China real estate crisis: Buy a house and get a gold bar! No Bitcoin unf!

[stompix]

The world just keeps giving, after my previous topic about paying your debts with monkeys we go to the next funny one, new home gold bar gifts!

Yup sadly, it's gold, not Bitcoin, not even Dogecoin or a 2 by 2 pixels NFT!
And maybe it's even worse than that since gold can't be checked by a decentralized network for authenticity evey time, it might be something like this:



^ NOT a Toblerone !

The article is a bit old but it's the only one out of a few tens I've read that covers every step.
https://www.theguardian.com/world/2023/jun/12/gold-bars-used-to-lure-chinese-homebuyers-amid-market-slowdown

TLDR:

property developers are struggling to shift stock is that several cities, in an effort to stabilize the market, have banned developers from cutting prices. Huafa Tianfu, a developer in the eastern city of Hangzhou, has been offering up to a kilo of gold bullion to tempt people into buying its flats, if it were 24 carat the 1kg bar would be worth about 450,000 yuan, or 18% of the value of the accompanying flat.

So, in the long version, how and why is this happening:

- Economic slowdown, deflation on the horizon housing sales have crashed
- The government can't allow the prices to go down that much because it will trigger something worse than 2008, with the main government and regional ones being in debt close to 300% which will be a disaster
- Since house estate developers are unable to cut fixed prices, they offer you a deal, giving you the house cheaper in reality but at the same time keeping the price up techically

So you buy 2 million yuan and you get a 400 000 yuan gold bar, so the price of the house stays at 2 million but you only pay in reality 1 600 000!

Now, we all know the Bitcoin situation in China is far than ideal, very far, like over the hills and far away, but could this be some breakthrough momentum when you're not allowed to pay what's worth but what's being said it's worth?

Let's look at it:
- Most are afraid that the bar will be fake, or of lower purity, total advantage bitcoin.
- Gold is harder to buy and once controls are in place no way near a million people a year will be able to get their bars
- Not that I'm advocating this but, it's a bit easier to deal with some accounting books once you deal with coins,I mean you can say that you gifted him 1 Btc and then send another 1 btc to some address. Again I'm not defending or advocating for tax evasion!
- The government doesn't like the gift loophole but doesn't like Bitcoin either so you got your hands already, but it will like a bit more since they are interested more in gold than in coins
- The developers won't have to pay one hundred armed guards to keep safe 1 ton of gold will the clients be afraid to leave the agency carrying a bar in their pocket, it can be done online

But more importantly, the seller can just say it's a worthless Bitcoin voucher code, it doesn't affect the price at all and besides, it's almost impossible to check if the voucher has changed owners. If I sell you a house and gift you 100 Pokemon cards I doubt pretty much someone will come to appraise it. Now that I think twice about this I'm really calling for tax evasion here  

So, do we have a potential usage scenario or I'm grasping at straws in a turd market full of bear dumps?

[1714604069]

1714604069

[Hispo]

To be honest, I do no know how a country which is allegedly controlled by a communist party would allow such chaos to continue to go on. 
One must also keep in mind the quality of the building materials of those projects, there are already many videos on Youtube pointing out how entire building have to be evacuated because the structure gets too weak through time.

It would seem that the building boom in China which is kept artificially, does not respond to the interest of the central government to give shelter to all the chinese people but selfish interest of a few private entities.

There are ways to detect counterfeit gold bars. To be honest, If I was to accept a deal like this one, I would gladly to go for destructive methods of verification.
 

[Faisal2202]

I do not have any authentic answer to your query, but saying that they are giving a gold bar as a gift and also saying they are doing that to fake the market value as per your own example. I think this gold bar is no longer a gift; instead, people are paying for it too.

But I am truly shocked to see how deflation could also shake the base of a powerful country. I have seen the world facing severe conditions in inflation but did not realize any situation in which deflation could make such an impact, and the strategy to fake the price of real estate in China is really good.

I mean, to avoid a more deflationary effect and to attract people, such a strategy is good. I am having such experiences just now (such experiences mean deflation impacts).

[icalical]

- Economic slowdown, deflation on the horizon housing sales have crashed

I am one of not so few people who expect housing market (bubble) to crash, people has been hoarding real-estate property too long, expecting an unreasonably high profit, while the most potential buyer --the younger generation-- does not have enough money to buy those real-estate

- Since house estate developers are unable to cut fixed prices, they offer you a deal, giving you the house cheaper in reality but at the same time keeping the price up techically

It's not a new MO by real-estate dealer, I have seen this since at least 3-4 years ago, this Chinese developer is actually a bit better than my developer, they are offering a car. Not only the value of the car is immediately decreased up to 30% after it got into the consumer hand, but they also give the cheapest car they can find on the market.

