The background of all this is that after the sudden COVID open-up in Dec 2022, people expected a bounce back of economic activities, which did not happen. There’s a saying in China “Chinese housing market and U.S. stock market are the two huge bubbles in the world”, and with the recent bankruptcy of Evergrande and bond default of Country Garden, some people speculate that the housing market is going to collapse. Another source of stress is that young people cannot find a job; the youth unemployment rate was 21.3% per government data in June (it is generally believed that the actual rate is 40%-60%), and the government outright suspended releasing the data from July—a very rare move showing that the situation has become so severe that the government has no way to hide it anymore. The USD/CNY rate has hiked to around 7.3 (it was 6.9 a year ago), which worried some but others think it’s natural given the U.S. is radically raising its interest rates. Finally, the economic impact of the floods in July/August is still felt in certain cities, but that’s mostly seen as a local issue now.
Source: I am from China and now live in the U.S. Anecdotal stories that are related:
1. According to my parents, the market price of their condo in Beijing used to be ~$600K USD a year ago, but it has now become ~550K. Although the amount of decrease is small, this is the first year in my memory that it decreased.
2. My mom knows someone who graduated from one of the top 2 universities in mainland China majoring in business, and they failed to find a job and are now staying at home as a “full-time kid”—something virtually unheard of for top-2 students in business.
> The background of all this is that after the abrupt COVID open-up in Dec 2022,
The actual background of this actually dates back to 2020, where the 3 red lines policy basically killed off the real estate market for good. This was on purpose. People reading news about the real estate troubles in China always forget that without the 3 red lines, Evergrande and all the real estate companies would still be busy doing their thing, stacking loan after loan for another decade before the market naturally popped. The CCP knew that this would basically kill off the real estate market, and they still did it and during the height of COVID no less.
This shows how serious the CCP are at trying to control their debt load and to try to shift money away from the bloated and unproductive real estate market into high value manufacturing and other more productive investments. If Evergrande and other real estate companies had been allowed to continue with their ponzi scheme for another decade and that bubble had naturally popped... It would be wayyyy worse then what we're seeing today. Xi also seems serious in trying to control housing prices, since that's also a big headache for the younger population.
This can also be seen in the fact that they are actually letting this huge companies fail, no bail, no huge debt fuelled stimulus. They are serious about trying to restructure the economy into something that doesn't rely as much on debt and real estate.
Of course the downside is that the bubble was already huge, lots of people have a lot of money in the real estate market as investments and the real estate market supported tons of jobs in related industries like construction, raw materials etc etc. So the bubble bursting leads to a massive economic downturn for a couple of years while the market and the country sorts itself out. That's deflating asset bubbles for you, the alternative is to keep feeding the beast like some countries (*cough* Canada). The CCP and the chinese people themselves are 100% to blame for the bubble getting as huge as it did, they should have did something like the 3 red lines a decade ago.
That's a lot of the reason for the high unemployment, a sluggish economy always means that new hires get frozen, hence why it's the people in their early twenties that are feeling the heat. Not to mention China just emerged from the damaging covid lockdowns, the real estate market is still in it's death throes, the aftereffects of the trade war/sanctions with America, a partial decoupling from America/The West, the Ukraine-Russia war, not to mention transitioning from a low value export based manufacturing economy to high value manufacturing services and consumer economy. When the last 3 years have been hit by multiple once a decade defining economic events, yeah no shit the economy is going to be bad for a couple of years. When you put factor in all this, it's already a miracle that they are still having positive GDP growth.
What matters now is how the CCP are trying to structure the economy without constantly rising housing prices and without a source of cheap labour. If they can't, then China will be another Japan or Brazil. We will have to see the economic situation in a couple of years, now is way too early to tell.
>If Evergrande and other real estate companies had been allowed to continue with their ponzi scheme for another decade and that bubble had naturally popped... It would be wayyyy worse then what we're seeing today. Xi also seems serious in trying to control housing prices, since that's also a big headache for the younger population.
But the CCP officials are getting huge bonuses from this ponzi scheme😂Evergrande would never grow to it's size without big connections in the CCP. I'm Chinese and I know how corrupt this whole thing is. Now they are seeing the danger, but it's too late.
They should have taken measures at least a decade ago if they are serious about controling the price.
I'm curious why you think Xi has a long-term plan for this nation? He only has a junior school level education...And recent years lots of Chinese people have awakened to the fact that he is just another dictator who cares mainly about his ego and power, with an emperor fantasy. Well he may well already is an emperor.
>This can also be seen in the fact that they are actually letting this huge companies fail, no bail, no huge debt fuelled stimulus. They are serious about trying to restructure the economy into something that doesn't rely as much on debt and real estate.
The problem dates way back to 2012, or even earlier. Covid just exacerbate the problem. CCP has been boosting their GDP figure for a long time by inflating housing. They can't just let Evergrande go bankrupt or default of course, that would be catastrophic. But without a bailout, real estate can never pay off the debts.Right now Evergrande is still getting loans and selling assets to keep existing.
