[jamesaurichs]

Some real estate related news from China:

- Country garden, China's second biggest property company after Evergrande, missed a mere 22.5M payments for dollar denominated bonds. It is trying to restructure a $340B debt owned. https://abcnews.go.com/Business/wireStory/chinas-government-...

- Li Ka Shing, richest man in Hong Kong, just offered an immediate 30% off on his newest buildings for sale

- One of China's biggest shadow banks skipped payment. These shadow banks provide liquidity to real estate companies, in short. https://www.bloomberg.com/news/articles/2023-08-16/chinese-s...

Some economic related news from China:

- China stopped reporting youth unemployment, estimated around 20-50%. Which is why nobody really thinks China is growing at 5%. https://www.washingtonpost.com/world/2023/08/15/china-econom...

- foreign investment fell down 87% from the same period last year, lowest level in 25 years. https://www.bloomberg.com/news/articles/2023-08-07/china-for...

- China's fertility rate dropped to record low 1.09 in 2022 https://www.reuters.com/world/china/chinas-fertility-rate-dr...

- China records fewest marriages in more than 3 decades https://www.cnn.com/2023/06/12/china/china-marriages-record-...

- China's exports fell by 14.5% in July from a year ago, while imports dropped by 12.4% https://www.cnbc.com/2023/08/08/china-reports-double-digit-p...

- China's economy slipped into deflation https://www.bbc.com/news/business-66435870

[renegade-otter]

"China's sliding yuan could be next 'black swan event' for markets, hedge fund EDL says": https://www.reuters.com/markets/currencies/chinas-sliding-yu...

It would be interesting to see the blast radius, specifically in terms of countries like Russia, which is becoming increasingly dependent on the yuan as it is exiting its relations with the West , huffing and puffing: https://carnegieendowment.org/politika/88926

[Havoc]

> the blast radius,

Global economy is the blast radius. China is the biggest economy by trade so it’ll ripple through everything

[tacker2000]

Could be, but the effects wont be so pronounced anymore i think. The biggest ripples have already passed through during covid and the time after.

The covid induced shortages like stock shortages, chip shortages, container shortage etc have already been dealt with and lots of companies have reduced their dependencies on china, etc…

[whimsicalism]

Yes, it is not looking good for their outlook.

That said, nobody is seriously claiming Chinese youth unemployment at 50% unless you are looking at something like labor force participation rate, which is then a similar number for the US as well.

[anonylizard]

No, it can actually be 50%. Why do you think that's not serious? Greek youth unemployment was at 60% during their peak debt crisis. China's mega debt tsunami is starting to slam the shores right now.

China already tried its hardest to suppress youth unemployment rates. Student councillors in China are given strict KPIs to ensure their students graduate with a job. So obviously they co-operate with shady companies that give out sham employment contracts, and then pressure the student to sign, all to give out an impression of 'graduate employment'

China faces a severe crisis of over-education. China educated many university graduates, but has no industry to actually absorb them (Many such industries were crushed by the government, such as gaming, tech, or education).

China's factories desperately need cheap labour (and are starting to lose competitiveness because of this), but the over-educated grads are absolutely unwilling to go back to the factory floor like their parents. So you have millions of grads all dreaming of sitting in a prestigious office job, where none exists, so instead they all compete for government jobs, where there's 1 role for 100 applicants.

The Chinese government is already enforcing a streaming system in middle school, with at most 50% of students going to high school, rest going into technical education, but its too little too late.

[expertentipp]

Don't know about China and your country, but in my country they resolved unemployment rates by limiting the number of tickets that the ticketing machines print in every unemployment office. Now unemployment numbers are record low.

[slushh]

If they have many university graduates and lack cheap labour, why don't they let those graduates build robots or organize the outsourcing of the labour into countries with cheap labour?

How can there be a surplus of educated people who are unable to organize something profitable?

