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> Months after China Evergrande ran out of cash and defaulted in 2021, investors around the world scooped up the property developer’s discounted I.O.U.’s, betti

by bArray 3y ago

> Months after China Evergrande ran out of cash and defaulted in 2021, investors around the world scooped up the property developer’s discounted I.O.U.’s, betting that the Chinese government would eventually step in to bail it out. One thing investors should always be clear about with the CCP - as a foreigner you will always be screwed over if it benefits the CCP. The CCP is extremely hostile, even having strained relations with other Communist Countries [1]. > After two years in limbo, and with over $300 billion in debt, Evergrande was ordered by a judge in Hong Kong to liquidate, a move that will set off a race by lawyers to try to find and grab anything belonging to Evergrande that can be sold. This will not pay out foreign holders of I.O.U.'s, because of this: > There isn’t a lot left in Evergrande’s sprawling empire that still has value. And any assets that are valuable may be off limits because property in China has become intertwined with politics. I hope this is a lesson to investors. I ultimately feel sorry for the people who invested into housing and who are now stuck with mortgages they must continue to pay despite having no property. T > Financial markets in mainland China and Hong Kong — a city that has for years been an entry point for foreign investment — have received such a blow that officials are scrambling to find policy measures like a stock market rescue fund to shore up confidence. On Sunday, they moved to stop short selling, a practice that allows investors to bet against a stock. The CCP over-stepped and took Hong Kong, which should still be under partial UK control and therefore an attractive entry for foreign investment. The CCP caused foreign investment in Hong Kong to be withdrawn and got this ball rolling. This is just the beginning. Almost all provinces in China are now broke and the economy has taken a very significant down-turn. Property is one of their largest investments and I am not aware of a financially good developer operating in China. There appears to already be talk of restrictions on bank withdrawals to prevent a run on the banks. [1] https://en.wikipedia.org/wiki/Sino-Soviet_relations https://en.wikipedia.org/wiki/Sino-Soviet_relations

KaiserPro 3y ago
> which should still be under partial UK control and therefore an attractive entry for foreign investment. As a brit, much as my colonial arse would love this to be true, the lease expired and Britain never had any real control over HK post handover. The only power we had was economic, and we've well and truly fucked that. the UK of the 80/90s is not the UK of today. For better or worse.
- bArray 3y ago
  Pretty sure there was an agreement in place [1]: > This blueprint would be elaborated on in the Hong Kong Basic Law (the post-handover regional constitution) and the central government's policies for the territory were to remain unchanged for a period of 50 years after 1997. We should have simply never have handed it back over to China and allowed Hong Kong to remain independent. From what I understand, it was some compromise that involved the Royal Family. > As a brit, much as my colonial arse would love this to be true [..] I'm not going to paint a picture that British colonisation was all good, but some Countries had it better. In recent times the people of Hong Kong and Burma (Myanmar) have begged for British intervention. > [..] the UK of the 80/90s is not the UK of today. For better or worse. I would love to disagree with you, but I can't. I suspect most Countries are in precisely the same place, where the average person feels as though things have gotten worse. I think the way to solve it would be to take a near-term economic down-turn and solve our fundamental issues: the interest on debt alone is astronomical, local governments need cleaning up (if only people knew the half of how corrupt they are), large investment into local security (military, NHS, energy, food, manufacturing), etc, etc. The next 20-40 years would be miserable but we would emerge strong. [1] https://en.wikipedia.org/wiki/Sino-British_Joint_Declaration https://en.wikipedia.org/wiki/Sino-British_Joint_Declaration
  - KaiserPro 3y ago
    point one is correct, there is theoretically a mechanism to make sure that HK is democratic. The problem is there is democratic, and "democratic". What china is doing is within the terms of the agreement. However it's a lease, not freehold. a lease reverts to its original owner. There was no practical or legal way to make HK independent.
saiya-jin 3y ago
Neither China nor Russia are communist countries for very long time. Folks here with more experience can describe better than me what actual regime there is, to me it seems like some mixture of brutal capitalism and regulated markets, dictatorship of the elite, all drowning in corruption. What labels they put themselves on doesn't really matter, does it.
- bArray 3y ago
  > Neither China nor Russia are communist countries for very long time. The Soviet Union is since 1922 [1] and basically still exists today under the leadership of Putin. The CCP is since 1921 [2] and is still in power today. Both have 100+ years under their belts. > Folks here with more experience can describe better than me what actual regime there is, to me it seems like some mixture of brutal capitalism and regulated markets, dictatorship of the elite, all drowning in corruption. It's what communism always looks like. At some point all systems are setup to incentivize the individual in order to ensure production happens. Over use of socialism almost always results in some percentage of the population choosing to do nothing to support the society they benefit from. It's why ideas like UBI will never work. The only other way to ensure production happens is to use the stick rather than the carrot. > What labels they put themselves on doesn't really matter, does it. Almost a "real communism has never been tried!" type argument. [1] https://en.wikipedia.org/wiki/Soviet_Union https://en.wikipedia.org/wiki/Soviet_Union [2] https://en.wikipedia.org/wiki/Chinese_Communist_Party https://en.wikipedia.org/wiki/Chinese_Communist_Party
- nvm0n2 3y ago
  How can you have both brutal capitalism and regulated markets? Those are normally presented as opposites, as in, "we regulate markets to soften the impact of raw capitalism". China isn't really a capitalist country. It's more capitalist than it used to be in the 70s, but as this refusing-to-liquidate nonsense shows, the basic rules of capitalism don't really work there. China ignores many things that are required to really do capitalism properly: - IP rights aren't enforced - Other kinds of property rights aren't enforced (see the ARM subsidiary that simply declared independence) - Staying out of private business (see Ant Group) - Many companies and industries are state owned - Industrial policy is still the standard in China (compare to the USA) - Markets aren't informed (rampant censorship, bad data) and so on.

