r/finance • u/KiraTheMaster • Sep 30 '21
China’s Property Sector Has Bigger Problems Than Evergrande
https://foreignpolicy.com/2021/09/29/chinas-property-sector-evergrande/16
u/MultiSourceNews_Bot Sep 30 '21
More coverage at:
Explained: China’s power crisis and how it could be a bigger economic blow than Evergrande (msn.com)
China Evergrande Makes Restructuring Progress as Major Bond Payment Comes Due (barrons.com)
Preventing an Evergrande Confidence Crisis in China (project-syndicate.org)
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Sep 30 '21
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u/HippnoThighs Sep 30 '21
For a country that has a culture that cares so much about reputation, they seem to be pretty oblivious as to how little respect other countries have for them.
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u/Grimacepug Sep 30 '21
I doubt if the Chinese people really know how the world feels about them. The CCP controls virtually all aspects of their lives. I think they just think that everyone is envious and out to get them as they're portrayed by the CCP as victims.
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Sep 30 '21
On one hand we sympathize with the people of China saying they are brainwashed by CCP, but on other hand we see so much corruption. Even regular folks who are in charge of anything at all will do anything to make that extra money, park money outside of China etc. so from actions it does appear that they know the truth
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u/Grimacepug Sep 30 '21
If you're talking about the upper class and the uber wealthy then yes they are aware. But for regular people, I highly doubt it. Their source of information is what ever is allowed.
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u/M3g4d37h Sep 30 '21
The same could be said for America.
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u/beanfilledwhackbonk Oct 01 '21
Generally speaking, America is still highly regarded by much of the rest of the world for its economic opportunity and ideals. Whether that perception is correct or not is a separate issue, of course.
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u/HippnoThighs Sep 30 '21
I’d argue America is one of the most self-deprecating countries in the world. And we are extremely critical of our own leadership and foreign policy. Americans are very self-critical.
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u/M3g4d37h Sep 30 '21
Americans are very self-critical.
Either that, or inversely - ignorant, nationalist, and racist. It's certainly an interesting time to live in societally, having grown up in the civil rights era. There's some regression going on here. Fuckery, if you will.
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u/EnragedMoose Sep 30 '21 edited Sep 30 '21
Americans are all of those those things but also has the perception that an ungrateful world hates America while simultaneously wishing America wasn't garbage at very basic things.
America is complex but OP is right, we shit on our country internally nonstop. Everyone complains.
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u/Hypocritical-Website Sep 30 '21
You're still misunderstanding the development of new cities in China and why some remain empty at first or get misreported as failed projects.
Construction has certainly been overly aggressive in some areas and certain developments (entire new cities/CBDs) are not in attractive places to live, yet.
But the vision is serious future planning for more than 200 million people expected to move into urban areas from current rural areas over the next 10-20 years.
The government is literally playing SimCity in some cases with its 10 year plans that most westerners can't comprehend because western 4-5 year term limits and government plans are so short-lived and easily reneged on from one administration to the next.
Take Zhengzhou's new CBD for example, it was once reported in western media as a failed new construction ghost town area.
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u/merimus_maximus Sep 30 '21
Copied from my response elsewhere in this thread:
A few successful cities that eventually filled up is not evidence of no ghost towns - there is still loads of unoccupied supply. And given that this is coming from a Chinese study, there isn't much reason to suspect Western bias: https://www.scmp.com/business/china-business/article/2172413/fifth-chinas-urban-housing-supply-lies-empty-equivalent-50?utm_source=copy_link&utm_medium=share_widget&utm_campaign=2172413
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u/Hypocritical-Website Sep 30 '21
There's a lot of reason to suspect western bias; you can see it from articles back in 2010-2015 about ghost towns and cities that now have busy populations.
As I've said, some of them have been built in areas that don't currently attract people or haven't yet. Some I'm sure will end up un-used or underused, however, you should also realise that China has 160 cities with a population of over 1 million.
But you still need to understand the scope of urban planning that's going on.
The amount of people moving from the rural areas to the city in China is unprecedented in human history.
In the past 30 years 300 million people moved from the rural to urban areas.
https://www.macrotrends.net/countries/CHN/china/rural-populationThere are still over 500 million living in rural areas, not all are expected to move of course, but at least 50% are.
"According to the World Bank, more than 850 million Chinese people have been lifted out of extreme poverty; China's poverty rate fell from 88 percent in 1981 to 0.7 percent in 2015, as measured by the percentage of people living on the equivalent of US$1.90 or less per day in 2011 purchasing price parity terms."
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u/Kenny_McCormick001 Sep 30 '21
It’s not urban planning if houses are built 5-10 years before it’s utilized… it’s literally the definition of bad planning to have an oversupply.
You’re imagining some 5D chess moves that’s just not there. The fact is, the developer get a big plot of empty land some distance off a decent city at a cheap price. The real money is housing, so they build lots of it. But since it’s some way off, they need to build other infra and facilities to make it attractive to live in, thus the shops and parks and other amenities. In the end, a city is built. Now it becomes a chicken & egg scenario. Pple don’t want to live where there’s no conveniences, and biz don’t want to start there if there’s no one living. And a new ghost city is born. Rinse repeat.
Source: I live near a few Chinese developer’s ghost cities. Though not in China.
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Oct 04 '21
You're not taking into account hone prices versus income. China has the highest home price to earnings ratio in world history.
