Every year, for the last 20 years, many articles say that we can be sure of an imminent housing crash. Then every year they are proven wrong. This is just one more of these articles.
... Bubbles are bubbles until they pop. A lot of infrastructure in China is under utilized, and let's not even get started on empty shopping malls and apartment buildings, even here in Beijing!
Whether the government can pull off a soft landing is up for debate, but every year with people, local governments, and companies become more leveraged, not less, I think a hard landing is more likely.
Now, if that happens, this doesn't necessarily mean that the government collapses, but many of the bandits who are making out on this have gotten their money out of the country, and a correction is more likely to negative effect those who didn't really benefit in the gorging. And if that happens, the CCP (many whose relatives have already fled abroad) is going to be facing a lot of pissed off nongming.
The Chinese internal economy is not as robust as its export economy, and shifting the economy to one based on consumption is an important goal to making it actually healthy. Right now, people just save or invest...and the investments are limited to some shady financial products and...real estate.
>>and the investments are limited to some shady financial products and...real estate. This is in Beijing , or Hebei, Henan and the 3 northern provinces. At the Pearl River Delta and the Shanghai-Zhejiang-Jiangsu triangle the investment is in production.
People from Wenzhou basically invented highly leveraged real estate speculation.
Also, as a normal person without guanxi, you can't really get access to the sure bet industrial investments, and participating in shadow lending is very risky.
chinese dont live on credit like americans, they live for saving. The financial market is slightly more regulated than the american financial market, aswell.
Exactly. Most of the money is kept in saving accounts with interest rates that are far below inflation. And what do you think the banks are doing with that money?
China is in fact buried in a massive pile of debt, from corporate to muni to personal, that they will never be able to climb out from under. And they've had to pile on ever larger amounts of debt just to keep faking the 'growth.' The notion of China being the land of savings and low debt is completely a myth.
"In the meantime, some investors are increasingly alarmed by the speed at which local governments are piling on debt to pay for public works. China's state auditor said in its report on Monday that local governments had total outstanding debt of 17.9 trillion yuan ($2.96 trillion), including contingent liabilities and debt guarantees, at the end of June."
"A report by Nomura said Thursday that Chinese municipal debt, a focal point of major concern about the country’s economy, had grown at an alarming 39 percent clip in recent years."
"China's overall debt-to-GDP ratio has sprung to over 200% from about 120% in five years. Most of this is from local governments and state-supported companies."
China's corporations are drowning in debt, at 151% debt to GDP ratio, the highest basically in the major industrial world. Twice as high as America's ratio.
Every year, for the last 20 years, many articles say that we can be sure of an imminent housing crash. Then every year they are proven wrong. This is just one more of these articles.
... Bubbles are bubbles until they pop. A lot of infrastructure in China is under utilized, and let's not even get started on empty shopping malls and apartment buildings, even here in Beijing!
Whether the government can pull off a soft landing is up for debate, but every year with people, local governments, and companies become more leveraged, not less, I think a hard landing is more likely.
Now, if that happens, this doesn't necessarily mean that the government collapses, but many of the bandits who are making out on this have gotten their money out of the country, and a correction is more likely to negative effect those who didn't really benefit in the gorging. And if that happens, the CCP (many whose relatives have already fled abroad) is going to be facing a lot of pissed off nongming.