Reconstruction is beyond CCP concern at this point, we will be extremely lucky to avoid a financial collapse. Recent years CCP has been putting out several so-called "epic policies" to "save" the market, either it's lower down payments, or lower mortgage interests, or lifting the household buying restrictions, but few people are biting the bait.
>So the bubble bursting leads to a massive economic downturn for a couple of years while the market and the country sorts itself out.
I don't think it will be a downturn, I think we could just call it collapse. I'm excited to see whether the US stock market or the Chinese housing market would collapse first.
>But the CCP officials are getting huge bonuses from this ponzi scheme😂Evergrande would never grow to it's size without big connections in the CCP.
The CCP isn't a hive mind. You got officials who only think short term and gets all the kickbacks and bribes and you got officials that look at the problem long term and know that for the overall health of the economy, shit has to change. They did manage to pass the 3 red lines so evidently there's a larger portion of the CCP that actively is working towards reform.
>I don't think it will be a downturn, I think we could just call it collapse.
Nothing about this screams collapse. Let's look at an actual collapse, namely the 2008 recession. Large banks like the Lehman Brothers basically going under in a few days, massive worldwide recession, the entire global financial system buckling at the seams. Hell China is still set for around 4% GDP growth this year.
>They should have taken measures a decade ago if they are serious about controling the price.
Better late than never. Considering that bursting the bubble would have made lost tons of CCP members poor and lost most local governments lots of money, it's a miracle that the policy even passed if you ask me.
>They can't just let Evergrande go bankrupt or default of course,
Evergrande literally just filed for bankruptcy.
>But without a bailout, real estate can never pay off the debts.
China has been supporting the real estate market the last 3 years so prices don't fall off a cliff, but they haven't started actually bailing them out. Nor are they giving them tons of cheap loans.
>I'm Chinese and I know how corrupt this whole thing is.
I'm america so I know how the CIA operates. I'm european so I'm an expert on EU export laws. I'm Russian so I know how the in depth working of the KGB and of Putin's inner circle.
>CCP has been boosting their GDP figure for a long time by inflating housing
If you know anything about China, it's also the people's and companies fault. I also have family in China, the real estate market wouldn't be so bloated if idiots didn't keep buying multiple apartments because "Line must keep going up, the government will never let the real estate market fail, housing is the ticket to easy money mindset" Various local governments have been trying to cool the property market for years and years, nobody can stop themselves from sinking money into what's been clearly a massive bubble. Most of the useless housing will never have been built if there was truly no demand from the people themselves, even if the real estate market was corrupt as hell.
What's next? Bitcoin, NFT and other useless financial assets are actually a ploy by the American government plan to massively boost their GDP instead of fucking retards being fucking retards and dumping money into ponzi schemes despite common sense and the government actively telling them not to?
>I'm curious why you think Xi has a long-term plan for this nation?
Probably because behind Xi is a legion of economist and other experts? Ever heard of "made in China 2025?" If they didn't have a long term plan, why even bother killing off the real estate market in the first place? Are you telling me that the country that dragged itself from starving African country status to world superpower in 30 years doesn't have a long term plan? The foresight to pour in massive government support for renewables, EVs and other green technologies 10 years ago when renewables and EVs was being laughed at was just pure luck?
>Recent years CCP has been putting out several so-called "epic policies" to "save" the market, either it's lower down payments, or lower mortgage interests, or lifting the household buying restrictions, but few people are biting the bait.
They don't want an outright collapse of the housing prices, that would be disastrous. But they really wanted real estate to go back to being the main driver of growth, they would remove the 3 red lines or just bail out Evergrande outright.
>Right now Evergrande is still getting loans and selling assets to keep existing.
Evergrande can't get loans... And yes, selling assets is what you do if you want to save the company. They literally just filed for bankruptcy a few years ago.
>Reconstruction is beyond CCP concern at this point
So why did they kill their real estate market during COVID? They actively know that the country can't rely on debt fuelled real estate growth anymore, hence why they actively nuked one of their biggest parts of their economy.
>The CCP isn't a hive mind.
I never remotely said that. I was saying this ponzi scheme IS originally carried out by CCP. Of course the people are part of this shit, but they didn't have a clue what housing bubble would become. Most of them who went into this were from the generation growing up in the cultural revolution, receiving very limited education.They would not know anything about ecomoics like you do, it's absolutely NOT their fault, they just saw an opportunity to get rich and rushed into the gold mine, just common folks. If you said "housing bubble" to my aunt she would be confused by this term.It is until now she realizes what she was doing. But they were encouraged by the policies and/or the surging market back then.
>Evergrande literally just filed for bankruptcy.
Yes in the US.
