China is undergoing a 2008 style financial crisis due to real estate speculation and deflation due to very weak domestic spending.
They have drowned their municipalities in debt cumulatively equivalent to the US federal and state debt as a percentage of GDP. Localities aren’t allowed to tax but are responsible for local services and industry. Local governments borrowed heavily to hit GDP growth targets and compete with each other for investment and talent.
There is now a backwards migration of the working class back to rural towns from the cities because the incentives China gives is towards technologies that only benefit their already upper-middle class workers. About 500 million Chinese live in rural areas and over 20% of their workforce toils in the fields. That’s not changing anytime soon. Youth unemployment has been 15-20+ percent for some time.
Not at all what’s happening. China’s government privatized real estate and was the engine of the bubble by disallowing localities from taxing and only allowing revenues via land sales. See above how central planning in the CCP has forced massive debt upon localities.
State banks backed Evergrande’s with cheap credit and govt guarantees.
Local officials were promoted for hitting GDP growth targets - see above how they put localities deep in debt by speculating on real estate.
The CCP gave households social credit for moving to cities and buying real estate.
The CCP is not protecting consumers in the aftermath. They won’t let consumers out of mortgages for unfinished condos because they don’t want the crisis to worsen - effectively bailing out developers.
Not sure where you came up with the idea that China is acting in the interest of its citizens rather than the state. That’s not a fundamental characteristic of an autocratic socialist state.
The citizens with real estate were the speculators. They gambled on being able to squeeze even more out of the next guy and they lost. In the US, we would just have taxed the kids (again) to bail out the homeowners (again). I have a hard time calling that more responsible.
They bailed out the little people and jailed the CEO's.
What happened was these companies went into massive debt building buildings based on the belief that real estate prices would increase forever infinitely.
The Chinese govt popped the bubble.
These real estate companies went bankrupt, many of them took payments from retail for apartments that weren't built.
They arrested the CEO's and upper management, siezed and sold their assets.
But the people did get bailed out by the government, all the little folk who bought apartments were refunded or had the construction project finished by the government.
Nope they didn’t. They refuse to let citizens cancel the mortgages even though developers haven’t delivered condos for years and they haven’t bailed out the little folk.
Moreover China’s govt was the cause of this by setting gdp growth quotas to get promoted, see all my other comments regarding this.
You’re just repeating propaganda and interestingly the other commenter responding to me has said the exact opposite, but also has said that China’s response was “morally superior”
For Building projects that were canceled the little people got full refunds
For Building projects that were resumed with the govt footing the money for their completion. People who bought apartments did not have their mortages canceled, they were forced to pay their mortages and will be receiving their apartments when completed.
So yes the little people did get bailed out. The government is footing to continue the housing projects while maintaining the terms of the mortages.
In the US, we saw all the people who could no longer pay their mortages because of interest rates skyrocketing lose everything.
We saw Federal marshalls marching into homes, and throwing crying people out, we saw crying people who have paid hundreds of thousands being thrown out into the street. In the US real estate crash, if you took a ninja loan and the housing crash happened, the banks suddenly demanded higher interest rates and you couldn't pay your house was foreclosed and all equity wiped.
These are all confirmed facts
In the US many little people lost their equity and were thrown out of their homes, many lost hundreds of thousands of dollars as they defaulted on loans and had their property siezed.
In China none of the little people lost anything
The buildings that were canceled the little people got full refunds
The buildings that were continued thanks to cash infusions by the government the little people will get their homes when it is finished.
The only person spreading propaganda is you.
This statement for example is a complete disinformation because you did not acknowledge that the chinese govt gave cash infusions to these stalled projects, and mortage payers will get their apartments
>Nope they didn’t. They refuse to let citizens cancel the mortgages even though developers haven’t delivered condos for years and they haven’t bailed out the little folk.
Not is but the obvious one was COVID policy during 2020-2022. It triggered the closest thing to a domestic unrest you can get in China after 1989, a large exodus of middle class, and an almost 50% crash in their real estate market. The last one is very deadly and still ongoing because that is how China financed its growth for decades.
That would require making babies and not making mistakes. Humans are generally/historically better at the former, but these days both seem to be a challenge.
They have drowned their municipalities in debt cumulatively equivalent to the US federal and state debt as a percentage of GDP. Localities aren’t allowed to tax but are responsible for local services and industry. Local governments borrowed heavily to hit GDP growth targets and compete with each other for investment and talent.
There is now a backwards migration of the working class back to rural towns from the cities because the incentives China gives is towards technologies that only benefit their already upper-middle class workers. About 500 million Chinese live in rural areas and over 20% of their workforce toils in the fields. That’s not changing anytime soon. Youth unemployment has been 15-20+ percent for some time.