Real estate giant China Evergrande will be liquidated
nytimes.com
nytimes.com
In the short term, though, this is likely to trigger a domino effect of other property developers defaulting and a lot of pain for everybody who (thought they had) bought property with them. The real tests are whether China will allow the Chinese entity to go bankrupt (and not just the HK one), and what's going to happen to foreign shareholders and ordinary Chinese citizens who trusted these companies with lots of hard-earned money.
One unpredictable ripple effect will also be on the crypto markets: there have been persistent rumors that Tether is heavily invested in Chinese property developers in general and Evergrande in particular.
I unironically think a property bubble pop is a great way to defeat the demographic slump in the long term.
That and the recent crackdown/reforms on private education makes me think the party is aware that property bubbles and education costs are a liability
At least the same hasn't happened with food and drinkable water yet.
However, I think covid changed that, where producers collectivly realized that if they just raise prices the middle men need to pay up.
Being stuck in a sector that operates "efficiently" sucks. You want guilds, like lawyers and doctors, or inefficiency, like the financial sector.
Evergrande is in the first group here, fruitlessly producing something of no real value, as there is too much of it.
The second group are those who invested in Evergrande itself, or the housing it built.
It sucks for everyone.
It sucks for Evergrande, as sooner or later it had to go bankrupt.
It sucks for those who invested in the housing, as it's clear that if they actually tried to sell or rent out the housing they would end up with some paltry sum.
It sucks for those who invested in Evergrande, as they're going to lose money.
It suck ls for those who can't afford a place to live because of the inflated prices.
I think there are really no winners here. No middlemen filling their pockets. It was a loss for everyone.
As with any bubble, the winners are the people who cashed out at the right time
Wouldn't a bubble pop help these people?
Wouldn't the ruling class on the opposite end of the leverage chain have benefited greatly with stacks of cash? The fun party is over now, but at least profit was successfully extracted from others. The extreme losers being people on the other side of the chain, paying mortgages on property that will never be built.
Already, at capacity attention, over capacity exploitation. Infrastructure debts, planetary debts #YOLO
I wonder, when we're finally getting AI enhanced productivity end to end, will we realize how deep we dug ourselves in?
In China, they had a speculative bubble sure, but what s gonna kill the market is that in 20 years a lot less young people will exist to even buy the houses, like in Japan.
To greatly simplify, it basically makes it so that it makes sense to have children on the far ends of wealth and poverty, and much less sense to do so in the middle.
When I was little it was still married-with-children by default, probably at relatively young age, and people had to decide not to have children. That was in part helped by the lack of widespread use of contraceptives. The norm in my primary school was two or three kids per family. I remember only one classmate with no brothers or sisters. Of course zero children families were not represented in there.
Now the default is single-no-children and you have to make an explicit choice to marry (you used to be nudged into it by society) and to have kids, by stopping to use contraceptives and to do all the things that long time singles are used to do.
Cost of housing, living, parenting is also an issue but I think that the default mindset is more important and sets the conditions for higher general costs: if on average people can spend all their money for themselves, the society and the market adjust and people who have to spend time and money also for kids are at a disadvantage.
If the default is changing in China too, their population is going to shrink no matter what.
For example china famously had(has?) the one child rule. This meant a deliberate shift in how children were raised (all your eggs in one basket)
> Now the default is single-no-children and you have to make an explicit choice to marry (you used to be nudged into it by society) and to have kids, by stopping to use contraceptives and to do all the things that long time singles are used to do.
I suspect you probably want to look deeper into the causes of that more. Yes contraceptives have a role to play, but they are not automatic, they require a deliberate choice, sometimes daily (https://www.statista.com/statistics/573210/contraceptive-use... granted this is for the UK, and doesn't account for people not taking it. The point is that younger women are taking pills daily)
Why are people not having kids? the answers are more complex than you seem to be suggesting.
Lots of people, young and old, take pills every day. People forget and unwanted pregnancies still happen, but a) that's not suggestive that the pill doesn't work or that it isn't responsible for a significant drop in realized fertility (the birth rate data makes that clear), and, b) the medical advances and cultural shift the pill enabled (casual sex is okay, sex outside of marriage is okay, children outside of marriage still pretty undesirable for most people) also paved the path for emergency contraception and the widespread acceptance and availability of abortion (to the extent that we now end the lives of 73 million unborn per year - that's a top-20 country, by population, per year).
In summary, is it more complex than "the pill did it"? Yes, but not much more. Birth control (of all types) is responsible the bulk of the reduction in birth rate.
Why don't people choose to have children? Part of it is cultural, aggressively anti-child beliefs. A big part of it in my generation is depression about the future - many people feel the future is hopeless because the government is not doing enough about climate change and we seem to be getting closer and closer to a large war. Most of my friends would express that sentiment when asked why they don't want children. A big part of it is financial & health related - a lot of people don't feel comfortable having children unless they are in perfect health & quite wealthy, because of proto-eugenicist ideas that are just accepted as part of our culture. Some of this is individually rational choices: if no one will provide you with appropriate financial & medical support for the full-time, critical-to-society job of raising children, some people accurately believe their standard of living will drop dramatically if they have a(nother) child.
All of these issues can be solved. The government can act on climate change and de-escalate tensions rather than preparing for war in order to let people have hope for the future again. The government can make IVF and other fertility increasing treatments free to the end user and otherwise as accessible as possible to lower the barrier to entry as much as possible. The government can choose to compensate people for the critical-to-society job of making & raising children, ensuring that having children is not a financial burden compared to not having children, & structure healthcare + educational outcomes such that people do not feel they and their children's lives will be worse after having a child, or at least that that isn't a true statement in terms of personal standards of living.
Western governments choose not to do these things because they don't need to, because they can rely on other countries having widespread lack of choice + poverty & instability to push young people to emigrate to the West & keep Western demographics very healthy. This solution works (at the expense of poorer countries), and while it can't last forever it can last for a very long time from our perspective. Eventually though, countries will need to solve the fundamental problem or accept widespread decreases in wealth & standards of living as population decreases.
Birth control is a tool, which requires conscious thought. If you look at the UK: https://www.statista.com/statistics/281981/live-births-in-th...
You can clearly see two peaks in the last 40 years. Given that the last peak comes after liberalisation of the morning after pill, it breaks the correlation between availability and birth rate.