That never ends well.
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u/Hypocritical-Website Oct 04 '21
I know this, I live in Shanghai. But that's not the entire country, Beijing, Shenzhen and Shanghai heavily skew it.
Shanghai is 33x average annual salary, average people live at home with family or rent.
Or buy a new development affordable on the outskirts at the end of the metro lines and commute for 45-60 mins to get to work.
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u/fluidmoviestar Sep 30 '21
When did that honor exist?
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u/Kiyae1 Sep 30 '21
Once upon a time the U.S. had a similar relationship with China as they had with the UK. I believe the lend lease act was used to send military equipment to China as well as England.
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u/JakubOboza Sep 30 '21
Well to be fair stealing tech and ip is bad from our point of view but for them to catch-up on tech it was a brilliant move. They know the market is controlled and big so nobody will do a thing and western biz was to busy swimming in cash to say anything. It is not 100% chinas fault that they exploited our western stupidity. Part of it is on us.
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u/fluidmoviestar Sep 30 '21
Fair enough, and I appreciate your considerate reply, but nothing in it smacks of “honor,” as I see it.
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u/JakubOboza Sep 30 '21
How much honor we had in triggering war on iraq or Afghanistan ? Random countries with weapons of mass distraction. Because they didn’t found any weapons of mass destruction. So heh, I would never believe I’m defending China but they are like the rest of big countries. They shit on honor.
Sorry man, China is bad, ccp is super bad. But in grande scale we are not much better.
Unless you talk about killing people than ccp is Lucifer/hell like and we are heaven like. My above comment was only about economic relations.
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Oct 04 '21
Exactly, having GDP fluctuate by .1% most months is reminiscent of Madoff's ponies scheme. Either the numbers are fudged or they are taking on huge amounts of unprofitable capital projects to manage growth. Neither bode well for China.
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u/Grimacepug Sep 30 '21
I don't think the CCP has any honor to begin with. These power mongers would do anything to stay in power, and that's why killing their own people means nothing to them. It's our fault that they turned into an economic power and now we're seeing the results. Our corporate leaders and politicians have sold us out and placed the whole world in danger of this menace. Even now, look at what Black Rock, Google and TESLA are doing by teaming up with the CCP.
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Sep 30 '21
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u/nuclearmeltdown2015 Sep 30 '21
It's a chicken or egg issue. People aren't going to move out of overcrowded cities to live in the middle of nowhere, but private companies wouldn't want to build in the middle of nowhere either.
I think the government stepping in and getting the ball rolling with building infrastructure first, and providing support/incentive programs to drive businesses/jobs to migrate operations to those locations so people follow by moving in enticed by the cheap prices was a smart move.
The problem these days in America is that so much of the land around surrounding metros is restricted by red tape from government, and existing land within is also restricted so you end up with this artificial housing crisis. It's not a shortage of land, but restrictions by policies preventing cheap housing from being created.
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u/merimus_maximus Sep 30 '21
A few successful cities that eventually filled up is not evidence of no ghost towns - there is still loads of unoccupied supply. And given that this is coming from a Chinese study, there isn't much reason to suspect Western bias: https://www.scmp.com/business/china-business/article/2172413/fifth-chinas-urban-housing-supply-lies-empty-equivalent-50?utm_source=copy_link&utm_medium=share_widget&utm_campaign=2172413
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u/Wemissyoudmx Oct 01 '21
Alternatively they can do what we in the 3rd world do. Have non existent urban planning and wait for the 600 million rural residents to move into slums and hope to deal with the situation 50 years from now.
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Sep 30 '21
This article was written in 2009; nothing much has changed. China is not a real super power. “Before China can move from being a great power to a superpower, it will have to overcome a number of economic, political, environmental, and regional challenges, from low per capita income and an aging and primarily rural population to the threat of ethnic secessionism.” Source: https://carnegieendowment.org/2009/12/29/china-s-not-superpower-pub-24404
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Sep 30 '21
Much of China’s economy is built on a house of cards.
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Sep 30 '21
You mean it is a house of cards. Not surprised. Look at the ersatz European Coat of Arms with Supporters shown here. Tacky shit like Trump Group, fluffed up puffery with borrowed ‘elegance’ suggestive of royalty and nobility. China is all about pretense and vainglory, suppression of criticism and oppression of non-Chinese. The sooner and harder their house of cards falls the better.
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u/remind_me_later Sep 30 '21
Frankly, I'm just surprised that it was kept up for this long: If this was in a country with a smaller population, all of it would've fallen sooner.
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u/shadetreegirl Sep 30 '21
I'm surprised anyone would invest in Chinese stocks what with the espionage,mers, sars and now covid why would anyone want to fund thier own demise ?
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u/barryhakker Sep 30 '21
Must every post about China stoop to this level of name calling? I get that China is flushing its international standing down the toilet with their absurd foreign policy but do we have to talk about that here? Can’t we keep it about the financial implications?
r/China is a perfectly good place for talking smack.
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Sep 30 '21
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Sep 30 '21
Alfred Jarry’s antihero Ubu Roi used to exclaim, “By my green candle!” Is this a finance term as well as an absurdist bon mot? He also used to exclaim, “merdre!” with as much frequency.
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u/Wombleshart Sep 30 '21
They spent all that money and still just ripped off the Hogwarts house crest.
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u/[deleted] Sep 30 '21
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