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

[el kaka22]

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.

[Fortify]

It's laughable to read those articles showing doctored data from China, then find out mere months later that China's opening from the lockdown has not been enough to make their economy surge again to pre-COVID levels. They're property/real-estate sector, which makes up a LARGE percentage of their GDP, is in the edge of crashing.

For the first time in history, China is considering to give UNSECURED loans to real-estate developers. Plus because of those fiscal stimulus that they have already distributed to help their economy, their budget deficit is in the highest in two decades. They are taking unprecedented risk to save their property sector.

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.

[Balmain]

They have a huge population, so that's why the price for real estate is insanely high. They can only rent an apartment, even better share a room with other people to make the cost cheaper.

I don't think it will bring the whole economy down, they will be forced to live with less money and as long as they can accept it, they will make the country rich.

Sadly China is not welcome for LGBTQ+ because gay or trans women can't give a birth, this is just a joke although it's also somewhat correct lol.

China has a huge population. That is true. But at the same time, this population is rapidly declining as a result of ultra-low birth rates. For the year 2022, Total fertility rate was estimated at just 1.09 children per woman. This is extremely low, and for comparison the TFR in Japan for the year 2022 was 1.26 children per woman and that in Russia was 1.416 children per woman. The low number of births for a continued period of time is being reflected in the economy. There is an oversupply of apartments and the demand is declining with every passing year. Retirees are moving back to their villages, while new births and in migration to the urban areas are not able to cover this.

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.

[Mate2237]

 China is one of the most populated country in the world therefore estate business in china should be at the peak at all time because population is attributed to an estate business. But if the estate business is not working well for then they have the opportunity to key into Bitcoin investment because we have china local board in the forum and that shows that they are not idle about Bitcoin but they are very much active in it.

The COVID 19 destroyed many businesses in the world and many countries are still trying to come out from the shock.

[STT]

China has a falling working population, its a big hole in its growth story potential.   This mostly effects banks who have leveraged those speculating on those markets.   The ironic thing about China despite its massive size as a country they will soon be 2nd largest country in the world after decades of forcing families to discard any children beyond just one allowed.  This has a massive effect on the underlying expansion of the country, China will continue to develop and improve as an economy and people with higher income but it will be at a slower rate and the biggest requirement is for a high efficiency to their actions.
  Its well known the property sector was inefficient in many ways to the extent of being dangerous and corrupt in parts.  Buildings are condemned without ever being occupied and/or built in areas not requiring populations of people to live.  The communists can force anything to be true by rule of the gun but they cannot alter basic economic and market laws, it leads to failure anyway despite the political will and backing of the largest national banks.   I do think those banks will be the weak spot but no doubt they are supported by the state.

[dothebeats]

They got a lot of real estate developers on the said country focused only on already dense regions. Also, their workers aren't earning enough, reducing their capacity to purchase homes and properties from these developers. I guess the government will have to bail out their developers in order to keep things afloat and looking good in the mean time, but with a population that doesn't have enough buying power to support the growing supply, I doubt it will last.

[icalical]

It's laughable to read those articles showing doctored data from China, then find out mere months later that China's opening from the lockdown has not been enough to make their economy surge again to pre-COVID levels. They're property/real-estate sector, which makes up a LARGE percentage of their GDP, is in the edge of crashing.

For the first time in history, China is considering to give UNSECURED loans to real-estate developers. Plus because of those fiscal stimulus that they have already distributed to help their economy, their budget deficit is in the highest in two decades. They are taking unprecedented risk to save their property sector.

I doubt there is any country in the world that can restore their economic growth back to be like the pre-covid condition the damage is too severe. But China's decision to give unsecured loan to real-estate developer, when there are already some prediction about real-estate bubble burst, and many people believe the real-estate in general is arleady over-valued.

[kentrolla]

This is what happens when purchasing power of people declines and there are government and banks who will surely bail out these builders, but what about the people over there? There were some massive mistakes made by this current regime and if we look at the broader picture we may find China is in vulnerable state at the moment because of its declining working population and all these sanctions, humanitarian issues. I think it's time communist regime relook into their policy and work towards growth of people rather than industrialists and once people are financially stable then by default their buying power would increase and such crisis might be rare.

[DrBeer]

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.

Some statistics on Evergrande only:
Chinese developer Evergrande owns 1300 real estate projects in 280 cities in China. The company employs 200 thousand employees, and the number of workplaces indirectly created by the holding is 4 million.
As of the end of July, Hengda Real Estate's unpaid debts totaled about 277.5 billion yuan ($38 billion) - that's about 1,931 court cases pending. And it's worth adding - that's not all the debts....
Let's add to this - the non-payment of taxes to the budget, from about 4 million workers, and a huge number of companies.
Of course, this will not bring China down to the level of "stone age" in 1 day, but it is guaranteed to create huge problems for the economy, which already has a lot of problems

[fauzan Ichsan]

This is what happens when purchasing power of people declines and there are government and banks who will surely bail out these builders, but what about the people over there? There were some massive mistakes made by this current regime and if we look at the broader picture we may find China is in vulnerable state at the moment because of its declining working population and all these sanctions, humanitarian issues. I think it's time communist regime relook into their policy and work towards growth of people rather than industrialists and once people are financially stable then by default their buying power would increase and such crisis might be rare.