> end the lives of 73 million unborn per year
I'm assuming your joining 48hr contraceptive with <28 week abortion, otherwise those numbers would mean that (I'm assuming the USA) every woman in the USA alive would be having an abortion at least every two years. Given the number of clinics capable of carrying that out, I find that number difficult to prove.
73mil/yr is the world number. https://www.guttmacher.org/fact-sheet/induced-abortion-world...
Contraceptive measures are not an explanation in and of themselves. They provide no information regarding the "why".
I'd argue that the reduction is more specifically reflective of people's willingness to have children in times of economic hardship or declining living conditions; perceived or otherwise.
This is only true if you don’t think women having full personhood is “not much”. Cheap, effective contraception came on the market around the same time that women started gaining legal rights, which is also when women were no longer forced into marriage and started to have independent careers of their own, whereas before the main option was motherhood, especially prior to social welfare systems supporting the elderly. It’s not a coincidence that we’re seeing backlash “men’s rights” movements now that a non-trivial fraction of men are learning that they aren’t worth settling for now that social pressure isn’t doing most of the work for them.
> to the extent that we now end the lives of 73 million unborn per year
This is overstating it considerably: it’s about 900k in the United States and 13M globally.
We won't be alive to see the final results of this experiment in societal change. I'm not sure I'm sad about this.
Ref for 73 mil: https://www.guttmacher.org/fact-sheet/induced-abortion-world...
The problem is that companies were allowed to capture all of the value of women's emancipation, to the detriment of everyone.
Women joining the workforce should have meant two people working 20 hours per week instead of one person working 40. Instead, two person households are working 80 hours and one person households are struggling to get by.
Literally all my colleagues in past 5 jobs (that few hundreds guys) have kids if they are over say 35. All colleagues of my wife. All of our friends. I cover western (Switzerland) and eastern Europe here. Same for Swiss colleagues and foreigners. Folks with nannies or family close but also raising their kids just by themselves, like us.
2 kids are standard, 3 are actually slowly becoming a norm. 1 is rare and more related to medical issues rather than an actual decision. From my own personal experience being raised as a single child, it sucks in many ways and will affect you negatively for rest of your life, regardless of all the love you received from parents (which of course helps but doesnt mitigate this).
And to your anecdotal evidence, let me respond with anecdotal evidence... aren't we constantly hearing news about declining birth rates and an aging population? I have heard this from Korea, Japan, the United States, generally about Europe and specifically about the Netherlands.
yes, that might actually be _the_ biggest incoming issue china has (through much much less because of housing prices).
Basically by combining one child politics with various cultural and economic effects lead to a very strongly favor for having a boy over a girl. Combine that with natural reduction in birthrate due to reduction of poverty and some other factors it lead to a situation where China isn't just approaching a shrinking of population size but more like a collapse which could easily lead to various social and economic emergencies (like collapse of rent system, collapse of health system, problems to feed all elderly people etc.). Given the current "moral" direction of their government I wouldn't be surprised that if they don't find a better solution they might either start a war to kill many of their young and mid aged single men and/or start to mass euthanizing old people, at least if sick and/or poor. They even have the perfect excuse wrt. of they PR represent that: "hey we just copied Canada why are you complaining".
Did I miss Canada embarking on a policy of euthanasia? I know that the treatment of native people had quite a few scandals in recent decades, did you want to allude to that?
Without wanting to make light of that situation, I think it is rather different in scale to what you propose.
This kind of euthanasia (voluntary, with a review board, like in Switzerland) is something I feel should be a human right, though I'm not sure about the intricacies of the Canadian system.
I think one should be very much aware of the extreme chasm between this and the kind of euthanasia committed in the early half of the last century in the third Reich, and not confuse them because of the common name. From the grandparent comment, I had assumed they meant to imply that Canada had implemented something closer to the latter.
It's not as bad as what I believe China might do if worst comes to worst.
But from what I have heard the Canadian system has issues, with cases of especially permanent sick+poor people being in some cases constantly "nudged" to say good by even if they still have a strong will to live. Through I'm not sure how wide spread such issues had been and if they where fixed.
The reason I mention it is because china would also claim it's fully free choice, then if that isn't enough start nudging and then if that isn't enough go further.
Lets just hope it won't happen.
That would be stupid, one thing the regime is not. Easier is to allow immigration of brides from Vietnam, Laos and Cambodia. Also, they can simply promote mechanization of agriculture. Right now, ~20-30% population is in agriculture that can be reduced to 2-5%.
China already has human trafficking of women from Laos and Cambodia. Birth rate still dropping.
It used to be that deciding to conceive made parents get their child into schooling and a lifelong career. Instutions were built and maintainted to support inflow of children and stable corporations were kept alfoat by a growing populace.
Making conception optional for sex has knocked over most of the stability there was in the west and people are scrambling to replace it with electronics and authority.
Tack on top of that, these country wide changes were not made by local governments, but by factories and corporations gradually dragging in the tools to break our society. And immigration on top to plug the gaps.
Something's gone terribly wrong with the West and there's no weasling out of it. It's time to stand up.
It's absurd to attribute the failure of modern capitalism to demographic flows or contraception.
Western corporations were relatively stable only because the rate of technological disruption was lower and, more importantly, the rate of overall financialization of the economy was so much lower. Capital moved very slowly, and financial instruments were few, often strictly regulated. Most capital was in steady manufacturing and agriculture business, rather than in volatile service industries. That made for a view of the economy where businesses were an institutional part of society, with roles and responsibilities and connections to locality.
Once technological disruption and financialization accelerated, unshackled capital steamrolled society into doing what it's best for capital pretty much all the time, demographics be damned. Part of the push towards later and later parenthood is due to the increased specialization necessary to tech-intensive capital-fuelled businesses, requiring longer and longer training times and complete dedication for several years on top of that - all to earn unstable jobs that disappear very shortly, thanks to more and more automation.
Yes, something is broken in the West: the needs of capital have trumped the needs of people for two generations, and now we're paying the price for it. You won't fix this through demographic tinkering, but through societal and political change. In fact, increasing demographic pressure on Western societies, at this point, is courting disaster.
And there it is. This narrative that immigration hasn't been a constant and deciding factor in the development of the West (and pretty much everywhere else) is so wild. Stability of an insular population is the absolute exception of history.
Don't ignore selection bias. When you're a kid, almost everyone you know is a child, and so almost every adult you know is a parent.
I don't know how old you are, but most of those societal changes - no need to marry and contraception - have been in place for decades. I'm in my early 30s and I wouldn't say staying single and not marrying is the "default" - yes, there's more people doing it, but I still know a lot of people who have coupled up and got married. I don't think I know anyone who's completely checked out of the idea of a relationship yet - the single people are still dating, often with the expressed desire of finding someone.