>Probably because behind Xi is a legion of economist and other experts? Ever heard of "made in China 2025?" If they didn't have a long term plan, why even bother killing off the real estate market in the first place? Are you telling me that the country that dragged itself from starving African country status to world superpower in 30 years doesn't have a long term plan? The foresight to pour in massive government support for renewables, EVs and other green technologies 10 years ago when renewables and EVs was being laughed at was just pure luck?
Okay name one of these brilliant economist? After 2022 "election", Xi had the highest 7 members in the party all of his Yes Man, they have little experience of managing state level businesses. Xi's main logan is literally "making China great again".
And yes I'm exactly telling you that. They had many references to learn from, like Japan that you mentioned, but they didn't. They let the real estate become this monstrosity and on its way to decimate the economy, and history repeats itself. Now shit is about to hit the fan and they hit the emergency brakes. This is what you call long term planning? I call it hindsight at best, some would call it the old fuck around and find out.
I'll also add, that no government in this world, whether now or in history, has so-called long term planning. Otherwise we wouldn't be in this dreadful predicament.
If you knew how EVs and "green technology" are not remotely enough of the "solution" to our energy conundrum and climate predicament, you wouldn't call it a "foresight". And by the way, despite all the rapid installation of solar and wind, coal consumption in China also soared to record highs, why do you think that is.
>I'm america so I know how the CIA operates. I'm european so I'm an expert on EU export laws. I'm Russian so I know how the in depth working of the KGB and of Putin's inner circle.
I said that because my family had to bribe the local officials to do businesses, and it's just a small one. These kind of shit was plain out in the open in 80s and 90s, now they are under the table. I said that not because of some kind of conspiracy, but it's our daily life.
>So why did they kill their real estate market during COVID? They actively know that the country can't rely on debt fuelled real estate growth anymore, hence why they actively nuked one of their biggest parts of their economy.
They did not only killed the real estate market during COVID, it goes way deeper. There were literally human lifes been sacrificed to maintain their "holy" zero COVID policy. It's true that they know shit can't go on like this, it does not take an Einstein to tell, even before COVID average citizens were starting to talk about how dangerous the real estate is, especially young people.
I agree with some of the stuff you said, but not the narrative of "CCP has the foresight of what's coming and has a long term plan of reconstrucing the economy", and ignore the fact that they were the major architect of this crisis. They do what most governments do, they pursue the fast growing so-called "GDP".
> Of course the people are part of this shit, but they didn't have a clue what housing bubble would become.
Anybody with common sense could tell that the housing market was a big bubble in the late 2010s. Xi literally said that he intended discourage housing speculation in one of his speeches.
>Okay name one of these brilliant economist?
One of the thousands under employment? How about the policy that have been implemented under Xi? The belt and road. Clean air act. The various industrial policies that helped to support the growth of important future technologies like renewables, nuclear, robotics, A.I, batteries etc etc.
>They would not know anything about ecomoics like you do, it's absolutely NOT their fault,
Learn, 2010s China is not 1980 china, even the beggars have smartphones and access to the internet. If you're buying a house, or buying multiple houses with a huge sum of cash, you have to do your due diligence. It's like trying to go into the stock market with no training and crying that the evil banks and hedge funds are the reason why you lost all your money.
>but not the narrative of "CCP has the foresight of what's coming and has a long term plan of reconstrucing the economy",
They had the foresight to invest billions into the renewables industry 15 years ago when most investors and people were laughing at it. America literally just passed a trillion dollar bill to basically replicate China's industrial success. They had the foresight to realise that investing trillions into the global south would win them a lot of friends with the BRI, again something that America and the G7 is basically trying to copy. They had the foresight actually do something about the housing bubble before it completely popped on it's on, even if it's very late.
They had the foresight to know that they would be stuck in the middle income trap if they kept going on, so massive IP theft and investment into important future industries like A.I and digital age technologies would be important in escaping the middle income trap.
>There were literally human lifes been sacrificed to maintain their "holy" zero COVID policy.
So people don't die of COVID when it's allowed to spread unchecked?
>They do what most governments do, they pursue the fast growing so-called "GDP".
It that was the case, the BRI, the ONS, the clean air act, hell, even the 3 red lines itself would have never passed.
>And by the way, despite all the rapid installation of solar and wind, coal consumption in China also soared to record highs, why do you think that is.
Probably because despite all the FOMO, China is still a growing rapidly and even their massive renewables growth can't keep up?
>If you knew how EVs and "green technology" are not remotely enough of the "solution" to our energy conundrum and climate predicament
LONG TERM PLANNING IN ACTION. The two major climate solutions are nuclear and population control. Guess what? China is also investing heavily in nuclear and is the poster child for population control. What more proof of long term planning do you want?
>They let the real estate become this monstrosity and on its way to decimate the economy, and history repeats itself. Now shit is about to hit the fan and they hit the emergency brakes.
Considering that the bubble could have continued for another decade before it popped on it's own...
You arguing with starry eyed Xi apologist, he sound very much like Chinese state-run newspaper. He is not to defend truth he is to defend the image of China.