[whimsicalism]

that’s a lot of words to not cite a single person saying 50%

[fmajid]

A Peking University professor of economics says it is 46.5% if you use the same definition as in the US:

https://archive.ph/L6ZfU

[whimsicalism]

wrong, that’s the labor participation rate

read your own article, you also just made up the thing about the definition in the US

[midoridensha]

>- China's fertility rate dropped to record low 1.09 in 2022 >- China records fewest marriages in more than 3 decades

Wow, at this rate, they might just overtake South Korea for lowest birth and marriage rates within the decade.

[jimbob45]

Wow, I thought you were making that up. It’s real. Why not just repeal the child limitations then? No reason to keep them in place if the rate is that low.

[orwin]

They did repel them, twice (once to put the limit to 2, now it's 3).

They also forcibly 'immigrate' SEA women since 2010[0], forming a combo with the Gulf countries : the Gulf enslave the men under false promises, then cartels raid villages, capture and sell the women (Vietnam is the only country where the state is strong enough to limit that). Sadly is hard to investigate the issue correctly, given China's lack of transparency, but it is possible that despite relatively closed borders, China now lead the world in sex trafficking, overtaking the Magreb (morroco to lybia).

[0] https://www.hrw.org/news/2019/10/31/chinas-bride-trafficking...

[robjan]

Chinese, especially in the upper tier cities, don't want babies now. Same as the West and for roughly the same reasons. Historically kids stayed with their parents until marriage who would then look after the grandchildren while they work. Now the parents are getting left behind in the villages or low tier cities while the kids fly out to the higher tier cities to work leaving no childcare structure and everyone grinding away at work with no time to find partners.

[BossingAround]

If you're talking about the one-child policy, that has been repealed in 2016.

[worrycue]

That's kind of late ... Wasn't anyone there keeping an eye on the birthrate?

[swexbe]

Bad policy tends to stick around for longer when you don't allow criticism of the ruling elite.

[BossingAround]

I see you haven't encountered authoritarian regimes very much.

[mensetmanusman]

Not if your paycheck is enhanced by keeping quiet.

[smallnamespace]

They were repealed several years ago

[PeterisP]

Fixing the consequences requires that they have to be repealed not now, not a few years ago, but rather 25 years ago.

[tjpnz]

Government control over reproduction leads to unintended consequences? Who would've seen that coming?

[jeswin]

It's not automatically a bad thing.

China has done fantastically well economically, and in terms of health care, education etc. There are other countries which have had strict population control and have done well economically - such as Singapore, South Korea. I see nothing wrong with poorer countries keeping restrictions on population growth - so that they can increase the standard of living and make sure everyone gets education and healthcare.

[somenameforme]

A declining fertility rate doesn't just change change the population, but also the relative distribution of each age group. A fertility rate of "N" means the next generation will be "N/2" times as large as the one before it. Because of this you can easily model what a society, composed of successive generations of a fixed fertility rate, would look like. To keep things simple, imagine everybody gives birth to all their kids at 20. When they actually do doesn't matter, it would always converge on the same ratios:

----

Fertility Rate of 2 (average age = 40): 100 80-year-olds, 100 60-year-olds, 100 40-year-olds, 100 20-year-olds, 100 newborns.

Fertility Rate of 1 (average age = 63): 100 80-year-olds, 50 60-year-olds, 25 40-year-olds, 12 20-year-olds, 6 newborns

Fertility rate of 0.5 (average age = 74): 100 80-year-olds, 25 60-year-olds, 6 40-year-olds, 1 20-year-olds, 0 newborns

----

You can also estimate the ongoing population rate of change for each fertility group by removing the elderly generation, adding a newborn generation, and contrasting the new population sizes:

----

Fertility Rate of 2: 500->500 = 0% population change per 20 years

Fertility Rate of 1: 193->96 = 50% population decline per 20 years

Fertility Rate of 0.5: 132->32 = 76% population decline per 20 years

----

In the developed world most fertility rates plummeted around 1970. So, assuming nothing radically changes, we should start hitting our 'equilibrium point' about one life expectancy away, so sometime around 2050.

[jskrablin]

It may work in short term but then you run out of population in long term. And suddenly any gains from short term improvement is under a big question mark.

[blackoil]

Why does China need 1.5 billion people?

[starfallg]

China has a poor social security net. The one-child policy has resulted in a couple having to provide or care for 4 parents and 8 grandparents.