I have 2 kids, and the main reason people I talk to aren't considering a third is cost. Cost of an extra bedroom, cost of a larger car, incredibly high childcare costs - there's a very large real reduction in living standards that comes from going from 2 to 3. Compare that to my parents generation, where 3 or more siblings was the norm. I suspect a large part of falling birth rates isn't that loads more people are living child free lives, but that the people choosing to have kids are having fewer of them.
I'm also in my early 30s, but the majority of people I know are not married. I know about the same number of people who are polyamorous as married despite not running in those circles.
I know I'm an outlier because the stats don't hear anything close to that.
I will say that in the major metros, marriage still feels relatively uncommon. I think I've been to one wedding in several years, and it was a work acquaintance more than a friend (I was surprised to be invited, really). Most of the people I knew that were married were in their late forties and beyond.
> I don't think I know anyone who's completely checked out of the idea of a relationship yet - the single people are still dating, often with the expressed desire of finding someone.
I think it's important to delineate between people who want a relationship and people who want to get married. Relationships can exist absent a marriage, and marriages can exist absent a relationship. Some people don't want to be single, but don't want to be married.
That's the demographic that I've seen growing. I don't see people pulling away from relationships so much as marriage. Marriage comes with so much baggage, and a lot of the traditions are based around historic assumptions that don't hold true anymore.
Prior generations experienced marriage as a transformative event, whereas for my wife and I, it was a nice day, but our lives went back to normal afterwards.
Add in the fact that even a small ceremony is expensive, and it's no surprise that many people are putting it off or foregoing it entirely.
Property speculation keeps prices high, and people paying off mortgages in dead-end jobs. Education costs force parents into difficult decisions to move out of HCOL areas where they likely have higher-value jobs. Energy and Water costs spike while providing no societal benefit.
The West is obsessed with keeping these in place, the rising East seems better placed to change economic inefficiencies. Not sure how it'll play out but I feel like Western society is being pillaged by the PE crowd who can take advantage of the above.
The real-estate market in the West may be bonkers but at least someone in their prime earning years can invest in stocks if they can't purchase a home. That has its own risks but with a little knowledge you can mitigate them and with patience you can wait them out and even benefit from them.
Also, I disagree that using houses as your store of wealth to fund healthcare is a sane policy. People should be paid for work.
You have to store wealth somewhere otherwise you'll constantly be losing wealth. Ideally, one could simply bank their savings without it losing value while also investing in a variety of other assets rather than putting everything into stocks or real estate but that's not the world we live in at the moment.
If you believe people should be paid for their work then you should also believe that the money they are paid for their work should not be bled away from them.
lol wut? china changing ineffeiciencies? this must be winnie the poo propaganda. china is corrupt as all hell and much of their building material is of dubious and shady quality. japan and korea are stagnating, and much of SEA is still struggling to modernize and combat their own structural inefficiencies.
PE is a cancer, but I'd be curious to know how much of a stake foreign firms have in those orgs.
Eastern countries with more direct government intervention, strong-arm leaders like Modi, Winnie the poo vs waning Western powers.
China didn't bail out its property gamblers, the West bailed out its banking gamblers. The West excels at high-level corruption. It's not bribing an official down a back alley, it's done Manhattan high rises and Mayfair team rooms.
Both are indefensible but as bad as each other.
It's true that perverse incentives were created out of that, but I would ask if the financial industry is still making these mistakes like NINJA loans. Considering how we just got out of inflation without a recession, the US economy seems pretty structurally sound today.
Not sure we can draw a line under anything yet and there is still lots of potential for economic instability out there.
The introduction of Tether coincided with the hijacking of the Bitcoin GitHub repo by the for profit company Blockstream.
Blockstream's Samson Mow had close ties with Tether and El Salvador dictatorial President who made Bitcoin a national currency on exchange for billions of dollars of free Tether dollars.
Tether is not and does not need to be backed by anything other than US intelligence agencies. There is no proof of this other than the fact that the larger USD counterfeiter is allowed to exist and control the price of the hijacked Bitcoin chain with the ticker, BTC.
And the Blockstream FUD is tired (I am the longest serving technical employee at Blockstream)
Another real world example is the Hong Kong Dollar. Just because it's pegged to the USD, does not mean it's counterfeit.
It has already happened. Evergrande and Countrygarden, two of the biggest developers both defaulted.
The insolvency of Chinese property sector is old news.
In my city, they tried to implement taxes for those who own more than two properties and it would be more expensive for properties that had no one living. The result is that the proposal was quietly removed from the voting in a Friday night before a weekend followed by long holidays.
The effect of China's property bubble was an oversupply of houses, leading to unnaturally low property prices. The long term effect will be a consolidation in the property branch, leading to less supply and higher property prices.
Whether this is good or bad I don't know, but it certainly will not lead to more affordable housing than right now.
it is, but it's also complicated as the problems are quite a bit different in China then in the US
the reason there was a bubble in China was because they sold (barely) affordable (apartment owned, not rented) housing to a huge amount of people while not producing it. Like they financed it similar to a snowball system. Group B buys housing but pays for the housing bought by Group A then Group C pays for Group B etc. But at some point it fell apart and people realized the housing they should have gotten "soon" isn't being build (or stuck in a partial state) and the company has no money anymore. (Kind oversimplifying the whole thing.)
To top that off there are (state build) ghost cities which have cheap appartments and acceptable building build quality, the problem is there is nothing there, no jobs(!), no supermarket, bus, people, "anything", if you are unlucky even electricity might be cut of in parts of it, (also I guess for rent not apartment ownership). (But there are also enough examples of western media reporting about ghost cities messed up because turns out just a few years later it wasn't a ghost city anymore.)
And to make that worse it's not just Evergrande. It outside of the areas with a lot of central government focus there where many cases of houses building companies which had money issues trying to pretend everything is fine by cheeping out on building cost to a point where houses build that way are basically unusable. Through from the outside it looked like there is still progress. Issue with that is, it is really hard to guess how bad it is, pro-china media most times doesn't mention it and if it says it's a rare exception and/or videos are fake, anti-china media says it's bad to a point it's everywhere, and you find little in between. And both sides are known to lie a lot.
