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For some fascinating background on China's present economic troubles check out this 11 August 2023 opinion piece in The Guardian by George Magnus, a research as

For some fascinating background on China's present economic troubles check out this 11 August 2023 opinion piece in The Guardian by George Magnus, a research associate at Oxford University’s China Centre: https://www.theguardian.com/business/2023/aug/11/china-economic-problems-show-things-are-seriously-amiss https://www.theguardian.com/business/2023/aug/11/china-econo...

fnordpiglet 3y ago
The overproduction of housing and other real estate in China has been a clear bubble that must eventually burst for at least 15 years. I’ve been stunned consistently they’ve managed to stave off the inevitable for this long. There are entire sections of cities that are entirely devoid of residents, entire sky scrapers empty - entire blocks upon blocks of empty sky scrapers. It could be waved away as long as growth was astronomical. But with weaker global demand, domestic demand waning, and almost every company figuring out their China production exit in some way or another, it’s bound to pop some day soon. My worry is chinas instability economically leads to political instability leads to wars to distract and focus away from the man behind the curtain.
- ladyanita22 3y ago
  One must remember that back in 2015, China established capital controls on the yuan. That + the pandemic (a massive, epic increase in money supply and cheap credit) helped China keep that going. AFAIK China's housing bubble began in 2008, after the housing bubbles of the West stopped giving China the growth it needed so much. So yeah, they kept the bubble going for long (and they're still trying to "soft-land" the economy, but I don't believe there's a soft-landing possible that doesn't lead to a Japan situation).
- bushbaba 3y ago
  Could say the same about nyc.
  - fnordpiglet 3y ago
    NYC vacancy rates are single digit, while Shanghai is around 15% and Nanning is around 25%. It’s incomparable. Imagine if 25% of the apartments in NYC were completely vacant. https://landgeist.com/2021/11/04/housing-vacancy-rate-in-china/ https://landgeist.com/2021/11/04/housing-vacancy-rate-in-chi...
    - undefinedland 3y ago
      [flagged]
    - wwtdtgotiatl 3y ago
      Sounds absolutely great, since when is having a surplus of basic needs a bad thing? if a country produces too much food, water or electrity everyone thinks its great, but somehow housing is different? What would majority of NYC residents who rent think of that market?
      - CyberDildonics 3y ago
        since when is having a surplus of basic needs a bad thing? When there was economy destroying debt used to create it and people aren't buying. The problem is debt and you are only looking at the comment you replied to, not what the thread is talking about.
      - kwere 3y ago
        that overcapacity is built on credit to developers and home buyers. Most of these loans extimate a bubble level price of decades of earnings of average household (should be 2-5 times your income), justified by the old speculative rush to flip the property to the next speculator few years down the line. The toy is broken and a lot of families cant even afford the interest on the loan. Banks and regulators are freaking out. Developers are also overleveraged, sold a lot of offplans properties that the bank cant even seize bcs these projects never got built/finished.
      - fnordpiglet 3y ago
        First, having extreme excesses of anything is a waste. Imagine a city where 25% of the houses were abandoned. That’s Detroit. It’s not good. It’s blight. Second, they are being financed in a Ponzi scheme with rents that are so high no one can rent them. They aren’t really built to be lived in. They’re being built to be built to drive debt investments. Third, if you produced way too much food, it rots. If you produce too much electricity, it is wasted into the ground. Water into the ocean. That’s pointless and a waste.
- meiraleal 3y ago
  [flagged]
- tibbydudeza 3y ago
  Tofu Dreg projects - who wants to live in apartments built like tissue paper ???.
jamesaurichs 3y ago
Kyle Bass had a great tweet recently on this too: China's REPORTED GDP 'growth' for 2022 was +2.9%. In a year where Chinese LNG demand was down 22%, their real estate market (which represents 33% of Chinese GDP) was in the midst of a collapse, literally welding Chinese citizens into their apartment buildings, and the WeChat payments flowing through their system were down over 20% yoy. In 2023, YOUTH UNEMPLOYMENT is somewhere between 20% and 50%, 48 local governments are in some stage of default on their debt (LGFV debt is approximately $10trillion or just under 60% of GDP), the majority of Chinese property developers are in default of their dollar bonds (71% are in default of over $180 billion in bonds), Xi has ordered all corporate and macro level dat to be severed to the West, and the Chinese government is reporting +5.5% GDP 'GROWTH'?! Reputable economists don't believe these numbers from the CPC
- ssabev 3y ago
  Seems legit to me. 11/10 investment opportunity. /s
- undefinedland 3y ago
  [flagged]