That's is in no way sustainable on an individual level and worse on a societal level when you have a small working population and a large number of people that require care.

[robjan]

Future generations have to pay off the debt generated by the current generation. Same as everywhere. You can either grow the population or make the economy more efficient, China still has the latter lever available to pull.

[blackoil]

China has a gross savings rate of 45-50%. Current gen has saved for their future.

[throwaway2037]

    strict population control

SG/KR has this? Tell me more.

[jeswin]

Had.

[somenameforme]

This is a crisis happening everywhere in the developed world. A stable practical fertility rate is 2.1. South Korea has the lowest fertility rate in the world, below 0.8, and there was no government meddling there. The US fertility rate is also plummeting and now down to below 1.7 and heavily biased by income. The birth rate for households earning < $10,000 is about 50% higher than those earning > $200,000 [1] with a near perfect linear relationship for incomes in between. And obviously there are way more poor households than 'rich.'

It's so odd to me that of the many issues people freak out about, this one ranks relatively low. We're looking at a non-speculative and entirely real demographic collapse of the entire developed world, in quite rapid order. For those who may not appreciate the impact, a total fertility rate of "N" means you will trend towards a system where the population of one older generation will be "2/N" times larger than the next younger generation.

So if you have a fertility rate of 2, each generation will be exactly the same. If you have a fertility rate of 1 then each older generation will be exactly twice as large as the next younger generation. So, for a simple model, imagine we all gave birth at 20. You'd trend towards a population distribution of 16 80-year-olds, 8 60-year-olds, 4 40-year-olds, 2 20-year-olds, 1 newborn. Systems of social security, healthcare, and the general economy will just collapse under that sort of pressure.

[1] - https://www.statista.com/statistics/241530/birth-rate-by-fam...

[vkou]

> Systems of social security, healthcare, and the general economy will just collapse under that sort of pressure.

Maybe we could buttress them by all the 4x to 10x productivity gains that automation has brought us. [1] Maybe we could cut back on all the useless, extraneous, low-to-negative ROI shit we're doing. We have options, here, that don't require a population ponzi scheme.

(Also, you can't be blaming this situation in China on demographic collapse, when it allegedly has massive youth unemployment.)

[1] Remember, just a few decades, when somehow, a single working adult could comfortably provide for a whole family? Why can't he, anymore? What has changed? We are more productive per worker, we have more workers participating in the economy, but somehow, you think we can't provide for everyone.

[lotsofpulp]

Expectations of comfort are always changing. Humans are a competitive species.

If the expectation for quality of life for the vast majority is living off of 1 income household, then that is an acceptable quality of life. If that expectation for the vast majority changes to quality of life by living off of 2 income households, then a quality of life from a 1 income household is no longer sufficient.

Also, expectations of work itself change. It could be possible that a sufficiently large portion of the population is simply unwilling to change bedpans for a price close to what old people themselves can afford (even if the cost is implicit from getting services from a family member). In this case, it becomes a political issue of how to allocate labor, i.e. who to tax, how much to tax them, and who gets the benefits of government spending.

[somenameforme]

This [1] page shows changes in real average household incomes from 1965 to 2020, broken down by quintile. Keep in mind the sharp increase in the number of necessities in modern life as well as things like healthcare, education, and housing inflating in price way beyond the rate of nominal inflation. Economically, many people certainly had significantly better lives in the past. Of course that would also have been a life generally without mass computing, the internet, and other such things. And I did say "many people", as it seems the bare median has probably moved up just enough that they're probably better off, but it's really uncomfortably close when one thinks how much we 'ought' have improved.

[1] - https://www.advisorperspectives.com/dshort/updates/2021/10/2...

[satvikpendem]

> Remember, just a few decades, when somehow, a single working adult could comfortably provide for a whole family? Why can't he, anymore? What has changed? We are more productive per worker, we have more workers participating in the economy, but somehow, you think we can't provide for everyone.

In Thomas Piketty's Capital in the 21st Century, he argues that the period you're talking about is an anomaly historically due to the postwar boom of an unscathed US, that many people take as the historical norm due to recency bias; no one alive today was alive in the 1800s or earlier to see just how unequal life among the poor and rich was. He argues that this inequality is the norm rather than the exception for what is happening today.

