Topic: China's real-estate sector is NOT doing well, it might bring whole economy down - page 4. (Read 977 times)

Even if the birth rate is low, the current population is too large for cities. Since the demand for real estate was so high in the past, the price has peaked. After the pandemic, construction decreased, and people migrated more to rural areas due to increasing inflation and difficulty in purchasing power, all of these were factors. As construction starts are decreasing and all of them are at the same rate, it has become inevitable for the real estate sector to continue its course.

What we're now starting to see is a bit more contagion, there was a news article published a couple days back stating that one of the biggest "shadow lenders" in China is in major trouble and it was organizing financing deals for struggling real estate developers. If the shadow financing world collapses, then we might start to see the whole chain break apart. There are millions, hundreds of millions, of Chinese people who put all their savings into property that might lose their whole retirement plan if the problem keeps on growing. It's all the fault of the Chinese government though, as they wanted this property bubble to keep blowing up because it was an easy way to appear richer with so much internal construction taking place, but as with many things it was mostly fake.

I highly doubt it may bring the whole economy down, I think it's obvious that it will cause trouble but they could just simply print money and cover it like USA did and then they could just end up moving forward with it. Surely it hurts, USA was hurt due to 2008 as well, but it didn't last long and by 2012-2013 the market was doing great anyway.

So, it is obvious that China could suffer for a while but then they will do fine and it will not be an issue for them, it will not be too quick but it will not be "whole economy down" type of thing. These are huge nations, with insane incomes, they will find a way to get back on their feet, they do not have to worry, surely there are a lot of debts now, but there are a lot of income that can eventually pay that debt too, which will be fine for them. I think the best thing we can do right now regarding this situation would be letting them do whatever they want to do and they could end up doing great eventually with time.

That would have been true if all countries were the same. But it is not.

Ever since Capitalism hit America, it become increasingly unprofitable to produce anything inside US. This is why US is the biggest importer of anything from anywhere specially from China. For example statistica says 16% of Chinese exports are to US.
On the other hand, the same thing hasn't happened in other countries. Or at least not with the same severity. So others still have production of their own so they don't have to import this much goods from China with such a MASSIVE deficit like US ($367.4 billion in 2022[2]).

[1] https://www.statista.com/statistics/270326/main-export-partners-for-china/
[2] https://ustr.gov/countries-regions/china-mongolia-taiwan/peoples-republic-china

Yeah, recession is a different matter. But China definitely want weaker US (economically, militarily or politically). The more US economy falls apart, the more they can export. For example with dedollarisation, the dollar becomes weaker and inflation goes up inside US, that makes production even less profitable and importing cheap Chinese goods more profitable.

Checking the long term US trade deficit shows this very well. For example 20 years ago that deficit was barely $60 billion but as soon as W. Bush took office in 2001 and started his adventures, US economy was screwed and that deficit was tripled before 2005 ended. Now it's between $300 to $400 billion annually.

Maybe a civil war

Are you familiar with the real estate bubble in China?
China has entire cities full with new buildings and nobody wants to buy an apartment in those buildings.
I agree that the Chinese government can seize the properties, if the companies fail to repay their loans, but the problem remains.
What would the Chinese government do with thousands of apartments, which cannot be sold because nobody wants to buy them?
The whole real estate bubble will collapse, when the demand for new houses/apartments goes down.
Of course China has enough reserves to temporarily solve the problem by injecting more money into the real estate business.
The problem is that this solution is temporary.

Quite a controversial statement.
Measuring the number of people had real "value" in the Middle Ages, when the number of people was the measure of the power of the state.
It's easy to prove. Take the economies of Switzerland and, for example, Bangladesh. And compare the numbers.

Switzerland:
Population 8.7 million
GDP 800.6 billion USD
Or 91945 USD/person.

Bangladesh:
Population 169.4 million
GDP 869.044 billion
Or 5129 USD/person.

What does the picture tell us ? That with a population 20 times smaller, Switzerland generates the same GDP.

Let's add China
Population 1400 million.
GDP 17730 billion USD
Or 12664 USD/person

As you can see - the number of people is not an indicator of the quality and competitiveness of an economy... And this is despite the fact that China is an export-oriented economy, and the global west gives most of the income and budgets of China. So there is a significant dependence of the Chinese economy on the west, and the number of people in China does not give a competitive advantage.