Another factor is that China has hit their [middle income trap](https://en.wikipedia.org/wiki/Middle_income_trap) which occurs at about a GDP per capita of $12,000 which is where China is now. Their wages are now too high to support a large manufacturing economy, which means they need to find another way to grow. Too bad Xi started a crackdown on tech companies a few years ago and killed their tech industry which was showing genuine signs of being a competitor to the European tech industry or even Silicon Valley one day.
> Another factor is that China has hit their middle income trap
The middle income trap is pure bullshit. There's no magic number to determine if a country/economy is suddenly capable of high value manufacturing/innovation/high value services. It depends on the country. You got countries like Luxembourg that have insanely high GDP per capita due to being a tax haven, countries like Japan that have maintained a high GDP per capita despite completely stagnating in technology, you got countries like India that have a GDP per capita lower than some African nations but can launch rovers on the moon. Clearly China is basically 2nd in the world overall compared to America in terms of technology and high tech manufacturing.
Look at it this way. Let's say America magically took control of all of Africa, they're a singular united country now. This will drop America's GDP per capita like a rock. By your logic, this will magically destroy America's high tech manufacturing overnight, people will lose braincells and stop innovating. This new country is suddenly one of the weakest in the world, if you base everything purely on GDP per capita.
Let's give China control of India and all of Africa, this will destroy their GDP per capita to a fraction of what it's currently is, which means that their high tech factories, world class universities and institutions will crumple away overnight, leaving them the crappy low value manufacturing economy that they had 30 years ago. That's how GDP per capita works right? Low number magically means that you suck at more advanced technology and services. Ignore everything else.
>Their wages are now too high to support a large manufacturing economy,
Their wages are too high to support low value manufacturing, that's why they're trying to move into high value manufacturing. Less cheap plastic toys, more jet engines and nuclear reactors.
>Too bad Xi started a crackdown on tech companies a few years ago and killed their tech industry which was showing genuine signs of being a competitor to the European tech industry or even Silicon Valley one day.
Sigh.... Once again people have no idea what they're talking about. Xi started the crackdown due to tech companies fucking over China's internet via extreme amounts of bad practises and also to curb the insane amount of money flowing to the app marketplace. China wants more focus on actual manufacturing and other hard industries. More semiconductors and robots and less tik-tok and other gig-delivery apps.
Don't believe me? Why did China launch a stock market specifically for high tech manufacturing companies right around the tech crackdown?
>a competitor to the European tech industry
What European tech industry? What does Europe have? Spotify? ASML? Deliveroo? A dying auto industry that didn't shift to EV fast enough? i don't see a European competitor to Tesla, Spacex, google, youtube, facebook, Apple?
You are a yet another Xi apologist.
What you are saying is plainly not true, manufacturers are chasing low prices, this how India and Vietnam are rising as industrial powers - they are plainly cheaper than China. The reason why manufacturers did not do it earlier have been highlighted in some books written by those who outsourced their business to China - namely, the manufacturing pipeline is smooth in China, you can bet that you have all the neccessary inputs for your product right in China, infrastructure is more or less efficient and with some neccessary amount of supervision you will get acceptable quality; this was not possible in, say, Vietnam. The situation is different these days. 80% of Samsung devices in my country are made in Vietnam, 10% in India and 10% in China.
And this the reason why China decided to inflate real estate bubble: because industrial gravy train has began running out of gravy.
> manufacturers are chasing low prices,
For low priced objects, which is what China is trying to move away from.
>this how India and Vietnam are rising as industrial powers
Call me back when they control 50% of the entire naval shipbuilding industry, or have their own silicon valley.
>80% of Samsung devices in my country are made in Vietnam, 10% in India and 10% in China.
The whole point of having a high value services industry is that you're the one designing said phones and the app ecosystem around it. Designed in America, made in China was a common insult to the Chinese industrial base a decade ago. Afterall, Apple gets the lion's share of profit from every iphone made, to say nothing of the money they get from the app store.
Just look at the amount of high end chinese phone brands that weren't there a decade ago.
>because industrial gravy train has began running out of gravy.
Look up China's market share in solar, batteries and electric vehicles. Or the shipbuilding market. Or the consumer/miliatry drone market. Or their software department. Or their robotics market. Or the petroleum refining market. Or the amount of robots that they are building for their high end manufacturing. Or software/app side like worldwide success that is tik-tok or their recent progress in A.I.
But oh no, they're losing out on the nike shoes industry to Vietnam, China's industrial base is clearly collapsing.
>And this the reason why China decided to inflate real estate bubble:
Which is why they basically killed their real estate market 3 years ago...?
"High End Chinese Brands" are all based on American innovation, OS, RF unit, Google Store they all feed from is all American.