CCP planning is just different. TBD if it's doomed to fail like the Soviet Union, or if it will make it through a crisis like this. It's also hard to tell what will ultimately call a crisis; just thinking back to 2008, a lot of the story is only figured out in retrospect (eg how critical Bear Stearns was).
Many things wrong with that statement. There is a reverse migration from cities back to countryside, since the wages in the city have fallen, jobs have disappeared, rent is still expensive, and it's harder to justify living in the city when you can only save a few hundred dollars a year from a job.
Thus, empty retail stores in major tier 1 cities. Empty apartments in Dongguan and Shenzhen. Small crowds at malls.
I think a lot of people living in the west without ties to china haven't realized that there are many huge but sometimes subtle changes in China in the last view years.
Isn't that like the people who claim that huge sky scraper in Tianjin will be finished any day now?
https://en.wikipedia.org/wiki/Goldin_Finance_117
Kangbashi is up to 100k now, at least, but they designed for a million, so it is still pretty empty. As soon as coal becomes big again, maybe it will fill up.
I think it’s much too early to really say the trend is sticking.
[1] https://open.spotify.com/episode/7s85fsvxULfVNGxUVQAMtT?si=g...
Wangfujing and Sanlitun, which used to be one of the bustling streets in Beijing, now empty
If you can plan and work on a longer term, you can do things like staging multiple phases of development.
They can build the subway station that opens up into a dismal swamp today, and watch the YouTubers laugh. But in 3 years the swamp is scheduled to be paved, in 6 years there will be 10,000 housing units in walking radius, and in 10 years, the Work Factory will have opened nearby and you have a sprawling community of 60,000 people surrounding a subway station that would be logistically difficult and expensive if you tried to build it in after the fact.
Property developers are the answer to affordable housing. We cannot have affordable housing without building millions of new housing units. It's the home OWNERS who are dragging their feet to try to artificially inflate their property values
Time to invade Taiwan, I guess.
> While Evergrande is listed in Hong Kong, almost all of its assets and the vast majority of its more than $300bn in liabilities are in China.
> In theory, the ruling could pave the way for liquidators to attempt to seize control of some Evergrande assets in mainland China, since Hong Kong has a mutual recognition agreement on insolvency and restructuring that applies in some parts of China.
> However, it is not clear how far mainland courts will accept the Hong Kong winding-up order.
In short, this headline is wildly overstated. This is a minority jurisdiction that is overreaching. There is no way that Mainland Chinese courts will respect the decision. Frankly, I would say the same if a giant French property developer happened to be listed on the Amsterdam Stock Exchange. If a Dutch court ordered them to liquidate, I cannot believe the French gov't would allow it. (To be clear: I am not an EU hater here. Vice versa would also be true.)
My prediction: China with directly or indirectly nationalise Evergrande. Most bondholders (especially foreigners) will be wiped out. Most of the unfinished buildings will be completed in 2-5 years.
Many things wrong with that statement. Chinese local governments are overloaded with debt - 12.6 TRILLION https://www.reuters.com/markets/asia/china-orders-local-gove.... National government has refused to supply local governments with more money, in fact it has limited some local governments to what they can build. Local Governments have zero incentives to add more inventory to an already bloated real estate supplies. A lot of these unfinished buildings were left unfinished for a number of years, is already left to ruin, and unsalvageable. Tofu dreg building qualities means it's easier to demolish these buildings.
As I understand, most of the debt issued by local gov'ts is RMB-denominated. The PBoC can easily assume (large) parts of this debt without large negative economic impacts. Other countries have done similar in the past by creating "bad banks" that are financed by the central gov't or central bank.
How could central bank finance such a debt without igniting the inflation? Especially in a country with already expensive money and pretty large interest rates.
Central banks can print money. And most countries, even developing ones, can support more money printing than people understand. I am not advocating for crazy money printing, but printing 5-10% of GDP for a single year to clean-up a big financial mess isn't so bad.
Did you know that Indonesia has an explicit monetary policy to monetize a certain portion of their national debt each year? The finance minister (Sri Mulyani) is well respected, so foreign bond buyers were not upset by it. It did not "ignite" inflation. Also, look at quantitative easing by US, UK, EU, and Japan.
Quantitative easing in US, UK, EU, and Japan happened during the economy balancing on the brink of deflation. I.e. when capital from the developing world was actively escaping into the developed world, when the developed economies were bathing in cheap capital and firms could borrow at zero or even negative percent, and the economy grew massively and required quantitative easing for simply avoid inflation.
We can see how money printing works when the economy isn't growing respectively, the inflation hits as it happened in EU, US and Japan now.
> Did you know that Indonesia has an explicit monetary policy to monetize a certain portion of their national debt each year?
No, I don't. The only sources I found tell the opposite.
https://www.thejakartapost.com/news/2020/05/06/no-need-for-u...
If not fallen down by then. The Tofu Dredge of Evergrand won't age in anyway for even other developers to acquire for completion.
I'm willing to take that bet!
My prediction, a bit different, not that much.
1) nationalized. Yes
2) foreigners will be wiped out. Yes.
3) Huge backlash and more foreign money will leave China
4) China will backtrack a bit to appease ( a bit, but not enough)
5) Most buildings won't be completed. China doesn't have the funds anymore to build property like x years ago. The elite already took out their money. Civilians lost their "investment" and won't buy real estate like they did in the past.
6) Property declines further. Others like Evergrande will fall.
7) property becomes "cheap" ( relatively)
8) population declines
9) property becomes even cheaper
... Etc
The thing I consider differently and shapes my narrative, is that it seems that China made a huge construction bet on population growth. And it seems that bet was wrong.
So they don't want to finish those buildings, since it would drive prices down quicker.
--- A lot of buildings were already abandoned and were never going to be build.
There's an elite group that can borrow money in China and they don't need much collateral for it. So they construct 25%, cash in and are gone. Perhaps this practice isn't common for Evergrande though.
But those buildings were abandoned because no one was willing to put in the 75% required to complete it ( which is a similar story, not the same though)
Source of this practice: a friend had to setup one of his client's division in China for a couple of weeks a couple of years ago.
While committing the act, they just think in the short term, and not about the absolute destruction of people's lives and property.
This nearsightedness complicate many problems further, and worsen them.
When I hear stories with some quote similar to "then the senator granted them the mining rights to an $800M mine on public lands for a 3-night stay at Sandals." I'm mad about the corruption, but I'm also mad at the politician for being dog shit at realizing how large their bribe should be.
but robust houses, man. in the future. eventually.
