Signs that China's real-estate bubble will burst and take the economy with it

Originally published at: https://boingboing.net/2019/02/16/systemic-risk-2.html

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and take THE WORLD economy with it.

FTFY.

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3.4/65 seems like a small proportion. What is it in other countries?

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Here is the full speech given by Xiang Songzuo, which has now apparently vanished from China’s internet.

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Well, we can’t exactly say it’s a surprise. It’s been clear for years now that the Chinese property market was a manufactured absurdity of the highest order. China simultaneously has some of the world’s most expensive real estate markets and mostly empty cities; a whole lot of financial shenanigans and unpayable debt. That 80% of the nation’s wealth is tied up in domestic property is disturbing, to say the least. We’re all in trouble.

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It’s much higher in the United States. Household real estate is valued at $24.6 trillion (here, table 8), and the value of all home mortgages are $12.2 trillion (here). I’m not sure if we are talking about the same numbers, however.

But then, household real estate is a much smaller percent of household wealth in the United States (28%). And these things play out at the edges, so you have to take into account the financial health of the mortgagers and the banks and things like percent of non-residence home ownership.

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considering 90% of everything is made there (at least as sold in the USA, including more and more food to my horror) what does that mean to the world economy?

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I’ve been reading for years that the bubble is going to burst. I know it has to at some point, since they always do. And when it does, a large portion of the world economy will go with it.

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And this is why the current leadership has been going all in on the dystopian police state stuff, like the pervasive surveillance, social credit scores and strangling what little media freedom there was post-olympics. When the economic engine stops delivering, the unofficial deal with China’s people (don’t demand political reform, and we’ll all get rich) is off, and people might get very annoyed very quickly.

It’s also a reason why he’s been keenly chopping away at any internal threats to power, removing all rivals via the popular anti-corruption campaign, abolishing term limits and getting the Tao of Pooh Xi Jingping Thought added to the constitution.

As the article points out, it’s also 30 years since 1989, and the leadership are desperate to make sure that this is not a significant anniversary in any way.

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I don’t think it would mean that much, if China collapsed. Other countries would easily pickup the slack created; clothing to India and Mexico, Japan and Korea for electronics, etc…

Think how many countries exist in the world that have some extra capacity to produce things cheaply, all of Eastern Europe, the African Continent, South America, Central America, many of the smaller Asian countries like Vietnam, Thailand…

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The Australian property boom is driven by Chinese money. Some parts of Canada as well, IIRC.

The Australian market is falling, which is fine, but they would fall further if the Chinese start to sell.

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Economic crisis wouldn’t necessarily mean that the government collapsed or industrial production completely stopped. Export-oriented sectors like electronics would survive a collapse in domestic demand, and unemployment would drive down wages, making Chinese exports more competitive.

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Sounds like a Guzheng playing imo…

Gosh.

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Wages are sticky, in that they don’t fall quickly. Currency devaluation through QE is more likely to affect the value of Chinese exports.

With the surplus of men, and shortage of women, and so many men buying residences that they don’t live in (and can’t because they are unfinished) so that they will be perceived as marriageable, they have harnessed the human sex drive to fuel a real estate bubble. The government there may decide to fix the surplus of men and provide a distraction from these problems through war.

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Aren’t the gender imbalances happening in rural areas, whereas the real estate bubble is an urban phenomenon?

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Thanks for posting that. IT seems, in Mr. Xiang’s analysis, that the bubble has basically already popped; it’s just so much smoke and mirrors keeping us from seeing that.

One of the things that came to mind for me when looking at the reasons that China can’t unwind this without massive structural reforms is the “lost decade” in Japan.

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Once they’ve collected it, they need to protect it better.

An online database containing names, ID card numbers, birth dates and location data was left unprotected for months by Shenzhen-based facial-recognition technology company SenseNets Technology Ltd, according to Victor Gevers, co-founder of non-profit organization GDI.Foundation, who first noted the vulnerability in a series of social media posts last week.

Exposed data also showed about 6.7 million location data points linked to the people which were gathered within 24 hours, tagged with descriptions such as “mosque”, “hotel,” “internet cafe” and other places where surveillance cameras were likely to be found.

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The government needs to step in & nationalize real estate. Or would that be too communist for China? :wink:

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