The problem in your logic is no matter what noble goals they are trying to achieve, their manufacturing base is disappearing nonetheless, and it started (before even 2010-s) long before they decided to move on to "high value industry", and the central government had no choice, but install policies which created this mess we are seeing today, because apparently Chinese High End Phone/Shipbuilding industry could not pull it off. Only then they had become nervous and briought up redlines and such, which did not help.
Only Wumao would speak about Chinese "software success". There is only one country that can claim success in software industry, and it is USA. There is "silicon valley" in China, it is idiotic to even assume there is something similar anywhere in the world.
Practice is the best criterion of truth (c) Lenin. What they have now it has roots. The roots are insuffiency of industrial output and need to pump up growth at any costs. No matter how you spin it, this reall estate bubble is the result of industrial stagnation and complacency of the Chinese powers.
> "High End Chinese Brands" are all based on American innovation, OS, RF unit, Google Store they all feed from is all American.
Yes and? America technology was heavily based on European technology 100 years ago too. Go back far enough and everyone copies and copies. It's the future that's important.
>Only Wumao would speak about Chinese "software success". There is only one country that can claim success in software industry, and it is USA.
It's handily beating out basically all of Europe and various American tech giants. Pretty good success story if you ask me. 2nd place is a pretty good place to be in. You don't have to go for gold every single time.
>their manufacturing base is disappearing nonetheless,
In low value manufacturing, which are only for the desperate poorer country. Factories don't shit out chocolate milk and perfume you know, every heavy industrialising country
>There is no "silicon valley" in China
Shenzhen.
>it is idiotic to even assume there is something similar anywhere in the world
Kinda of my point.
>Only then they had become nervous and briought up redlines and such, which did not help.
The 3 red lines was only place into place 3 years ago, kinda hard to see the full effects of it today.
>this reall estate bubble is the result of industrial stagnation and complacency of the Chinese powers.
Real estate bubbles pop up eveywhere. Canada and Britain are building up a pretty big one as we speak, is it because of industrial stagnation there too?
True. Most westerners only knows that the jack ma has been banned, but don't know why he is banned. Generally related to the super high leverage financial model. Crackdown tech companies? Really no sence.
Thanks for posting. If you could, do you mind elaborating on this:
>it's the people in their early twenties that are feeling the heat
What kinds of outcomes are these people seeing now or what is their outlook like for the near future? How exactly does "feeling the heat" feel for them? - I guess is what I'm asking.
Feeling the heat= high unemployment. Lower pay. etc etc. How they fare will depend on how fast China recovers from this downturn. Which could take a handful of years, to decades.
And if they aren't able to get a job or pay for necessities, what happens to them?
I feel like in western countries "economic downturn" means that the government bails out the corporations and the people are left to fend for themselves. Since the CCP did this on purpose to save it from happening on a larger scale later on, are they doing anything to help these people? No job or lower pay is bad, of course, but are those affected retaining their autonomy? Maybe not enough time has passed to really know...?
Start a war and Send them to the meat grinder. The majority of that demographic are young men that will not be able to find partners because of the massive discrepancy in population of men and women in that age range due to the one child policy. What do you do with a bunch of young testosterone filled men with no work and no future? Eliminate them before they start rebelling and causing problems
Lmfao nope China cares even less about their citizens than the west. At no point has any western country ran their citizens over with tanks and ground up their bodies so badly they had to be washed in the sewer. Mao purposefully sent people to die on the front lines in Korea. The have the second largest military spend and have border disputes with every neighboring country. They invade taiwans airspace daily, have shot missiles around and over the island multiple times, and have openly stated many times they will invade Taiwan. The only question is when and as those domestic pressures grow that when becomes sooner and sooner. Just look at their covid response. They will do whatever they feel is necessary to keep the party in power
I don't think further conversation is going to get us anywhere if you haven't yet been able to entertain opposing viewpoints. For instance:
>At no point has any western country ran their citizens over with tanks and ground up their bodies so badly they had to be washed in the sewer.
Is this in reference to Tiennamen square? If so and you aren't afraid of having your ideas on it challenged, [you could check this video out](https://www.youtube.com/watch?v=sqPI8xlnrwg).
​
>The have the second largest military spend
And when you give military speding a common donominator what happens? [China isn't even visible on the chart](https://www.statista.com/statistics/266892/military-expenditure-as-percentage-of-gdp-in-highest-spending-countries/) (they're at 1.7%, btw).
​
I'm sorry, I'll have to reply to the rest of your comment later, or I might not if the conversation has moved on or it is no longer relevant. If you want me to address anything in particular please say so but for now I need to leave where I am currently and I won't be available for a while.