[somenameforme]

How does he respond to the 1971 [1] argument? That whole page is alluding to the ending of the Bretton Woods system. Until 1971 the USD was directly convertible to gold at a fixed rate. This was supposed to prevent bad economic behavior because if we weakened the dollar too much (by e.g. 'printing' money), then people/countries could 'bankrupt' the US by converting all their USD to gold. Of course we [shockingly] did print too much money, defaulted on our obligations, and gave the rest of the world a 4 finger salute. A famous quote from Nixon's treasury secretary at the time: "The dollar is our currency, but it is your problem."

I find the consumer price index 1775-2012 quite interesting. It's really easy to see how nearly everything listed there could be directly, and very likely causally, linked to giving the US government the power to start printing tens of trillions of dollars. Because that money invariably makes it to the most well off in society, even on the rare instance when it starts somewhat lower. If not one has to come up with an alternative explanation for what happened at that time, because it's like in 1971 that were just a button pressed saying, "start destroying socioeconomic stability."

[1] - https://wtfhappenedin1971.com/

[gottorf]

One current presidential hopeful has a policy position of undoing that, by having the dollar become a stable unit of measurement against real commodities. It's an interesting idea, and perhaps one more realistic than going back to the gold standard.

[mensetmanusman]

South Korea had huge government meddling to psyop the population into thinking kids are only a burden.

https://www.prb.org/resources/did-south-koreas-population-po...

[somenameforme]

Thanks. I'd never read nor heard about this. It seems similar to Iran - another country with a national birth control program [1], which worked far too well, and which very few people know about.

[1] - https://en.wikipedia.org/wiki/Family_planning_in_Iran

[meowtimemania]

Usa does have immigration to supplement the birth rate.

[perlgeek]

It does, but on a global scale this only works as long as there are enough countries with high birth rates. And birth rates are going down basically everywhere.

[ssijak]

They are up in "undeveloped" countries.

[perlgeek]

They are higher in less developed countries, but still falling.

Go to https://ourworldindata.org/fertility-rate and select some regions, see for yourself. Africa as a whole has declining fertility rates. Even if you look a high-growth countries such as Niger or Democratic Republic of Congo, the fertility rate has been declining in the last 20-30 years, and you'll be hard-pressed to find a country where it has gone up.

[fmajid]

Except it’s been loosened after decades, and suddenly the economy tanks?

The more likely explanation is Xi’s authoritarianism and crackdown on the private sector. Anyone with a brain in China is trying to get their money and themselves out of the country.

[RugnirViking]

It has been loosened because of the inevitable damage it is causing. Look at china's demographic pyramid. Their widest demography is 45-60. Their birthrates are very low. As those people age and there are fewer workers entering the workforce it will lead to social problems (as it did in japan and currently is in the west)

That's not to say there isnt a big crackdown on just about everything right now. There is. Bankers forced to read xi jinping thought and write essays on it monthly etc.

[tjpnz]

One thing didn't cause the other but it needs to be considered when looking longterm. Its effect will have an impact on the economy for many decades.

[fmajid]

Of course, demography is destiny, but the point is the sudden worsening of China's economic outlook did not coincide with tightening of the one-child policy, quite the opposite. The challenge for China is that it got old before it got rich like the European nations or Japan, and this transition will be much harder to navigate.

[The_Colonel]

The bigger challenge is that the demigraphic shift is much more dramatic than either Europe or Japan.

The fertility rate was 6 in 1970, it dropped to a half within a decade and then kept dropping rapidly.

[satvikpendem]

Fertility rate across the world is dropping even without government intervention. Who knew having a higher standard of living means you don't need as many kids to work the farm, and indeed, that people simply don't want to give up that lifestyle in order to have kids?

[The_Colonel]

Yes, but the fertility rate drop is just too fast in China. There will be way too many old people requiring care for too few people in the productive age.