Which is why it hasn't had the impact you would expect.
https://www.cnn.com/2024/01/29/business/evergrande-ordered-t...
> Hong Kong and the mainland city of Shenzhen — where Evergrande is based — have a mutual insolvency recognition agreement, but it’s “effectively inoperative”
But China basically ignores HK in this.
Evergrande has been ordered to liquidate, on paper this means that the Chinese subsidiary Hengda must also liquidate, but China's just... not going to liquidate Hengda? So instead of Evergrande's creditors dividing up Evergrande+Hengda's assets only Evergrande's assets are going to be liquidated? If that's right, how does that work? Does Hengda get bought and the purchase price distributed to creditors? Does China just tell Evergrande's creditors "too bad"?
that sounds inline with standard operating procedures.
Foreign investors have snatched back nearly 90% of the money they put into Chinese stocks this year (2023)
https://markets.businessinsider.com/news/stocks/china-econom...
Foreign investment in China turns negative for first time
https://asia.nikkei.com/Economy/Foreign-investment-in-China-...
https://www.scmp.com/economy/china-economy/article/3248078/c...
That said, once foreign bond buyers realize how much foreign creditors get back from the Evergrande debt (0 cents on the dollar), pretty sure foreign bond purchases will drop fast
"Global investors raised their holdings of Chinese bonds for a fourth straight month, capitalizing on a lucrative currency swap strategy to continue their gradual return to the world’s second-biggest debt market.
They bought 181 billion yuan ($25 billion) of local yuan bonds on a net basis in the country’s main interbank market in December, taking their total holdings to the highest since April 2022, show Bloomberg calculations based on clearing house data."
All of this is besides the point that foreigners are buying China's bonds, as @loeg has stated. They are essentially swapping out riskier equities for the safety of bonds which is by and large what is often taught to do when the economy isn't booming, only to switch back into equities when the downward cycle is over.
[0]: https://www.cnbc.com/2017/06/20/argentina-sees-strong-demand...
2.75B is 0.002% of the $133T worldwide bond market.
https://www.sec.gov/about/divisions-offices/office-credit-ra...
>the implications for the company’s vast business in mainland China are unclear.
>Hong Kong and the mainland city of Shenzhen — where Evergrande is based — have a mutual insolvency recognition agreement, but it’s “effectively inoperative” and courts in the city are “extremely unlikely” to recognize the offshore liquidator, Silvers said.
What we have here is a complex set of semi-international legal issues on the other side of the world. I don't trust HN commentary on the subject. It seems very undecided for now and will be a sticky situation for China, Hong Kong, and foreign investors.
There's nothing at all about Evergrande in China Daily, which means there's no official position yet.
[1] https://www.scmp.com/business/china-business/article/3250215...
https://manifold.markets/SanghyeonSeo/will-hong-kongappointe...
In a broad sense, that's how bankruptcy works in the west too. The government has rules for who gets paid first, and everyone else is SOL.
The last one my company dealt with, we got about 10% of our exposure back. So we got £1,000 instead of the £10,000 that was owed. We then got to write that off as a loss.
This monster is in a different league to anything I've dealt with but the principles here would largely be the same but with less transparency and more money wandering off for a chat with shady characters. I suspect that the rules I might follow may be joined by some rather more complicated ones, when the sums involved are large enough and the corporate structures are complicated enough.
if Hengda is a going concern by it's self, then it might be sold off to a bunch of people to raise cash, or shares of it given to creditors to sell off them selves.
but then there is the concept of senior and junior debtors, and the like.
It's in no way a given that a subsidiary is insolvent just because the parent is.
This isn't unusual. E.g. when Commodore went bankrupt several subsidiaries continued to operate as long as they had stock, and the UK subsidiary even tried to organize a buyout of its parent.
In general, sure, but in this case, no. The subsidiary has, at most, $260B of assets against $275B of debt. It's insolvent.
E.g. in particular in situations where there is any way to justify that they will not become cash flow insolvent. If they can somehow make a reasonable case that their assets will appreciate in value faster than their debts will come due. Thought it might put additional constraints on their spending.
Note that I'm not arguing that they're a going concern - I have no idea, but given they're presumably dependent on Chinese property prices for their assets valuation it does sound dicey - just how it might be possible for them to justify not winding up the subsidiary.
This is freeing the Chinese business of its obligations of $25B in foreign debt.
Presumably that makes for a better business.
Who knows. Evergrande could easily be worth less than -$25B. No one wants to buy a business worth negative money. But it's definitely worth less negative money now.
If you borrow money from a bank and that bank goes bust, you still owe the full balance based on the initially agreed repayment schedule, it is just that your loan is now an asset contributing to the recovery of the bank's own creditors.
Granted, it's very weird to have the parent die. Normally you have subsidiaries to isolate risk, and even if the problem is the parent I imagine you'd cool the books to shift the debt to a sarificial limited liability subsidiary that can go bankrupt so the business can continue.
> HK is sort of what NY is to the US. It is a peripheral region with some minor degree of autonomy but because it just so happens to house the Chinese version of Wall Street this means it’s judiciary is a little bit special when it comes to dealing with insolvency and other corporate issues.
This means that it very likely means liquidation in China as well.
Though it's kinda funny to imagine the Dutch held onto NYC until the 1990s after which there was some sort of unification process.
That’s a good 300 years before 1990 :)
If you want some actual information I recommend "Cross-Border Insolvency between Chinese Mainland and Hong Kong: The Past, the Present, and the Future" (2022). https://ssrn.com/abstract=4100844
It has languished incomplete-- basically rotting-- in part because of EB-5 financing trouble + Oceanwide.
It's expensive to finish, expensive to demolish and the hellish post-covid/high-interest commercial real estate landscape means it will likely remain there for a while
It's just been sitting there because of EB-5 financing trouble. Especially in post-Covid commercial real estate environment
The fiasco took down a sitting City Councilman (who was just sentenced 13 years in prison: https://www.justice.gov/usao-cdca/pr/former-los-angeles-poli...)
More info:
https://en.wikipedia.org/wiki/Oceanwide_Plaza
https://www.costar.com/article/2030217368/los-angeles-skyscr...
It's not a lie, it's commercial real estate!
https://www.youtube.com/watch?v=FbTR3lDuYqk&list=PLkH0kJMHYO...
At least in NYC, the requirement is that bedrooms need to have a window. Are there more requirements than that? I've had kitchens w/out windows in NYC. Bedrooms needing windows doesn't seem very BS to me.
https://www.reuters.com/world/china/china-will-cut-banks-res...