Wrong. They have the second highest spend which is what I said. https://worldpopulationreview.com/country-rankings/military-spending-by-country All you did was strawman to try and lie and avoid the actual discussion which is the obvious and undeniable military aggression towards taiwan. There’s nothing to talk about when you ignore this. And I’ve entertained tiennamn square could be fake till I saw all of the outside video footage, pictures, interviews of reporters that were literally there. I mean come on the bullet holes are still in the walls there you can go see them yourself. I’m not watching a 25 minute video you couldn’t even put into words yourself especially after you purposely misinterpret their military spend. China doesn’t give a fuck about its citizens just like every other country. The reason they haven’t had to go to war to quell local uprisings like most is because they had continuous economic growth and improvement in their citizens lives. That has changed. If they really didn’t care about their military and wouldn’t do that they would be spending that 252 billion on their citizens but instead they’d rather have aircraft, missiles, and ships. There’s a reason they have border disputes with every surrounding country including their ally with Russia. They literally fight India every single day on the indo-China border. They are militaristic and continuously encroach on sovereign nations airspace and water space with military equipment. This idea that they are some saint that would never attack to keep in power is absurd.
You're either misunderstanding me, or it's become a bad faith argument. Do you understand what a "common denominator" is and why its important for comparrisons between countries that can vary vastly in different ways? This is elementary mathmatics we're talking here. If you're refusing to engage with me on this then you are wilfully ignorant and there is no need to reply because there is no conversation to be had here, we'd just be talking at each other.
I mean youve just ignored literally everything across multiple comments to just try and act condescending without proving any point at all. You’ve purposely misinterpreted and ignored anything I’ve said so yeah There is no point in talking to you further. Some advice: drop the attitude it doesn’t make you look right it just makes you look like an asshole. Good day.
>Maybe not enough time has passed to really know...?
Yeah. China could surprise us and get their economy roaring back next year.
>are they doing anything to help these people?
On the flipside, lower house prices is good for young people and bad for old people.
>And if they aren't able to get a job or pay for necessities, what happens to them?
They have to take the shittiest jobs, move in with their parents. China isn' norway
I chuckled when you mentioned Canada. Here in Toronto I believe the selling price for starter condos is around $1100 per square foot. It’s absolutely disgusting how commodified housing has become here. And not too long ago think 2013-2014 that starter condo used be $220k now it’s worth $600k+. Meanwhile our wages are comparable to MCOL cities in the US. Yet our housing prices are comparable to Boston, NYC, and SF.
I dunno a \~11% decrease on a property investment is a bit more than what I would call small. It's certainly not being ruined but neither is it insubstantial.
I listen to NPR or it may be BBC and stories of many even leaving the business industry and living w family back in their small villages is prevalent. The cost to survive is not in balance.
>My mom knows someone who graduated from one of the top 2 universities in mainland China majoring in business, and they failed to find a job and are now staying at home as a “full-time kid”—something virtually unheard of for top-2 students in business.
Imagine having run the full nightmarish gauntlet of Chinese education to come out on top like that, and then ending up unemployed. Man that must do something to your psyche...
Fully agreed.
I left in mid 2022. They really totally screwed the economy with zero covid. People can't comprehend how many businesses and how the people suffered.
No, Zero Covid has nothing to do with their problems. It is constant goal shifting by those like you, who blame "zero covid" on China problems. I remember when they decided to abandon the policy, talking head would keep saying that the market are going to boom. It did not happen. China had real estate bubble long before covid. Check pre-2020 videos about Chinese ghost cities. The problem is as old as 2012, where analysts have began noticing the problems.
> According to my parents, the market price of their condo in Beijing used to be ~4.5m CNY (~$615k USD by today’s exchange rate) a year ago, and it is now ~4m. Although the amount of decrease is small, this is the first year in my memory that it decreased.
I caught a Bloomberg segment the other day where a guest mentioned that they get their data directly from realtors and they were showing price drops of over 30% in parts of Shanghai.
Y'all this ain't about China, they're preparing you psychologically for what's about to happen to you. They will of course blame it on China, and depending on how bad it is might actually want to start a war.
Your western elites are getting beat left right and centre on the international stage. And all your sanctions and trade wars are only isolating you faster and faster from the rest of the world, whom you NEED. All your societal focus is on your oligarch's stock prices and your own positions in it. Which left you completely blind to the hollowing out of your economy. You produce nothing here! All you have is your financial markets and your cheap money addicted tech sector, while everything tangible is manufactured abroad. Your energy situation is actually frightening, including the US.
There is a critical failure in you strategy and you are inflicting it on your own damn selves. You have to have globalized trade because you will need to import that things you need for your economy. Without global trade, then you collapse! You are NOT self-sufficient in all sectors of your economy. The rest of the world is, and much more energy secure.
Your oligarchs built an Empire with the central goal of building such a global trade network with access to abundant cheap energy, no matter how many people they killed. That's why you commit such atrocities around the world for oil and other resources. Never stopped, look at the human rights violations by your mining sector for example, shoutout barrick.
Now you are breaking down your own access to the global trade network with tariffs and sanctions. And extremely simply embarrassing incidents like the Canadian arrest of a huwaei executive. All your oligarchs are embarassing manchildren and bloodthirsty racist war mongers. Oh yeah, you so badly lost control of the oil market that you have to resort to literally petty theft of Syrian oil. The US is currently occupying a section of Syria and are actively stealing food and oil of the Syrian people. Yeah the terrorist groups they funded simply lost and stopped fighting.