[mvdheuvel1983]

What is China's obsession with gold bars? About thirteen years ago some Chinese were swapping physical notes for gold bars, the three years ago, there was a scandal where a Chinese company used fake gold bars to obtain loan. Then 3 days ago China invest in almost 8k tons of gold.

Well, as for real estate in China, they are struggling to keep their heads up and this is the reason for the gold. Well it is a good one compared to offering a car. But then what is the value of the gold?

[stompix]

To be honest, I do no know how a country which is allegedly controlled by a communist party would allow such chaos to continue to go on. 

Chaos is perfect when you want to hide the really dangerous stuff, it's better to leave a few things in the open to make people believe that's the worst thing rather than trying to get everything in order and failing majestically.
 

There are ways to detect counterfeit gold bars. To be honest, If I was to accept a deal like this one, I would gladly to go for destructive methods of verification.
 

Everyone does so, if you're going to sell a gold in most asian golds shops prepare to be asked to have it cut in a few random points, nobody is buying gold by the weight volume ratio anymore, with the advance in technology you can right now cast the fake gold bars in less than 0.1% deviance which would fool almost everyone.

It's not a new MO by real-estate dealer, I have seen this since at least 3-4 years ago, this Chinese developer is actually a bit better than my developer, they are offering a car. Not only the value of the car is immediately decreased up to 30% after it got into the consumer hand, but they also give the cheapest car they can find on the market.

It's actually the same thing, nobody is expecting you to keep that bar or the car, you can resell them the next day to get your money back, it's not a nonrefundable gift or something like that. Besides, the value of the car is based on how much do they sell that apartment and how much are they forced to declare as value
- the minimum fixed price is 500 000 and the real market value is 400 000 they will probably gift you a mercedes
- the minimum fixed price is 100 000 and the real value is 90 000 then you are going to get a used vw golf!

What is China's obsession with gold bars?

It's not only China, there are numerous countries in which gold is seen differently, both as a showcase of wealth, some safe way to keep your money hidden, a hedge against inflation, in some cases the distrust is so big they will embrace gold just because of that. Unfortunately and this is the second thing in this topic, Bitcoin seems quite unable to replicate this trust gold has on a larger scale, more are interested in the gains in value than in conserving that value over long periods of time or even security. But I guess you can't compete with things that have been around for thousands of years.

[Synchronice]

Is that the reason behind China's increased gold import? Haha, kidding. By the way I wonder, are they going to limit developers to build new houses? Because lowering of supply will increase the price and they won't have to make a shit show like this one.
Overall, housing prices are artificially inflated worldwide because it's an easy money to buy/sell and/or rent. People are waiting months to sell their apartment or to rent commercial properties and still don't decrease prices, this really makes me to think that real estate is artificially kept inflated. But I don't understand why does China want to keep it inflated? What's wrong with decreasing housing prices if there is not a big demand? I don't understand what's the point of banning developers from cutting prices?

And to be honest, I don't completely understand what's the point of your post @stompix? Why don't they offer Bitcoin over gold? Or it would be better if they offered bitcoin over gold? I think this is done on purpose, they could offer a sportscar or something like that instead of gold that will 80% be fake. A lot of people on Reddit say that Chinese real estate developers are very shady. China remains a mystery for me, I don't really understand what's the life there. I have heard good from some people who have been there but online everyone talks about how terrible and full of scammers it is.

[safar1980]

In the market, such deceptions do not work, because the chena in the market is regulated by supply and demand. Banks and the government can support developers and offer very favorable conditions for the purchase of new housing, but this will depreciate the market for subsequent sales, because it will always be more profitable to buy a new apartment.

[darkangel11]

I wouldn't buy a property in china even if they were offering me gold bars with it.
First of all, bars filled with tungsten are a common thing nowadays as it fools the scales (similar density).


Here's a fake gold coin from reddit.

Then there's a problem of quality. Chinese buildings are nowadays made cheap. In the link you can see some pictures of Chinese buildings made of foam.
http://hongwrong.com/foamed-plastic-found-as-construction-material-for-new-housing-in-central-china/

And here's a video explaining the problem.
https://www.youtube.com/watch?app=desktop&v=hBwcw7pmsBE

It's not only China, there are numerous countries in which gold is seen differently, both as a showcase of wealth,

True, India is one of those countries. They traditionally give gold to the bride and groom at weddings. There will always be a market for gold there, which also makes gold easy to sell in these countries. IMuslims also have a knack for gold as far as I know.