Family economic stability can be a benchmark for a country's economic development. When Covid occurs, various economic sectors experience a decline, so that people's purchasing power decreases, especially in the property sector, because of course they will prioritize basic needs for survival. The government has taken steps to stimulate shortages in the property sector, and we will see the progress

[wxa7115]

It's laughable to read those articles showing doctored data from China, then find out mere months later that China's opening from the lockdown has not been enough to make their economy surge again to pre-COVID levels. They're property/real-estate sector, which makes up a LARGE percentage of their GDP, is in the edge of crashing.

For the first time in history, China is considering to give UNSECURED loans to real-estate developers. Plus because of those fiscal stimulus that they have already distributed to help their economy, their budget deficit is in the highest in two decades. They are taking unprecedented risk to save their property sector.

I doubt there is any country in the world that can restore their economic growth back to be like the pre-covid condition the damage is too severe. But China's decision to give unsecured loan to real-estate developer, when there are already some prediction about real-estate bubble burst, and many people believe the real-estate in general is arleady over-valued.

This only shows how desperate they are and how cornered they feel, the growth of the Chinese economy has been the talk of politicians and economists for decades, however it was easy to experiment dramatic growth when the economy of China had been annihilated by its communist leaders.

However now that China is finally finding some difficulty to grow, we are finding out they have severe problems, with the most important being their aging population, as their one-child policy is finally showing the tremendous impact that it will have on China from now on.

[pinggoki]

I saw an explanation on YouTube about china's real estate bubble. They don't even finish the apartments, that would lower the value. And they have tens of millions of empty new apartments, just for the sake of investing. It's the biggest bubble ever, and the only way forward is to make it worse.

You forgot to add that they are also demolishing newly built high rise condominiums because there's no one that's going to live there not to mention didn't they also created a condominiums in one of their provinces that are supposed to be a eco friendly because they've incorporated greenery in those buildings but they ended up creating a green hellscape because those plants because a habitat for a lot of mosquitos? Another that I can think why this is happening is because China wants to develop a lot of their provinces into becoming an urbanized mega cities and combine it with the corruption of the ruling party and a lot will probably conclude that there's only one end to what they're doing. I agree that this is going to be the biggest bubble in China and I hope that when it pops, the people will finally do something about how their government does it's thing.

[Wind_FURY]

Perhaps another cause for concern among Chinese investors, and it shows that there are people who are starting to become more distressed for their economy.

The China International Capital Corporation, a state-owned multinational investment and financial services company, has banned/censored all of its analysts from writing or saying anything bad about China's economy, the Chinese market, and Chinese companies.

That's Q.P. - Quantitative Pleasing.

 

[DrBeer]

Perhaps another cause for concern among Chinese investors, and it shows that there are people who are starting to become more distressed for their economy.

The China International Capital Corporation, a state-owned multinational investment and financial services company, has banned/censored all of its analysts from writing or saying anything bad about China's economy, the Chinese market, and Chinese companies.

That's Q.P. - Quantitative Pleasing.

 

Hiding the reality and banning the publication of real figures, the "best" indicator that things aren't going well...

But as long as stock data is still available, here it just is, and there's nothing you can do about it

Chinese stocks closed in the negative on Friday - investors remained cautious given the sluggish economic recovery, and strong foreign investment outflows further reduced risk appetite.

The Shanghai Composite index fell 0.68 percent to 3,040.97 points, while the blue-chip CSI300 index fell 0.66 percent to 3,538.01 points.

Hong Kong's Hang Seng index fell 1.96% to 17,559.42 points and the China Enterprises index fell 2.1% to 6,041.15 points.

Mainland blue chips lost 0.8% for the week, their worst weekly performance in a month, while the Hang Seng Index climbed 0.6%.


Total: decline, forecasts - not comforting, and "cherry on the cake", the government introduces strict censorship on the publication of real data on the state of the economy, which will lead to another wave of capital outflow and investment from China....

[pooya87]

The China International Capital Corporation, a state-owned multinational investment and financial services company, has banned/censored all of its analysts from writing or saying anything bad about China's economy, the Chinese market, and Chinese companies.

Welcome to the real world where every government is doing exactly this with a different approach
China being a traditional dictatorship, bans things outright and obvious like. Others like US that are a modern dictatorship, bans the same things in a different and non-obvious way. For example by having full control over the mainstream and social media and prevent the facts from coming out. That means despite all economy experts calling US economy the literal definition of a Ponzi scheme, that is not allowed to be said in the mainstream media for the majority to hear. Anybody who says it, despite their academic weight, is called a "conspiracy theorist" until 2008 is repeated and everything falls apart!