You can only steal and manipulate markets for so long before you can't. With no global trade network, and no access to cheap energy, what will you do?
Your banks are insolvent. That means you will print money and your currency will devalue to the point of it being paper monopoly money. Play monopoly and give one starting player the ability to take as much money from the bank as they want. The game doesn't work obviously right? Because the rest will say fuck this, we ain't playing.
Brics said they will stop playing, will we?
The moment is coming where we will decide if we want to do a revolution or get pulled into an unwinnable war.
As an American, I’m not going to disagree with your analysis of the Western hegemony, because it’s pretty accurate for the most part.
But I will say that just because one side is in trouble (the West), doesn’t mean the other isn’t as well. China has done some things better than us, but it doesn’t mean they also haven’t been fucking up fast and picking up speed. Their One-Child Policy has them staring down a frightening demographic cliff, and their real-estate market is a real-estate bubble waiting to pop.
Both of our nation’s markets are inextricably tied together though, and if/when China has a bad downturn, the US is going to follow suit, because as you mentioned, we’re a hollowed out shell of a functioning economy.
The US economy has come a long way in decoupling from China. We trade more with Mexico now than we do with China.
If China experiences a full-scale economic crisis, the US will be largely insulated. Europe might not be so lucky, though.
>Their One-Child Policy has them staring down a frightening demographic cliff, and their real-estate market is a real-estate bubble waiting to pop.
Oh.... lol.
I thought on collapse we agreed on degrowth and alleviating pain on the planet. But when the chinese do it, it is bad. But if China has more kids, what will you say?
I’m not saying degrowth isn’t a good thing, it is. But it’s fucking poison to economies, which is what me and the previous poster were talking about. He was saying their economy is surging and I’m saying it has a lot of cracks in its foundation. If their markets implode, they’re in for a REALLY rough time.
And a demographic cliff isn’t just “population goes down”, it’s also “population becomes too old to work”. Too many dependents and not enough providers is a really bad thing in any country. Look up the dependency ratio.
Of course, we're all linked. But they are much better prepared for it than we are. Look at the blitz of economic deals with everyone in the world other than the west. They can probably redirect all of their US exports to the rest of the world, and get more valuable things in return like cheaper oil, other raw materials, and combined trade and financial infrastructure. There is a whole world out there that can give you better stuff than just paper.
Contrast that with the west which can not survive without the parasitic hold it has over the global economy just because of the strength of their currency and their historical foothold on the countries of the global south in the form of debts.
One set of population will get much poorer, others will only see their standard of living rise. I hope Brits are doing ok because it will get much much worse. Can't say the same thing about Dubai or Singapore.
Sure they will, but they will make us pay for it by inflation and layoffs. So prices will keep going up and there is no income coming in. Whoever will still be working, it's to just survive. Everyone else becomes homeless.
Pretty much what is already happening.
But no you also need global trade because all your supply chains are global, and any breakages will spiral costs out of control like we've seen with the pandemic. They printed an incredible amount of money then, and they will do it again now.
If the Chinese economy collapses, the whole world economy will collapse. Many people dont realise this and act as if a Chinese economic depression is a good thing.
I see how it would depress asian economies, but I don’t see how it would affect the western economies.
China’s imports mostly come from Asia. So if the chinese economy collapses, then there is less demand for imports which would depress asian economies.
Additionally, if China’s economy collapses, them unemployment skyrockets and wages get suppressed, which leads to cheaper exports for western economies. Cheaper exports might be a problem for other exporters, but it should be a good thing for importers no?
The only way I can see it affecting western economies is through the exposure to the chinese economy that western financial institutions have, but I recall the percents were not too high. I guess then again, financial institutipns tend to be leveraged to the waazoo though, so who knows.
You read and replied to this post using devices that were almost exclusively manufactured in China. Imagine if that manufacturing capacity collapses. No new products or the rest of the world. Suddenly it becomes impossible to replace anything. Economic activity stops.
1. Exposure is a big issue. Western economies are already extremely frail right now. They could pull through and recover, but even just a moderate hit like a Chinese depression would hammer them.
2. China doesn't just make plastic toys anymore. A larger and larger part of their exports are being relied on for productivity in the west. If it was just cheap consumer goods, not a problem. But think of what happens to western businesses unable to get the parts from China that they rely on.
This will be my 5th once-in-a-lifetime economic crisis/upheaval. At this point, they tend to come every year. If the financial markets were humans, they would be drama queens and we'd suggest a good therapist with all these outbursts
The material economy and financial economy decoupled in the 1970’s so it’s all fugazzi bullshit - trillions lent on goods and services that will not be produced. Funny, this is also why income and wealth inequality has grown so much
These were once in a lifetime financial events before the 70’s though
Exactly right. It was decoupled with the hope that self-discipline of those in power could keep it appropriately managed. But that seems more like a coke-fueled pipe dream than a viable policy.
