China's real-estate sector is NOT doing well, it might bring whole economy down

[stompix]

Who doesn't know this country called the Bamboo Curtain country? At first many people thought that a socialist country like China was difficult to become a developed country. But what happened next, this bamboo curtain country was able to show who he was, and made his country a developed country, also made his country one of the countries with the largest economic power in the world.

Bruh, there is nothing special about China becoming a developed country, Vietnam did so, and their global power rank is just based on their huge population, nothing else, if you look at real nominal GDP per capita China is below Argentina Tukey or Mexico, there is one China, the one doing all hose exports and the financial centers and the rest of China with 300 million migrant workers that are exploited by their own for this status, migrant workers who make on average $600 a month, is that the showcase of an economic power?

In the meantime, a record high number (1 in 5) of young adults are unemployed. So, if we combine all that, China's certainly facing challenging times for its economy, although I don't think we're near a point of true devastation.

Just wait for it, they have stopped publishing this data, they will invent a new indicator that is "better", then fudge the previous numbers to be far worse than in reality and publish the new statistic and success, unemployment is down from 30% to 25% which is way better than growing from 20% to 25%, right? When China stops publishing something you know it's far worse than even what they said previously, so bad they can't even fake the numbers anymore.

Countries like India seem to be doing better in comparison even though they surpassed their population recently.

And Congo is doing better than Germany and Bangladesh better than France!
Also Madagascar is better then Switzerland, their GDP growth is 4.2% compared to 2.6% last year and their population is also three times larger, so, Madagascar rules, right? Except that their wage is $600 per year compared to $7000 a month!

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[bettercrypto]

Isn't this year 2023 many calamities facing the country of China, and maybe because of these events, there seems to be a real estate problem?

Of course, if you sell real estate, there probably won't be much interest, especially if it has been hit by a severe calamity or disaster, because buyers may think that if another disaster occurs, only the real estate they will buy will be affected the property. Therefore, it won't give any benefit it from them in the end.

[franky1]

In the meantime, a record high number (1 in 5) of young adults are unemployed. So, if we combine all that, China's certainly facing challenging times for its economy, although I don't think we're near a point of true devastation.

results for JUNE!
many students resign from their college campus role to return home for summer break

funny how the article wants to sensationalise the stats for 16-24 age group, but they couldnt do the basic good reporting standard of even interviewing several people in that age group to get a grasp of their experience/reasons.. and instead they interviewed ONE person outside the age group who was 29, not 16-24

so take things with a pinch of salt when an article makes speculation of reasons without even interviewing the group the article is meant to be about

[stompix]

In the meantime, a record high number (1 in 5) of young adults are unemployed. So, if we combine all that, China's certainly facing challenging times for its economy, although I don't think we're near a point of true devastation.

results for JUNE!
many students resign from their college campus role to return home for summer break

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.

[Captain Corporate]

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.

[franky1]

In the meantime, a record high number (1 in 5) of young adults are unemployed. So, if we combine all that, China's certainly facing challenging times for its economy, although I don't think we're near a point of true devastation.

results for JUNE!
many students resign from their college campus role to return home for summer break

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 govemernment wouldn't have stopped releasing the data, right?

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

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.

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

[Wind_FURY]

Chinese economy is too weird to analyze like this, specially without doing extensive research into it. For example last time a sector in China was about to go bankrupt, it turned out that it was the Chinese government's doing. They basically bankrupt them to prevent capital from leaving the country!!!

Not saying this is the same but you got to do a lot more research to figure what the hell is going on in China.

their budget deficit is in the highest in two decades.

The economic crisis is a global matter so it is affecting every country but to be honest China is one of the least affected ones.

For example the budget deficit thing you are talking about is like $130 billion which is like 1% of China's GDP and is really nothing specially since the GDP growth for China is above 5%.

In comparison other countries are doing a lot worse. For example US budget deficit is already in the trillions ($1.7 trillion to be exact) which is a much bigger percentage of the GDP too (nearly 7%) and the growth US set was 2.4%.

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.

[DrBeer]

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.

[pooya87]

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.

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).

[franky1]

China's domestic economy can't support their manufacturing sector.

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

[Wind_FURY]

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.

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.

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.

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.

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

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).

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.

[pooya87]

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 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.

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

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 might actually be a Banking Crisis that could probably crash the whole U.S. economy next year,

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.

[franky1]

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%

[DeathAngel]

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.

[Wind_FURY]

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 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.

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

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.

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.

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

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.

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.

There might actually be a Banking Crisis that could probably crash the whole U.S. economy next year,

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.

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

[royalfestus]

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.

[Alpha Marine]

So I honestly don't believe anything coming from China. Not the good and definitely not the bad. You never know what's going in the background.

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.

[DrBeer]

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%

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.

[davis196]

property is always needed. its literally a hard asset
investing in property has backups of government seizing the property/land of real estate if they dont pay back. the government can be part of the deal of escrow too.

the loans are to help real estate developers finish 50-80% part-built apartment blocks so they can put them on the market, sell and then repay costs

its a drastic different story compared to say doing grants and loans to restaurants and small businesses which can take money and just close business. when you see how many scammed the small business stimulus system of multiple countries. you'll soon see investing in property is more secure

not only do the government get back loaned money of the development. but they then continually earn land/property taxes. so it pales in comparison to the small business stimulus cheques system risks

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.

[pooya87]

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%

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

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.

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.

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

Maybe a civil war