[STT]

USA doesnt have a dictatorship its just a heavily government dominated economy, quite a few countries exist in that way it doesnt have to preclude democracy but I think when a country undermines capitalism it leads to that path.  Its clear the currency earnt by the common working man, family or population is being misused and spent underneath the savings and attempts of those who would use that plain cash as their principal worth after receiving plain wages.  If you own assets in the majority you are massively better off then those stuck in cash I think.
  The dictatorship is the control of the money, alot of things stem from that even abroad thats true that the dollar is vital to control and denial of trade to unfriendly regimes.  Russia is trying to use gold as a proxy most likely, they decided that policy long ago and any invasion they carry out is with knowledge of difficulties with Dollar.  Similarly China has for over twenty years been the largest buyer of gold and for a long time the largest producer with little exports they are accumulating massively.   China can underpin the majority of the commodity market fairly easy, they just buy so much more then anyone else and often try to dominate and manipulate prices even with treasuries they have been censured for illegal practices when dealing from what I remember.
  Its probably the case that most of NATO sees Dollar actions as required in parallel to defense otherwise.  War games include economic policy and actions that could take place as its quite valid.  So I think dollar is being mismanaged, there's multiple bad policies and over spend but its not just one country doing that its tolerated and propagated across the globe on purpose.

[Casdinyard]

It's been like this for a couple years now. Saw some reads and a documentary talking about how the housing bubble in China's much worse compared to the US. Imagine the biggest housing provider in your country, who "owns" 80% of the commercial buildings in your city territories as well as a couple rural areas defaulting on their loans cause apparently they took out loans to erect these buildings, with the idea of these houses paying for themselves when they get occupied, and then getting fucked over sideways when you realize that the economy's not allowing for this to happen.

So yeah, if you don't mind the worsening political situation in mainland China, as well as the economy, might want to wait for the housing bubble in there to pop completely and then buy yourself a house time to take advantage of the people who took advantage of us.

[DrBeer]

The China International Capital Corporation, a state-owned multinational investment and financial services company, has banned/censored all of its analysts from writing or saying anything bad about China's economy, the Chinese market, and Chinese companies.

Welcome to the real world where every government is doing exactly this with a different approach
China being a traditional dictatorship, bans things outright and obvious like. Others like US that are a modern dictatorship, bans the same things in a different and non-obvious way. For example by having full control over the mainstream and social media and prevent the facts from coming out. That means despite all economy experts calling US economy the literal definition of a Ponzi scheme, that is not allowed to be said in the mainstream media for the majority to hear. Anybody who says it, despite their academic weight, is called a "conspiracy theorist" until 2008 is repeated and everything falls apart!

A very profound misconception. I will not give you the reasons

First of all, there is no media monopoly in the USA. There are media outlets openly funded and supported by different parties and groups. And they are opposing. Therefore, the subjects of materials can be any! Yes, there is a ban on materials that in one way or another, support illegal currents, ideologists, groups - terrorists, criminals, etc. layers. This is normal. But even so, you can't compare the state-controlled, CENTRALIZED media, as in China, with the fairly independent, law-abiding media in the United States. And they differ from state to state. Any totalitarian centralized power (as in China) will always monopolize the right to information !

[Hispo]

Guys, correct me if I am wrong but, arent most of the Chinese real state projects of a very low building quality, to the point there have been recorded cases of those building actually going down by their own and similar scary situations?
We can all agree that China population is big and real state may always have value in that country, but as far as I understand, the bulk of the Chinese population is concentrated in big cities, specially near their East coast.

If this is indeed a bubble which wil inevitably pop in the future, I wonder if anyone of you have an strategy to short the Chinese real state market from the comfort of your desk?
Is there any way to do so without having a centralized bank account in China? Just curious, I don't have liquidity to seriously short anything. 

[DrBeer]

Guys, correct me if I am wrong but, arent most of the Chinese real state projects of a very low building quality, to the point there have been recorded cases of those building actually going down by their own and similar scary situations?
We can all agree that China population is big and real state may always have value in that country, but as far as I understand, the bulk of the Chinese population is concentrated in big cities, specially near their East coast.

If this is indeed a bubble which wil inevitably pop in the future, I wonder if anyone of you have an strategy to short the Chinese real state market from the comfort of your desk?
Is there any way to do so without having a centralized bank account in China? Just curious, I don't have liquidity to seriously short anything. 

Well, objectively, I wouldn't label all buildings as substandard. Some are quite good, some not so good.
The main problem here is that Evergrande in recent years just tried to show a beautiful picture, and built really "dead cities", which then simply demolished. It was profitable for the company - new 100500 apartments, it is considered as an asset of the company, increases its attractiveness, creates the appearance of active work and high demand for this real estate provider,..... . And then they were quietly demolished, having invested in the construction of a small part of the real project documentation.... Some really "demolished themselves", there are many videos where the house just falls, because it lacks a proper foundation and the building stood almost on several concrete pillars that did not hold in the ground.....