by bArray 3y ago

KaiserPro 3y ago

> which should still be under partial UK control and therefore an attractive entry for foreign investment. As a brit, much as my colonial arse would love this to be true, the lease expired and Britain never had any real control over HK post handover. The only power we had was economic, and we've well and truly fucked that. the UK of the 80/90s is not the UK of today. For better or worse.

bArray 3y ago
Pretty sure there was an agreement in place [1]: > This blueprint would be elaborated on in the Hong Kong Basic Law (the post-handover regional constitution) and the central government's policies for the territory were to remain unchanged for a period of 50 years after 1997. We should have simply never have handed it back over to China and allowed Hong Kong to remain independent. From what I understand, it was some compromise that involved the Royal Family. > As a brit, much as my colonial arse would love this to be true [..] I'm not going to paint a picture that British colonisation was all good, but some Countries had it better. In recent times the people of Hong Kong and Burma (Myanmar) have begged for British intervention. > [..] the UK of the 80/90s is not the UK of today. For better or worse. I would love to disagree with you, but I can't. I suspect most Countries are in precisely the same place, where the average person feels as though things have gotten worse. I think the way to solve it would be to take a near-term economic down-turn and solve our fundamental issues: the interest on debt alone is astronomical, local governments need cleaning up (if only people knew the half of how corrupt they are), large investment into local security (military, NHS, energy, food, manufacturing), etc, etc. The next 20-40 years would be miserable but we would emerge strong. [1] https://en.wikipedia.org/wiki/Sino-British_Joint_Declaration https://en.wikipedia.org/wiki/Sino-British_Joint_Declaration
- KaiserPro 3y ago
  point one is correct, there is theoretically a mechanism to make sure that HK is democratic. The problem is there is democratic, and "democratic". What china is doing is within the terms of the agreement. However it's a lease, not freehold. a lease reverts to its original owner. There was no practical or legal way to make HK independent.

saiya-jin 3y ago

Neither China nor Russia are communist countries for very long time. Folks here with more experience can describe better than me what actual regime there is, to me it seems like some mixture of brutal capitalism and regulated markets, dictatorship of the elite, all drowning in corruption. What labels they put themselves on doesn't really matter, does it.

bArray 3y ago
> Neither China nor Russia are communist countries for very long time. The Soviet Union is since 1922 [1] and basically still exists today under the leadership of Putin. The CCP is since 1921 [2] and is still in power today. Both have 100+ years under their belts. > Folks here with more experience can describe better than me what actual regime there is, to me it seems like some mixture of brutal capitalism and regulated markets, dictatorship of the elite, all drowning in corruption. It's what communism always looks like. At some point all systems are setup to incentivize the individual in order to ensure production happens. Over use of socialism almost always results in some percentage of the population choosing to do nothing to support the society they benefit from. It's why ideas like UBI will never work. The only other way to ensure production happens is to use the stick rather than the carrot. > What labels they put themselves on doesn't really matter, does it. Almost a "real communism has never been tried!" type argument. [1] https://en.wikipedia.org/wiki/Soviet_Union https://en.wikipedia.org/wiki/Soviet_Union [2] https://en.wikipedia.org/wiki/Chinese_Communist_Party https://en.wikipedia.org/wiki/Chinese_Communist_Party
nvm0n2 3y ago
How can you have both brutal capitalism and regulated markets? Those are normally presented as opposites, as in, "we regulate markets to soften the impact of raw capitalism". China isn't really a capitalist country. It's more capitalist than it used to be in the 70s, but as this refusing-to-liquidate nonsense shows, the basic rules of capitalism don't really work there. China ignores many things that are required to really do capitalism properly: - IP rights aren't enforced - Other kinds of property rights aren't enforced (see the ARM subsidiary that simply declared independence) - Staying out of private business (see Ant Group) - Many companies and industries are state owned - Industrial policy is still the standard in China (compare to the USA) - Markets aren't informed (rampant censorship, bad data) and so on.