ fades | 61% | 18 | 0.18 | ⚠ differs |
| BABA BABA | SHORT | -1.0% · 5d -3.8% | 60% | 15 | 0.17 | ✓ matches cascade |
| NDX NDX | SHORT | -1.0% · 5d -1.6% | 60% | 20 | 0.17 | ✓ matches cascade |
| High-yield credit HYG | SHORT | -0.2% · 5d +0.1% ↺ fades | 62% | 16 | 0.17 | ✓ matches cascade |
| JPM JPM | SHORT | -1.3% · 5d -1.4% | 60% | 20 | 0.16 | ✓ matches cascade |