This is where I'm at.
We never really know what's really happening on the ground in countries like this. You see mainly what they allow you to see. A country filled with so much sensory. The citizens see mainly what the government wants them to see while the outside world sees only what the government wants them to see.

I see a lot of things and I know it's highly exaggerated. Like the "dollar will soon be worthless" talk.
People made it seem like the US dollar would be worthless in the coming year, but if you look deeper into it, the dollar was doing better than the Chinese yuan.
It's easier for people to poke holes in the US because it's easily accessible. In the sense that the data and on-ground situation of the US can be gathered relatively more easily but in the case of China, they just show you what they want you to see.

Where does the public get their news in China since most media outside can access information there. In spite of the fact that the information about the real estate of the country is unclear and varies everywhere, there is something that is not right about the real estate. It has been reported in the past that the president of the country is dissatisfied with the country's housing/real estate market. In other words, the housing system is not meant to make money, but rather to live, affecting the real estate business immediately, and then follows the pandemic crisis. As for other recent information that cannot be verified, I will accept information from anyone who recently visited China and has first-hand knowledge.

But that's the point, it can't.


Perhaps not, and perhaps it's truly nothing, but they are starting offer unsecured loans to real-estate developers, and don't forget that's a first in their history and probably a sign of distress.

Plus, currently, it might not be that concerning, but budget a deficit that's the highest in two decades? If export revenues go down, their deficit will definitely go up.


China doesn't want the U.S. to enter a recession. What's bad for the United States - the largest importer, will be bad for China - the largest exporter.


War - like the pandemic, will be the next Black Swan?

Well we are quite some time after the pandemic, subsequent money printing & supply chain issues. I realise tyere is always a lag with these things but I really hope we are past the worst now & we can start being confident of a soft landing. After the last few years, we really do not want a hard landing, recession & what comes with it, we have suffered enough.

china is not dependant on america. america is a small populus

us has 330m

south america has 400m+
EU has 700m+
africa has 1200m+
rest of asia(exclude china) has 3100m+

S.A+EU+A+RoA= 5400+

US only amounts to 6% of just the main area's listed
so if US completely 100% stops using chinese produce.. it only affects china by 6%

It's not supposed to. It's not like Chinese exports have halted altogether or have had a significant decrease (like 80%) for them to need to cover it with domestic economy.
In the ongoing global recession, demand for Chinese goods hasn't really changed that much. Their exports were slightly decreased (IIRC it was something like 4%). That is why they only needed to cover that small deficit.
Which is where the decreased interest rates, other incentives for domestics producers and demand for them started coming out.

Unfortunately, because they do it by killing the economy of other countries as capital migrates to China same as the jobs. In fact this is why in a lot of countries including USA the middle class fell down to become lower class.

There are a lot of different reasons why United States could fall apart in the near future. That is why they do what they've always done: start wars.

It would be laughable to believe that China's dometic demand alone would be enough to support their whole manufacturing sector at its current state and size. There will be a recession if international demand goes down.


It's merely business, ser. The world needs cheap goods, China can manufacture them.


There might actually be a Banking Crisis that could probably crash the whole U.S. economy next year, https://www.fxhedgers.com/p/powell-says-the-quiet-part-out-loud

It might probably give us another opportunity to BUY The DIP like 2020 crash too.

chinas domestic economy vs international. does not affect much of the manufacturing economy

china's manufacturing is 90% automated by robots. so less products doesnt cause mass loss of employee's. they just slow down the machines speed
to make less products per hour

however, looking at the stats
when it comes to microchip production for instance.
the 2019 stat was 215m wafers per month
the 2021 stat was 296m wafers per month (+36%)
so 2023 can drop by -36% and still be like 2021

however looking at actual data
china are making MORE wafer fabrication facilities.. so production is seeing demand not slowdown so it appears 2024-2025 will have even higher wafer per month stats compared to 2021 economy

Interestingly enough, Chinese government has been focusing on this. They've been trying to build that up to improve the domestic "demand" in their economy and strengthen it from within. In fact one of the reasons why they are less affected by the global crisis is this.

But you are right. China has always wanted stability so that they can milk everyone in the world! If US economy crashes, China will be significantly affected. This is also why they always try to or hope for stability in other regions of the world too, such as West Asia.

However, lets not forget that for China that is a double edge sword. In fact the reason why China owns a huge amount of US debt is two reasons:
First is to help the dead US economy to stay alive artificially for longer so that they can milk it more.
And second is that at the same time they want to have a very potent weapon against United States in case US regime wanted to face China militarily for instance (ie. if China dumps the massive amount of US bonds they own at cheap prices it would annihilate US economy).