[1] https://www.cnbc.com/2024/01/25/china-youth-unemployment-wil...
[2] https://en.wikipedia.org/wiki/Aging_of_China
[3] https://www.axios.com/2023/10/11/chart-chinas-real-estate-st...
However, knowing asian predisposition to longevity, it may not quite pan out in the end.
> ANZ’s senior China economist Betty Wang believes the scale of the problem is much bigger. She estimates that 1.5 trillion yuan ($223 billion) of mortgage loans, or 4% of banks’ total outstanding mortgage loans, could be affected by the movement.
> “What concerns us is if more home buyers cease payment, the spreading trend will not only threaten the health of the financial system but also create social issues amid the current economic downturn,” she wrote in a report on Thursday.
https://www.cnn.com/2022/07/14/economy/china-property-crisis... (2022)
This is actually not a big deal at all if you are following modern high-rise construction techniques.
Tough doesn't mean it can't happen, just that it might be harder than normal to square it away
Edit: should have read the piece - it seems this is exactly what they did - dangled (or at least, failed to deny) the prospect a government bailout, to offload the debt to international speculators.
It's almost as bad as the people who gave Ponzi their money despite the hint being right there in his name /s
In a word: no. Specifically, it’s a compound word (singular).
From the Wikipedia link I posted above, especially the last quoted line:
> Compounding occurs when two or more words or signs are joined to make a longer word or sign. If the joining of the words or signs is orthographically represented with a hyphen, the result is a hyphenated compound (e.g., must-have, hunter-gatherer). If they are joined without an intervening space, it is a closed compound (e.g., footpath, blackbird). If they are joined with a space (e.g. school bus, high school, lowest common denominator), then the result – at least in English – may be an open compound. A group of words that is not a compound is a phrase.
So that is two words, that together form a Compound.
More explicitly, from the definition for "Word" [1]: "For example, ice cream, air raid shelter and get up each are generally considered to consist of more than one word (as each of the components are free forms, with the possible exception of get), and so is no one, but the similarly compounded someone and nobody are considered single words."
Determinism is a distinct concept, and while related to nominative determinism, in the sentence I used, I don’t think it’s accurate to say that the word nominative is an adjective modifying determinism because nominative determinism is itself a distinct concept that functions singly as an appositive after an independent clause and a colon.
https://en.wikipedia.org/wiki/Apposition
I’ll admit that you are free to disagree on this point or any other I have made, and I wouldn’t consider you wrong to do so. My remarks regarding what you posted in response another person in the thread were meant to contrast our views on this matter. Clearly, it’s implied that these are my views, and it’s okay to be wrong, and I’ll admit that I may be considered wrong myself by you, but to say so isn’t an ad hominem because we were both making truth claims with the unstated assumption that we each believe ourselves to be right. It’s not an insult or claim for/against you personally or regarding your character. It’s just how I view your claims on this topic as evidenced by your comments.
It just seems needlessly pedantic to derail an entire thread to call someone out for supposedly miscounting words when it’s literally beside the point I was making, but I respect your difference of opinion.
The person you responded to wrote "That is two words or a phrase". You replied "In a word: no. Specifically, it’s a compound word (singular)."
In this, the evidence you yourself have provided says you are incorrect. "nominative determinism", if it is a compound at all, is an "open compound", not a "compound word". It is an "open compound", and as such is made up of two words. The person you are refuting is correct. You are correct in identifying it as an open compound. You are incorrect in claiming that it is a single word.
https://en.wiktionary.org/wiki/compound_word
It’s okay to be wrong. I’m just not wrong on this point, and if I were, I’d be okay with that. Are you okay?
That guy who was banned from trading in Hong Kong in 2016 for shorting the stock in 2012 must feel vindicated, at least.
Basically, the Hong Kong stock exchange is increasingly a scam as well.
In reality these "homes" are nothing more than a concrete box for legal/tax reasons.
These are second or third "homes" for people that were purchased as a poor investment.
The investors should eat the losses.
Given the ability of the CCP to significantly control major industries and movement of people, is it not possible that someone might buy an apartment in a "ghost city" while living in a rural area or renting in another city, expecting that people and jobs would flow to the city once it was completed?
Basically I don't really understand all the details, nuance and different corporate and governmental players involved in the "ghost city" phenomenon, but I'd almost expect that the government could make a "ghost city" into a "real city" in no time, by shutting down factories in one city and opening them there, or by changing internal migration restrictions.
Few real people buy homes knowing with certainty they would remain empty. People speculated on new development, future growth, and induced demand. For some reason, people online like to make them martyrs or idiots. lots of schadenfreude.
The reality is a lot more mundane. They were just a risky investment bubble that popped.
Seems like it?
https://en.wikipedia.org/wiki/Under-occupied_developments_in...
>Many developments initially criticized as ghost cities did materialize into economically vibrant areas when given enough time to develop, such as Pudong, Zhujiang New Town, Zhengdong New Area, Tianducheng and malls such as the Golden Resources Mall and South China Mall.[15] While many developments failed to live up to initial lofty promises, most of them eventually became occupied when given enough time.[6][16]
>Reporting in 2018, Shepard noted that "Today, China’s so-called ghost cities that were so prevalently showcased in 2013 and 2014 are no longer global intrigues. They have filled up to the point of being functioning, normal cities".[17]
>Writing in 2023, academic and former UK diplomat Kerry Brown described the idea of Chinese ghost cities as a bandwagon popular in the 2010s which was shown to be a myth.[18]: 151-152
Tianjin will always have a few ghost districts and skyscrapers. They eventually fill up after a decade or two or are razed for something else. It was like that when I first visited China in 1999 as well.
https://www.reuters.com/business/china-evergrande-offshore-b...
About $2b worth out of $300b of debt, so not that much, although I'm not sure if this is just one group of many.
There isn't really such a thing as free press covering China well, particularly in Asia. The closest thing was the Hong Kong press, but that got muzzled a few years back. RSF currently rates only Taiwan and South Korea as countries with free press in Asia, and those are not going to have the most unbiased view about China. https://rsf.org/en/region/asia-pacific
(RSF lumps Oceania in their Asia rankings, I wouldn't call Samoa or Australia Asian countries)
1. https://x.com/rchoongwilkins/status/1750810417260351500?s=46
The news source you're looking for is Bill Bishop's Sinocism. It's a paid Substack. I haven't found any other news source that really gets into the nitty gritty of China happenings.