Great analogy!
On another note, the US markets will feel this deeply. The articles I read act like this is happening "over there" when China's problems are our problems, too.
It certainly will cause worldwide impacts, but the US has been doing a good job of reducing dependence on China. We do more trade with Mexico these days, and the IRA and other legislation has thrown a lot of money and motivation at US firms to move manufacturing back to North America.
Point being, we are in a better position to handle this than we were a decade or two decades ago.
My bigger concern has to do with how the Chinese leadership will try to deal with this. Hopefully it does not lead to war.
In an attempt to assuage internal issues arising from their economic turmoil, the communist leadership decides to do something to distract the populace.
An extreme event would be invading Taiwan. A less extreme version could be some kind of saber rattling that jacks up the tension in the area to 11.
True, perhaps China's 'Favored Trade Nation' status is has diminished.
That said, they say the most effective way out of an economic depression is war and I really hope that doesn't happen.
The US economy is already on thin ice. I keep seeing reports of poor consumer fiscal health. I'm not an economist but it seems like a consumer based economy should not do well if the consumers can't even afford basic needs like food, shelter, and healthcare. It's pretty obvious that any catastrophic event (economic, geopolitical, or climate) could trigger a global economic downturn.
China is going to have massive internal issues regardless of what happens globally. Several generations of double digit economic growth sets certain expectations for its people which are clearly not getting met now. I wouldn't be surprised if China attacks Taiwan as a distraction from domestic issues within the next few years.
I'm not trying to be an alarmist but we may be looking at a global conflict on a scale we have not seen for 80 years and with several nuclear powers it doesn't look good.
Yeah, it could be real disastrous. Especially once people pull their heads out of their asses and see that the global war currently being set up for kickoff is precisely the only way out of it for Xi.
And I said for Xi, not for China. There is a big difference.
This might lead to collapse because a GFC today would likely be much worse than in 2008. The financial systems in US, EZ and China are showing signs of significant weakness. (SVB, Credit Suisse etc) The European economy is very weak, China's is deteriorating fast. And the geopolitical scene is one of increasing animosity. And the expensive natural disasters that just won't stop lately......A global financial crisis is the last thing we need right now.
Borrowing trillions to bail the banks out at 7-8% interest cant happen. So the Fed could immediately drop rates or not drop rates and and do QE, which risks higher inflation. The inflation piece was less of a constraint in 2008 by it now that it’s in play the gov is constrained.
China won’t politically collapse, tho it may financially for a bit. This happened to Japan in the 1990s and Korea and Taiwan as well in 1997-2004, each East Asian country had to deal with something like this.
The main problem with China is due to one child their population pyramid is skewed towards males and also the young aren’t as prevalent as the old in the near future. A Chinese economic breakdown would be a disaster for all nations Ngl
The argument here isn't that China will collapse, but that their financial markets will, in a way akin to or worse than 2008. If I had to guess a better example might be the Japanese bubble pop.
I am so tired of hearing about how this or that bubble is about to pop and "could be" worse than [insert famous downturn]. Just crash it already. Please. I want to be able to buy a house finally.
“Meanwhile, the Xi government's supervision of the financial sector is very lax.” It’s almost funny that he problem is not enough government involvement in the financial markets.
The following submission statement was provided by /u/mark000:
---
Related:
https://ca.finance.yahoo.com/news/country-garden-seeks-add-grace-042421463.html
>China is flashing new signs of financial stress almost on a daily basis, with a property giant making fresh efforts to avoid default and a state-run bad debt manager suffering a bond slump on worries about its own health.
.............................
The ceaseless warning signals from credit markets are adding to broader concerns about the world’s second-largest economy, where authorities remain reluctant to adopt stronger stimulus even as an unprecedented property crisis intensifies. Signs of contagion from the housing woes have grown in recent weeks, from missed payments by one of China’s biggest shadow banks to a bond rout among Hong Kong developers.
---
Please reply to OP's comment here: https://old.reddit.com/r/collapse/comments/1655k6a/chinas_financial_crisis_could_be_as_disastrous_as/jyc5k0v/
Related:
https://ca.finance.yahoo.com/news/country-garden-seeks-add-grace-042421463.html
>China is flashing new signs of financial stress almost on a daily basis, with a property giant making fresh efforts to avoid default and a state-run bad debt manager suffering a bond slump on worries about its own health.
.............................
The ceaseless warning signals from credit markets are adding to broader concerns about the world’s second-largest economy, where authorities remain reluctant to adopt stronger stimulus even as an unprecedented property crisis intensifies. Signs of contagion from the housing woes have grown in recent weeks, from missed payments by one of China’s biggest shadow banks to a bond rout among Hong Kong developers.
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