[hatshepsut93]

- Gold is harder to buy and once controls are in place no way near a million people a year will be able to get their bars

The government, especially as tyrannical as the Chinese one, will find a way how to bring Biticoin activity to the minimum if millions of people will start using it in a way they don't like. They will tighten the financial monitoring of bank accounts and make banks investigate the source of incoming large transactions of their clients. So selling Bitcoin online would become quite hard. And they can go after physical bitcoin to cash exchangers by raiding them with police. It won't stop 100% of Bitcoin use, by likely over 90% of people would reconsider using Bitcoin.

[adaseb]

Yeah I read an article about the Evergrande situation and it’s bad. Basically they didn’t have issues selling real estate in the large cities but the issues came when they started building these towers in smaller cities and nobody wanted to buy these apartments. And they needed the money from sales to pay off debts.

It’s crazy that the government allowed this to happen. They can try and give you gold but eventually they are going to be giving people 50% worth of gold for the value of the entire apartment because prices will start to tank that hard. Don’t think there is an easy way out of this.

[Yamane_Keto]

TLDR:

property developers are struggling to shift stock is that several cities, in an effort to stabilize the market, have banned developers from cutting prices. Huafa Tianfu, a developer in the eastern city of Hangzhou, has been offering up to a kilo of gold bullion to tempt people into buying its flats, if it were 24 carat the 1kg bar would be worth about 450,000 yuan, or 18% of the value of the accompanying flat.

So, in the long version, how and why is this happening:

I see that China, with its cash reserves, is able to intervene and solve the crisis of real estate developers, but I see the slowdown that is happening as an attempt to "pinch the ears" of these companies and make them respond to government requests in the future, but who is stupid who presented the idea of offering a kilogram of gold bars to entice people to buy their apartments? The idea is fundamentally wrong and can be understood if it was an investment fund that buys apartments and gives you an additional return in gold or dollars.

Such ideas make the buyer refrain from buying, as he believes that he will get the apartment at a cheaper price in the future, so why buy it now?
Bitcoin will not be an alternative at the present time, but for the user who knows cryptocurrencies, Bitcoin is much better than online gold buying and selling services.

[EyesFit]

But more importantly, the seller can just say it's a worthless Bitcoin voucher code, it doesn't affect the price at all and besides, it's almost impossible to check if the voucher has changed owners. If I sell you a house and gift you 100 Pokemon cards I doubt pretty much someone will come to appraise it. Now that I think twice about this I'm really calling for tax evasion here  

So, do we have a potential usage scenario or I'm grasping at straws in a turd market full of bear dumps?

You bring up an interesting point regarding the sale of items like Bitcoin voucher codes or even added bonuses like Pokémon cards (at collector pricing) in transactions. It can indeed be challenging to assess the value and authenticity of such items in a market that may lack scrutiny. Your concern about potential tax evasion is valid, as these additional items could potentially be used to manipulate the perceived value of a transaction.

In essence, it's essential to have transparency and accountability in any market to maintain trust and ensure fair transactions. Whether this situation could be a potential usage scenario or not depends on how it's regulated and monitored within the market. Your caution is well-founded, and it highlights the need for vigilance in any trading environment.

[el kaka22]

It doesn't really make sense to limit the price reduction, they are finding ways. Instead of spending 100k on a house and getting 20k back, you spend 80k and it would be the same thing, but because it is not allowed to drop the prices they are doing something like this. It still doesn't make sense though, because it is not the way it should be.

Let the market be whatever it is until people buy the houses, if the construction company has to make a loss, they will have to make a loss. The overestimation on how much people would pay for houses was the real trouble, China kept on building, not realizing that all the people who can buy a house, already bought it, and they do not need more new places to be built.

[Don Pedro Dinero]

So you buy 2 million yuan and you get a 400 000 yuan gold bar, so the price of the house stays at 2 million but you only pay in reality 1 600 000!

What a load of bollocks. The result of not letting prices regulate themselves by pure supply and demand and trying to manipulate them for political expediency. This rubbish has been known not to work since Diocletian's edict of maximum prices, which only served to stop people from producing goods or selling them on the black market, bypassing the edict. With this we have something similar. I don't let you lower the price but in order to sell the house you give away something that is 20% of the value, which, as much as the Chinese government doesn't want it, is a de facto 20% price reduction.