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.
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.
> 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
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.
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.
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.
1.) Why did it take Evergrande 3 years to liquidate? In western countries, liquidation happens in a few months. One should note that Evergrande did not get that big by itself; obviously it had the support of CCP elites to secure huge bank loans. Therefore, when it went bankrupt, the delay was to allow these elites to pull money/liquidable assets out of Evergrande. Thus after 3 years, Evergrande probably has pretty bad mark-to-fantasy assets left. This bodes very ill for creditors. Foreign creditors account only for $25B of the $300B liabilities for Evergrande. https://apnews.com/article/china-evergrande-property-liquida...
2.) This event implies that most of the Chinese real estate developers are bankrupt/insolvent. excluding for Li Ka Shing's portfolio most likely.
3.) Evergrande's assets are mostly comprised of lands in China. This means, most of the lands will get returned to local governments, which will increase land inventory massively. This will accelerate the real estate price decline in all parts of China, on top of the 30-40% drop we're seeing in Tier 1 cities, on top of the 50-60% drop we're seeing in non-Tier 1 cities.
4.) What does this mean for China's 3 pillars of economic engine (real estate, consumer spending, export)? real estate comprises of 25-30% of Chinese economy, so the economy will be forced to mark to reality these assets, and will take a huge hit. Consumer spending is tied to real estate engine, since most of the citizens' wealth is in real estate. Thus we are seeing consumer spending decline and downgrade substitution patterns. Case in point: recent $1 McDonald burger deal was causing shortages in China. Haidilao has been focused on a cheaper version of their hot pot, which costs $10. $1 bread shops are spreading across China.
5.) If real estate and consumer spending is crashing, then China can only rely on export, and thus the trend of dumping abroad will continue. Especially cars and solar. Europe is in the middle of looking into applying tariffs to Chinese EVs. US is already set with heavy tariffs on Chinese EVs. Note that Chinese export to US and Europe has dropped 10% and 20% y/y.
EDIT: also coincidently, Chinese authorities just banned short selling https://www.reuters.com/world/china/china-securities-regulat.... This is following the Chinese stock market decline of 11% this year. and 3 year cumulative decline.
GDP is generally a bogus metric but it's an odd kind of depression that has a 5% growth in it.
Expand your balance sheet to pay everyone to dig a hole.
GDP goes up.
As long as you ignore debt, GDP doesn't really mean anything.
Look at China's debt.
Not so much if you compare it to the original “Great Depression” https://en.m.wikipedia.org/wiki/Long_Depression
Of course assuming that 5% even means anything. Look up the Soviet official growth figures from the late 70s and 80s
Can I ask the source of how you gained those insights?
Interesting to note: they have higher debt levels than the US ( GDP wise). If GDP would go down, that would mean a vicious circle and they wouldn't be able to "fund" their way out with low risk.
Which seems to indicate a lot of advantages to fiddle with the GDP growth numbers and explains limiting access to economic statistics: https://www.bloomberg.com/news/articles/2023-08-16/china-is-...
Though as a platform it lends itself well to amplifying extreme claims backed by speculation that play into people's fears, so unless the accounts in question have a history of well-sourced factual reporting, I'd be rather skeptical.
1、恒大，龙头房企，负债规模约2.6万亿，2021年9月正式宣告暴雷。
2、中梁，浙江房企，负债规模约2000亿，2022年4月公告美元债寻求展期，宣告暴雷。
3、俊发，云南房企，负债规模约1200亿，2022年4月2.19亿信托贷款未兑付，宣告暴雷。
4、融创，龙头房企，负债规模约1万亿，2022年3月美元债展期，宣告暴雷。
5、世茂，龙头房企，负债规模约4000亿，2022年3月公告60亿信托展期，宣告暴雷。
6、龙光，粤系房企，负债规模约2000亿，2022年3月公告美元债违约，宣告暴雷
7、祥生，浙江房企，负债规模约1500亿，2022年3月，1200万美元利息违约，宣告暴雷。
8、大发，上海房企，负债规模约300亿，2022年3月2228万元美元债利息无法偿还，宣告暴雷。
9、禹洲，闽系房企，负债规模约900亿，2022年3月美元债利息2125万美元违约，宣告暴雷。
10、正荣，闽系房企，负债规模约2000亿，2022年2月公告美元债违约，宣告暴雷。
11、富力，粤系房企，负债规模约3000亿，2021年12月7亿美元债展期，宣告暴雷。
12、华夏幸福，产城地产龙头，负债规模约2600亿，2021年2月首次承认52亿债务逾期，宣告暴雷。
13、佳兆业，粤系房企，负债规模约2300亿，2021年11月3亿理财产品未兑付，宣告暴雷。
14、阳光城，闽系房企，负债规模约3500亿，2021年公司理财未兑付，宣告暴雷。
15、奥园，粤系房企，负债规模约2500亿，2021年11月，6590万元信托贷款违约，宣告暴雷。
16、新力，江西房企，负债规模约1000亿，2021年10月2.5亿美元债违约，宣告暴雷。
17、花样年，粤系房企，负债规模约600亿，2021年10月2亿美元债违约，宣告暴雷。
18、当代置业，负债规模约800亿，2021年10月3亿美元债违约，宣告暴雷。
19、中庚地产，闽系房企，负债规模300亿，2021年10月9.3亿债务违约，宣告暴雷。
20、光耀地产，粤系房企，负债规模100亿，2021年9月宣告破产。
21、蓝光，川渝房企，负债规模约2000亿，2021年5月中期票据违约，宣告暴雷，目前逾期未偿还债务已达300亿。
22、阳光100，老牌房企，负债规模约400亿，2021年8月债券违约，宣告暴雷。
23、德润创展，深圳房企，负债20亿，2021年8月宣告破产。
24、广州粤泰，粤系房企，负债规模80亿，2021年8月宣告破产。
25、宝能地产，深圳房企，负债规模2000亿，2021年8月理财产品逾期，宣告暴雷。
26、实地，粤系房企，负债规模约200亿，2021年7月商票拒付，宣告暴雷。
27、三盛宏业，上海房企，负债规模约500亿，2019年10月员工理财未兑付，宣告暴雷，公司老板失踪，被法院悬赏1000万。
28、福晟，闽系房企，负债规模约700亿，2019年12月3亿基金违约兑付，宣告暴雷。
29、泰禾，闽系房企，负债规模约2000亿，2020年7月债券违约，宣告暴雷，目前逾期未偿还债务已达430亿。
30、卓达地产，北方房企，负债规模300亿，2018年开始，卓达24次被列入被执行人，此外还有7起股权冻结，涉及金额约9.14亿。
这30家房企的负债总规模是7.48万亿
also, https://www.reddit.com/media?url=https%3A%2F%2Fi.redd.it%2F%...
to default on a large scale; to fail to repay the loan or deposit of many creditors or clients
I'm sorry - but any foreigner who lent Evergrande money thinking this wasn't a huge risk is a moron.