Smaller rich countries can solve this problem by importing young workers from poor countries. But on China's scale of 1.5B people that's not really feasible. (China also isn't really that rich on average, isn't attractive for immigrants and isn't culturally welcoming to immigrants)

[blackoil]

China still has ~20% people in agriculture with automation that can be bought down to 5%. That should free enough resources.

[Tade0]

Truth be told they didn't have much of a choice, as it prevented around 400mln births in a country that has been a net food importer for over 20 years:

https://www.cfr.org/article/china-increasingly-relies-import...

[CamperBob2]

Ka Shing, richest man in Hong Kong

Talk about nominative determinism...

[satvikpendem]

I wonder how nominative determinism works across languages. Given enough languages and names, one is bound to come up with any number of people whose life is nominatively determined.

[abwizz]

not unlike star signs

[satvikpendem]

Indeed, so not worth taking seriously. ND is a fun little observation though, when it does happen from time to time.

[Tade0]

I have an uncommon name for someone of my generation and the net effect is that people would often take me for someone more sophisticated than I am in reality.

[_hypx]

The economic crisis has been brewing for a long time. No country can just ignore basic economics forever. They have been living off of borrowed time (and borrowed money) for a while now. The bill will come due soon. This is eerily similar to what happened to Japan in the 1990s.

[FreshStart]

Missing : real estate invested missing money into sprawling conglomerates. E-car brands and other industries.

[throwaway2037]

SCMP says CKC Holdings only reduced prices by 16% on less than 300 units in a single building in a non-premium location. The 30% figure only comes from shitty, click baity "news" sources. Property analysts felt that 16% cut was in line with the market. No one with deep understanding of that market is clutching their pearls too tight.

[NovaDudely]

To soften this a little bit, and I mean a very little.

The youth unemployment numbers are hard to judge, could be right but it is hard to tell on the outside.

The fertility figures are a long term issue, China is not alone in that but something to keep an eye on.

Those import/export figures... now that is the the most telling of how the economy is fairing nowadays. For all the speculation I have heard for decades, that is the most alarming stat I have seen. That is where the rubber meets the road for an economy that is so depended on those things to keep society function vaguely well. Stay tuned...

[jimmySixDOF]

I heard someone on the radio recently speculate that due to the political climate China could prefer and produce a Japanese style decades long unwinding of economic bubbles vs a western style resolution through crisis. Of interest also was the level of Municipal debt and it's stratification between provincial higher default risks and a handful of real high flyers.

[zpeti]

Except they will be doing this at a much lower economic situation than Japan.

Japan still got to being a first world country, but then busted. China won’t get there.

[The_Colonel]

Japanese demographics were also much more stable (even if low in general). China will have a much more dramatic demographic shift. The fertility rate was ~6 in 1970, ~2.8 in 1980 ... 1.09 in 2022. These strong generations will continue retiring, but there will be few young workers to replace them.

[bohadi]

Don't know where you're from or your experience but you maybe want to update your priors on the meaning term first world, which peaked in usage roughly 1948...

https://books.google.com/ngrams/graph?content=first+world&ye...

The mean and median living some places might surprise you. For example visit HongKong, Singapore, Taipei, Tokyo, or a mainland city this millenium. Or dont'!

First world, it mostly conjures automobile culture and car infrastructure which is nothing special these days but check the world's largest car makers... you would guess Germany Japan or even the USA recently no?

[throwaway2037]

Why was this downvoted? There is plenty of truth here.

[eunos]

> China stopped reporting youth unemployment, estimated around 20-50%

youth unemployment data is just another toxic data that rarely used before in China and others just like "Total Debt" metrics that only used against China for some reason.

> China's economy slipped into deflation

Mainly caused by normalizing pork price, last year it went wild due to swine flu.

[worrycue]

> Mainly caused by normalizing pork price, last year it went wild due to swine flu.

Seriously? One food can cause the entire economy to slip into deflation?

[eunos]

Pork price is a huge component of Chinese CPI. Also the price reductions were massive, like double digit huge.

https://www.cnbc.com/2023/08/09/china-reports-smaller-than-e...

"A 26% year-on-year drop in pork prices, a staple food in China, contributed to the overall decline in the CPI in July"