[so98nn]

I think we are surrounded by ambiguous investors who can’t differentiate between decentralised asset and centralised asset. That’s making unforeseen roadblocks in accepting Bitcoin throughout the system. The only thing that’s making them invest into asset like gold is its physical presence and their attachment with it as they can hold it. Now they don’t think about the issues that you have very well portrayed in OP, about its fairness, reality checks etc. Why would they? They see the yellow shiny bar thats enough for them to work with. However in case of Bitcoin everything is opposite and there is no way to verify things even physically. Sadly no yellow shiny bar there. China is master of crooked science, let’s not get into it. Lolz

[Kakmakr]

It is funny how people are attacking China .... when the US economy are bending the knee before them. China are lately buying the most Gold in the world.... where  ==> "The United States boasts both the world's biggest national debt in terms of dollar amount and its largest economy, which resolves to a debt-to GDP ratio of approximately 128.13%. The United States' government's spending exceeds its income most years, and the US has not had a budget surplus since 2001" Source : https://worldpopulationreview.com/country-rankings/countries-by-national-debt

I am not a "Goldbug" and it has been like that for many years. Try to get an independent audit on the Gold that are stored in Fort Knox for example and you will be amazed that it has not been physically inspected for many years. (It can be Gold plated Tungsten or Lead bars for what we know) 

In any way.... countries like China and Russia and India are buying Gold like crazy... while other countries are collecting debt. 

[Sayeds56]

t's not only China, there are numerous countries in which gold is seen differently, both as a showcase of wealth, some safe way to keep your money hidden, a hedge against inflation, in some cases the distrust is so big they will embrace gold just because of that. Unfortunately and this is the second thing in this topic, Bitcoin seems quite unable to replicate this trust gold has on a larger scale, more are interested in the gains in value than in conserving that value over long periods of time or even security. But I guess you can't compete with things that have been around for thousands of years.

Indeed, Gold has a special place in human culture and finance for thousands of years, and its role extends beyond store of value, it is also used for manufacturing  electrical components and parts, particularly in electronic industry. Beyond its industrial utility. traditionally, it is considered symbol of wealth, a safe heaven and jewelry.

It is not surprising , if some Chinese real estate companies are using Gold as means to reward their customers, an elegant approach to marketing and promotion.

[stompix]

What a load of bollocks. The result of not letting prices regulate themselves by pure supply and demand and trying to manipulate them for political expediency. This rubbish has been known not to work since Diocletian's edict of maximum prices, which only served to stop people from producing goods or selling them on the black market, bypassing the edict. With this we have something similar. I don't let you lower the price but in order to sell the house you give away something that is 20% of the value, which, as much as the Chinese government doesn't want it, is a de facto 20% price reduction.

If they would allow this their whole real estate market would come crashing down and with it the entire fake GDP, and everyone knows that if they miss and can't fake anymore their 50-year-long plan of continuous growth they are all sent to the execution platoon!
They are in so much trouble they can't afford to budge on inch

Just look at the chronology, and this comes from SCMP, which is basically the CCP paper for English propaganda:

China Evergrande downplays impact of staff arrests in Shenzhen, as property management unit warns on debts
one week later
China Evergrande says founder Hui Ka-yan under ‘mandatory measures’ for alleged crimes, amid stock trading halt in Hong Kong

they have companies not able to pay debts, prices falling down making those debts unpayable, and on top of that:

Even 1.4 billion people can’t fill all of China’s vacant homes, ex-official admits

This is a bit like those companies that failed around here.
They poured a ton of cash they got in debt for into coins, the market crash come, their stock went to pennies, the debt skyrocketed, they had to sell the shitcoins basically sealing their fate, and still had no money to pay the debt thus triggering the bankruptcy of those that lent them money also.

And we have some still arguing about debts ratios of 100% when Chinese debts are at 300% since they have province debts, local government debts, central government debt, and country debt, they even stopped realizing that data after Covid since it went completely off track:
https://www.scmp.com/economy/china-economy/article/3018991/chinas-total-debt-rises-over-300-cent-gdp-beijing-loosens.

It doesn't really make sense to limit the price reduction, they are finding ways. Instead of spending 100k on a house and getting 20k back, you spend 80k and it would be the same thing, but because it is not allowed to drop the prices they are doing something like this. It still doesn't make sense though, because it is not the way it should be.

Imagine you have built 1 billion houses that nobody lives in and which are on almost every balance sheet at a certain value and this gets sliced in half, it would turn into a flood of bankruptcies since thousands of companies will see their assets turn worthless.
Think LUNA! 

Let the market be whatever it is until people buy the houses, if the construction company has to make a loss, they will have to make a loss.

Even without allowing the companies are fall one after the other, Evergrande, Fantasia, and Country Garden, what do you think will happen if they set the price free? 

[DrBeer]

I take it this is about the not-so-successful attempt to save Evergrande, which is dragging China's entire economy down ?
An interesting but pointless attempt ! China's economy has become a "bubble", and there is no way out of the situation except for tough measures to reorganize the economy. And moreover, confrontation with the West, at the same moment, makes the situation even worse. It's like treating a systemic disease and at the same time going on a bender, taking heavy drugs, and doing other extremely unhelpful actions.