fnordpiglet 3y ago

The overproduction of housing and other real estate in China has been a clear bubble that must eventually burst for at least 15 years. I’ve been stunned consistently they’ve managed to stave off the inevitable for this long. There are entire sections of cities that are entirely devoid of residents, entire sky scrapers empty - entire blocks upon blocks of empty sky scrapers. It could be waved away as long as growth was astronomical. But with weaker global demand, domestic demand waning, and almost every company figuring out their China production exit in some way or another, it’s bound to pop some day soon. My worry is chinas instability economically leads to political instability leads to wars to distract and focus away from the man behind the curtain.

ladyanita22 3y ago
One must remember that back in 2015, China established capital controls on the yuan. That + the pandemic (a massive, epic increase in money supply and cheap credit) helped China keep that going. AFAIK China's housing bubble began in 2008, after the housing bubbles of the West stopped giving China the growth it needed so much. So yeah, they kept the bubble going for long (and they're still trying to "soft-land" the economy, but I don't believe there's a soft-landing possible that doesn't lead to a Japan situation).
bushbaba 3y ago
Could say the same about nyc.
- fnordpiglet 3y ago
  NYC vacancy rates are single digit, while Shanghai is around 15% and Nanning is around 25%. It’s incomparable. Imagine if 25% of the apartments in NYC were completely vacant. https://landgeist.com/2021/11/04/housing-vacancy-rate-in-china/ https://landgeist.com/2021/11/04/housing-vacancy-rate-in-chi...
  - undefinedland 3y ago
    [flagged]
  - wwtdtgotiatl 3y ago
    Sounds absolutely great, since when is having a surplus of basic needs a bad thing? if a country produces too much food, water or electrity everyone thinks its great, but somehow housing is different? What would majority of NYC residents who rent think of that market?
    - CyberDildonics 3y ago
      since when is having a surplus of basic needs a bad thing? When there was economy destroying debt used to create it and people aren't buying. The problem is debt and you are only looking at the comment you replied to, not what the thread is talking about.
    - kwere 3y ago
      that overcapacity is built on credit to developers and home buyers. Most of these loans extimate a bubble level price of decades of earnings of average household (should be 2-5 times your income), justified by the old speculative rush to flip the property to the next speculator few years down the line. The toy is broken and a lot of families cant even afford the interest on the loan. Banks and regulators are freaking out. Developers are also overleveraged, sold a lot of offplans properties that the bank cant even seize bcs these projects never got built/finished.
    - fnordpiglet 3y ago
      First, having extreme excesses of anything is a waste. Imagine a city where 25% of the houses were abandoned. That’s Detroit. It’s not good. It’s blight. Second, they are being financed in a Ponzi scheme with rents that are so high no one can rent them. They aren’t really built to be lived in. They’re being built to be built to drive debt investments. Third, if you produced way too much food, it rots. If you produce too much electricity, it is wasted into the ground. Water into the ocean. That’s pointless and a waste.
meiraleal 3y ago
[flagged]
tibbydudeza 3y ago
Tofu Dreg projects - who wants to live in apartments built like tissue paper ???.

jamesaurichs 3y ago

Kyle Bass had a great tweet recently on this too: China's REPORTED GDP 'growth' for 2022 was +2.9%. In a year where Chinese LNG demand was down 22%, their real estate market (which represents 33% of Chinese GDP) was in the midst of a collapse, literally welding Chinese citizens into their apartment buildings, and the WeChat payments flowing through their system were down over 20% yoy. In 2023, YOUTH UNEMPLOYMENT is somewhere between 20% and 50%, 48 local governments are in some stage of default on their debt (LGFV debt is approximately $10trillion or just under 60% of GDP), the majority of Chinese property developers are in default of their dollar bonds (71% are in default of over $180 billion in bonds), Xi has ordered all corporate and macro level dat to be severed to the West, and the Chinese government is reporting +5.5% GDP 'GROWTH'?! Reputable economists don't believe these numbers from the CPC

ssabev 3y ago
Seems legit to me. 11/10 investment opportunity. /s
undefinedland 3y ago
[flagged]