My personal opinion, if you set aside the external economy that lives off of "China is the factory of everything".
One of the key needs of the population is their own housing. And the Chinese government decided to combine the experience of the USSR in providing citizens with mass housing, but taking into account other economic realities. To begin with, in the USSR such a global project "for centuries" was realized at the expense of poverty wages of citizens who had a Chance to get some real estate, as if "for free".

China decided to kill many birds with one stone:
- To give a feeling of availability of real estate to citizens
- To give a powerful boost to the INTERNAL economy - the mass construction market pulls up a huge number of related parties, and now, probably directly or indirectly worked for this segment of the economy tens of millions of people and many thousands of companies.
- At the same time, according to the legislation, the real estate market, or rather the life of housing - not eternal, legally - 70 years from the date of construction. And then buy a new one. This means that this sector of the economy will work forever.
- The banking sector is developing, because most of the housing is bought on credit.
- A person with loans secured by state banks, becomes more "obedient", because "unacceptable behavior" going against the "line of the ruling party of China" - synonymous with the deprivation of work, the ability to pay the loan for your home and eventually - its loss.

The idea was great, but the realization was shaken after COWID19, and the changes in China's domestic policy, or rather the shift to totalitarian methods, with the rejection of democratic and capitalist ideas. Also, increased relations with the West did not improve the economy, but significantly worsened the government's ability to rely on foreign currency revenues to finance mega-companies such as Evergrande and government lending programs.

They probably are least affected, but offering unsecured loans is the first in China's history causing their budget deficit to be the highest in decades, and it's growing. But OK, that's probably nothing.

You also said that the economic crisis is a global matter. That's true, and it's probably why China doesn't want the U.S. economy to crash. Why? Because the U.S. is China's biggest customer for their manufactured goods. China's domestic economy can't support their manufacturing sector.

you read my response
you post a link showing a graph.. but you still dont see the point
every summer break has the peak of the years

students do seasonal work, get it yet

hers another context that can help

more 'young adults' go into education vs straight into work....
now do you see the context of why the numbers are as they are

if a economy was flatline.. but young adults chose education to better themselves. the graph you showed would look like a graph of that scenario.. completely independent of inflation/deflation.. just the decision of more kids going college causes bigger waves

this has more correlation to the employment swings of that age group, more so than inflation/recession
https://www.statista.com/statistics/227028/number-of-students-at-universities-in-china/


2021 was low due to covid stuff, people learning from home, working from home so not part time working on campus to then quit as much when summer arrived


yep as i said... before GREEDY developers took the money started building but at 50-80% through started on new plots to try and pre-sell those too
only problem is there were no buyers of the second plots meaning no money to then finish the first plots(rob peter to pay paul)

as for the $451bill for 20m homes.. thats only $22.5k each... kinda cheap, good deal
now guess how much budget UK/US set to build houses at a per house cost... via US/UK tax money treated as loans/grants

Honestly, USA had a 800+ billion dollar crash just because of real estate and nothing really happened, and I do not think that this would mean anything for China neither. Surely the inflation while trying to fix it is a big issue, and people would rather not have that and would love to not burst the bubble, but the growth at times could be facing tough situations like this and has to halt. USA growth until 2008 was insane, from 2001 to 2008 they grew at an insane speed, used most of it on Iraq war to be fair, and got so much from it, but at the end of the day we are talking about something that can't be sustained. Same happened with China, their construction industry was at all time high levels, they were building insane high amount of buildings, everywhere, and better than before, think of redoing a whole 1+ billion population nation, obvious that we are talking about something that would be unsustainable in the end.

Doesn't matter


It was 16% in June 2020 and 13% in June 2018, it has grown for 8 years missing growth in 2021 by only  0.3%.
Besides, if it weren't something serious the govemermnt wouldn't have stopped releasing the data, right?

Back to the crisis, this is fresh from the newsfeed:
https://www.businessinsider.com/china-economy-property-real-estate-crisis-white-list-bank-loans-2023-11

$451 billion to complete 20 million housing units, that were pre-sold!
20 million houses started and financed when everyone though real-estate was a good investment, pre-sold at prices were above current levels, but with no chance of actually being worth that much in the future while the same companies that look now for billions in loans also look at dwindling numbers in future orders.