Wait until that hits all the countries China has “helped” with infrastructure….and significant loans. Nations will say “we’re not paying for this junk” and China will have to deal with a big issue…across many, many countries.
20+ years of rampant building with substandard steel and concrete. look at the failure rate on their high-speed rails guess that is job security if you have to keep building it over and over again.
This has been looming for years. This may be the first domino and it may not. Burmt eventually, that domino will fall.
Exports are 11% of our GDP and China is 7% of our exports… if their demand disappeared it would impact our GDP by 1%. American firms have something like only $10B invested in China. Seems like a smaller risk for us. Don’t know. Might just lower our prices.
Not totally on topic but they now estimate that Covid killed about 1.9 million in China in a matter of 2 months. https://archive.ph/aC1LF
I think like 20% of our imports are Chinese. It's so entangled at this point I think it would be quite the ripple
timely..rate cuts. wonder how that makes that alternate currency basket look China Takes Drastic Measures To Shield Economy From Real Estate Storm (msn.com) On a recent note, the world’s second-largest economy has issued a directive to prominent state-owned banks, mandating substantial reductions in both bank deposit and mortgage rates, as reported by Bloomberg. ....... The mortgage rate cuts, which are set to reverberate across a market worth $5.3 trillion, are exclusively targeted at loans for primary residences, in an attempt to cushion the fallout in the housing market. Simultaneously, the Chinese government is taking shelter behind promises of amplified stimulus measures to drive growth and employment within the country. The recent surge in youth unemployment to over 20% has prompted the authorities to kick into action.
There are plenty of jobs in China. Just not the high skilled, high paying jobs that their youth, especially those with college educations, are expecting. How Bad Is China’s Economy? Millions of Young People Are Unemployed and Disillusioned
possibly.....also the general thought is that the US will take much less of a blow compared to a lot of the world since we are not a big importer to China
My son lived in China for years, and told us that the high rises in China are built with planned obsolescence in mind. Basically, make-work on a large scale. Build poorly, tear down, build again. A jobs program, if you will.
It's weird to think about what's going on here. China is willing to sacrifice wealth to create purpose for folks.
This was not really an "accepted practice" as much as it was government policy. China was trying to move people inland and away from the coast, where the population is too high and difficult to support with natural resources, electricity, food, etc. After the construction of the Three Gorges Dam, they had enough fresh water to supply many more millions of people in the Chongqing area. It also allowed large ships access to Chongqing to deliver goods to and from Shanghai on the coast. They then needed housing, which the government invested in. Then they needed jobs to bring the people in from the coast. This is where the problem came in. No one wanted to move from the coast to Chongqing. Everything about civilization was better on the coast, including education, health care, the environment, culture/entertainment, etc. They provided tax breaks and incentives to companies to relocate, but no one came. There may have been some fear of the dam collapsing, but I think most of it was the perception of Chongqing as a backwards place. It is very hard to create a major metropolis (and fully modernize it) in the middle of nowhere on a short timeline.
France is the one that is crapping their pants about China's economic problems. Their biggest industry is luxury goods, and their biggest customer is . . . China.
Poor wording on my part. Once the cat was out of the bag the building continued and the investors kept investing no? But as you said, the government made it policy so I'm probably still wrong in my assertion. I'm certainly not versed in the whole situation I just remember a couple of investigative pieces on it a while back that implied it wasn't slowing.
I don't think the obsolescence is necessarily intentional. No one is really responsible for maintaining the high rises once they are built and sold out. And the buildings are not designed with maintenance in mind. They are built as cheaply as possible, as additional cost to the builder means less profits. The real problem to me is that China's government is very weak on regulating things that don't threaten the ruling party, and housing design and construction quality is one of those things that doesn't threaten the ruling party. Many of the apartments are sold before the building goes up, so it takes a certain amount of trust to invest in something you can't see or touch. If you wait, there won't be any apartments left. You get a water leak above your apartment, you have to find a way to deal with it. The apartments are not "owned" by the people living in them, even if they are fully paid for. They are allowed to live there up to 70 years before the government takes the building back and demolishes it. By the end of the building's life, no one wants to live there.
It wasn't investors that were investing in these buildings. It was regional governments who were taking out loans and handing money to builders. The loans were very easy to get if your region was targeted by the CCP for growth. The Chinese national government does a very poor job of deciding how to invest money, even though their best and brightest students go into finance with the hope of getting one of these government jobs and handing out money.
Chinese homebuilder Country Garden warns it could default after posting $7 billion loss (msn.com) Country Garden warned Wednesday that it could default on its vast debts as it reported a loss of 51.5 billion yuan ($7 billion) for the first six months of the year. The company, which was China’s largest residential developer last year, said it had been caught off guard by the depth and persistence of the slump in the real estate market, particularly in smaller Chinese cities, and had failed to react fast enough. .................... All of the above … indicated the existence of material uncertainties which may cast significant doubt on the group’s ability to continue as a going concern,” it added in the filing. The troubled real estate giant is battling a liquidity crisis which some fear could spread to China’s wider economy and even spill over abroad.