> This will accelerate the real estate price decline in all parts of China, on top of the 30-40% drop we're seeing in Tier 1 cities, on top of the 50-60% drop we're seeing in non-Tier 1 cities.
According to "official" sources - property prices aren't even down 5%. Where are you seeing that they're down 30-40% in Tier 1 cities?
It would take the median couple >7 years saving 100% of post-tax income to afford a downpayment on the median 100 m^2 condo. If you assume even 3% interest - thereafter - the monthly payment would be >80% of their COMBINED post-tax income.
China's property prices have astounded me since 2000 - and yet they continued to rocket higher for a solid two decades.
People are NUTS in the US at Price to Income levels of 4:1 - when this is some of the lowest Price to Income for housing in the world. We consider places like Vancouver and London and Sydney ludicrous bubbles - and yet they are usually below 10:1. China was at 11:1 in 2000 and climbed to 17:1 by 2020: https://lipperalpha.refinitiv.com/2020/06/chart-of-the-week-... Places like Shanghai have ratios of 38:1 and higher.
Pretty sure median US income can’t afford a condo in NYC.
https://medium.com/alpha-beta-blog/even-beijing-home-prices-...
https://fortune.com/2023/08/17/china-home-sales-worse-than-o...
https://sccei.fsi.stanford.edu/china-briefs/tier-3-cities-ho...
My sources are from real estate agents in China.
Not sure why anyone would actually trust official numbers from China. China still claimed 5% gdp growth last year. pretty laughable.
Also, you can just watch what multinationals are doing. They have retail numbers from their Chinese stores. And it's pretty clear Japanese and Taiwanese and South Korean and American and European multinationals are all withdrawing.
Your fortune article says PRICES are only down 2.4% (roughly the "official" stats).
Your other article is about T3 cities.
"Existing homes near Alibaba Group Holding Ltd.’s headquarters in Hangzhou have dropped about 25% from late 2021 highs, according to local agents."
"Even as of March, before a fresh slowdown, more than half of tier-2 and tier-3 cities saw existing-home prices fall more than 15% from peaks,"
"residential housing prices in tier 3 cities dropped by nearly 20%."
EDIT: Again, to get the real numbers, you need to have access to Chinese real estate agents. And these folks aren't going to be posting articles for everyone to read. Or if they post a video in anger, it will get taken down.
The vast majority of Evergrande's outstanding foreign debt is from >2012.
BlackRock, HSBC, and UBS poured in about $3B of the $25B in 2021 alone...
And, I'm sorry - if you didn't see a risk doing that in 2021 - you're gonna lose all your money sooner or later.
In BlackRock's case - it was primarily for 401k-ers for exposure to Chinese bonds. I think the US should've made it illegal - and probably will soon - to offer a product like that.
Why anyone in the US would want exposure to Chinese bonds that don't even have good yields for "diversity" is incredible. Up next - Russian and Venezuelan 100-year bonds at 0% interest!
The West is a minority of the Earth now, including financially.
Though I guess that bond prices would be meaningless for most at that point
Or they are very smart while investing your money. Check your country's pension fund, see who manages it and what they invest in. Or better yet, don't.
the reality so far is that prices have pretty much stayed flat for the past 4-5 years. there hasnt been any significant fall anywhere within like 1 hour of me in shenzhen
Pre-owned housing prices in Shenzhen fell by nearly half from their peak in 2020 after holding up over the past two years of plunging new-home values amid slumping demand and a liquidity crunch for developers.
https://www.caixinglobal.com/2023-08-25/shenzhen-existing-ho...
Meanwhile, according to Leyoujia store transaction data, second-hand housing prices in Shenzhen in the fourth quarter of 2023 were around 65,000 yuan per square meter, down 12% from 2022, and 22% lower than the all-time high in the first quarter of 2021. The transaction prices in some areas and real estate have already returned to 2018, and the drop compared to the highest point was as high as 30% to 40%.
https://news.futunn.com/en/post/36099590?level=1&data_ticket...
Because this isn't "the West". China/CCP is specifically unwinding this slowly to avoid cross-market contagion.
No they don't, not for entities of any significant scale or complexity. Lehman Brothers was still in liquidation as of 2022: https://en.wikipedia.org/wiki/Bankruptcy_of_Lehman_Brothers
E.g. Your Edit stating that China banned short selling. They didn't ban short selling. They banned borrowing of shares that are "restricted" to short sell.
> There are a number of ways of achieving a short position. The most fundamental method is "physical" selling short or short-selling, which involves borrowing assets (often securities such as shares or bonds) and selling them. The investor will later purchase the same number of the same type of securities in order to return them to the lender. If the price has fallen in the meantime, the investor will have made a profit equal to the difference.
Maybe when prices have dropped if they are converted into dollars. I am not sure should we use dollars to measure everything to should I use Yuan for China.
Hopefully this causes bitcoin and crypto to crash all the way below $10,000.
If USDT is worthless then you want to sell it, causing the price of Bitcoin to rise on those exchanges.
Also, Tether would try to save face, by honoring USDT redemption at 1$ as long as they can, which drains their reserves. So if they aren't able to do it anymore, it means that they don't have anything left, and USDT is now worthless.
These things are highly non-linear and bank runs can kill a bank in no time (and tether is functionally a bank).
And then everyone gets spooked of crypto as a whole and sells for fiat.
Basically whenever "shit" happens all of crypto goes down.
> it's more likely people will get spooked of crypto and sell [USDT] for USD.
I don't think (the vast majority of) USDT holders can sell for USD fiat -- because they are locked out of the US financial system for one reason or another. That is, actually, the reason they are holding USDT instead. They can (try) to exit via BTC, and maybe they can cash out for some other fiat currency. Just not USD.
[1] https://www.dirtybubblemedia.com/p/examining-tethers-secret-...
However, it is possible that they have spent the last two years rotating out of Chinese bonds into T-bills. In fact, it's pretty likely that they have tried to do that; the question is how well they've been able to.