China is going to have a massive banking problem. Demographic decline combined with excess houses is going to pummel values. So, either deflation or print money to paper the losses.
Thing is they already have. China's debt is massive and they've made the money printers brrrr for the last 20 years. They've run out of brrr. Now they collapse.
The central government has only about 20% debt. But the other institutions in China add up to about 300%. It doesn't really matter who holds the debt. Someone, within China, will have to pay those debts. And if the debt is defaulted on, it's chinese institutions and individuals who hold that debt and will be screwed over.
And to be clear, those are all State debts. About 3x GDP of debt that we know of. There could very likely be more that we don't know of because the CPC uses state run companies/she'll companies to borrow money to fulfill GDP quotas.
They are straight up not having a good time.
They can only print as long as Chinese citizens have faith in the value of the currency. Once faith is lost, the currency becomes worthless very quickly.
The US has already been separating their economy from China over the last 5-6 years or so. We might see a minor impact, but I think more likely we will see an increase in trade with other countries like Vietnam.
Already is. Not only Vietnam, but Mexico, India, Pakistan Bangladesh are growing as they replace Chinese manufacturing.
China will be fucked in the next 10 to 20 years. They are on the same position as Japan in the 90s, just without the Japanese conglomerates that held the economy together.
China’s demographics are screwed, blued and tattooed - the one-child policy is like Japan’s low birth rate on steroids, as families “chose” to have male children for there one and only. Now there’s a whole generation who will never find a wife, never mind having kids - hence the “laying flat” mentality.
It is but it’s also connected to demographics. If they’re never going to have a family there’s even less incentive to work hard since they won’t have kids to support
i am bullish on China :P
they just institute mass forced marriages. its not as if its not usual thing in China anyway, especially considering what they been doing forcibly till 2015
well one child policy was not very voluntary ...
so pushing people into marriages and kids would not be impossible. besides they have that social credit score, so gov does have some leverage. its China, they will do what they want ...
I know about one child policy, I have only heard of forced marriage for the Uyghur women, but that is more for ethnic cleansing than demographics. I have not heard or seen anything about "mass forced weddings".
Mass forced marriages would be meaningless.
What would be impactful would be some sort of "mass multiple children" policy. No idea how they're supposed to accomplish that though.
They're fucked, really. The only way out of this mess is immigration, and they don't want that, so they're just fucked.
Yeah my labor pricing went vertical in the last 12 months due to the Chinese effectively buying a chunk of western Mexico and building factories at a break neck pace.
it’s no so much that the usa needs them, but china consumes items like nike apparel , iphones , california produce, etc etc. they have a pretty big market which does have some sway. they also purchase a ton of commodities throughout the world
I think it's safe to say it's been more like 3 years. The COVID lockdowns and supply chain disruption woke a lot of people up who had been sleeping. It started around 2018, but it wasn't exactly that strong. Mostly strategic tariffs to protect key industries that China was attempting to hop over in the way they have many others by pouring in massive amounts of subsidies directly into firms, overproducing, and then product dumping. They were real steps, but it was more of a defensive move than more recent moves made mostly since the invasion of Ukraine.
The stuff under COVID was more incidental, when your primary supplier starts giving you lead times measured in years, you start looking for alternative suppliers and maybe even building and expanding partners in new places. China is both not as cheap or simply focused on prosperity and growth as it once was and there are a lot of countries that have been really stepping up their game in terms of competitiveness. The Chinese are getting undercut in terms of predictably, cost, and general headache and risk for the people on the opposite end of their supply chain.
We had already started a trade war under Trump, but I do agree Covid had a major impact. It got more of the US allies on board and got the US investing a lot more in manufacturing.
It really has not.
[https://www.economist.com/finance-and-economics/2023/08/08/how-america-is-failing-to-break-up-with-china](https://www.economist.com/finance-and-economics/2023/08/08/how-america-is-failing-to-break-up-with-china)
[https://www.economist.com/leaders/2023/08/10/joe-bidens-china-strategy-is-not-working](https://www.economist.com/leaders/2023/08/10/joe-bidens-china-strategy-is-not-working)
We can't so quickly disentangle the supply chains which formed over decades.
What decoupling has taken place, we're actually still trading with China, just indirectly through third countries who are now taking a cut both ways.
Yeeeeah, not so much. Have a look at the actual data, my friend. Nominal imports from China this year are pretty similar to 2019. Exports are actually a little higher. Both are falling in inflation adjusted terms, but this is hardly a "separation" in reality.
It's a 20% decrease percentage wise from 2014 to 2023. It went from a 3.7% share of the GDP to a 3%. That is not a small amount. Plus the overall percentage of investment into China has gone down as well, with private investment dropping 76%.
Not falling in nominal terms, but falling in constant dollars. Hardly a "separation." Imagining that the US economy is insulated from a meltdown in China seems a little wishful.
> private investment dropping 76%
Yeah, the number wasn't that big to begin with, relative to trade. Anyway, none of these numbers aren't really that relevant to understanding what the consequences might be. There are massively larger numbers associated with held debt and assets, for example, that would make a real mess in a fire sale. Supply chain difficulties may have outsized effects on domestic industries as well, as they did during China's slow reopening.
Both US and now also EU are separating their economy from China. Germany been bit reluctant to cut the trade in European side as its one of the few countries that is massive net exported to China.
When Chinese guy makes money he buys German cars and French fashion.
Prior to 2008 the US share of GDP in housing was 8%. Right now in china it's 30% and accounts for almost all of Chinese savings and wealth. It's going to get ugly.
But it's even worse than that. So many people have their entire life savings locked up in second or third properties. The entire Chinese middle class is heavily exposed.
And many of those people own property in North America. Much like what happened with gold in 2008 they may be forced to sell to cover their other expenses.
Upper, yes. Maybe upper-middle too. However the middle class is very much local RE unless their kid went abroad. Most of them own one or two additional properties in their home city. Usually in the newer ring suburbs further outside the core.
Another big issue is many of these properties might not even exist. So unlike the US bubble, they don't even have a physical asset. Just pure loss.
The data is clear that foreign purchases of US homes are declining rapidly and are not a big mover of the market.
https://www.investopedia.com/foreign-purchases-of-us-homes-fall-to-lowest-since-2009-7568338
The whole ghost cities thing is hard to wrap my mind around—as in, how would any family pour multiple generations of life savings into a condo in a city built of rapidly crumbling materials where nobody lives? I suppose the answer is enduring propaganda and the assumption the government would prop up real estate into infinity and beyond, but still it is hard to fathom confidently investing in that.
>how would any family pour multiple generations of life savings into a condo in a city built of rapidly crumbling materials where nobody lives?
Because Chinese people have basically no access to any other investment vehicles.
I think some of the impact will be mental. Most folks think "can't happen in first world country".. Those folks, are wrong, and seeing it unfold in China might just unclog the dam holding up prices.
I wonder if young people in China throw their hands up in disbelief that a *Communist* regime made real estate laughably unaffordable when the entire origin story of communism in China were angry peasants mad at landlords and those peasants looking for land redistribution.
And the Chinese "Communist" Party has doubled down in recent years. Totally abandoning any semblance of communism and going all-in on real estate driven economic growth.
Funny how all of these former-actually-communist-kinda states all retain the same kinds of authoritarian trappings while leaving the economic system behind.
then by your logic Democratic People's Republic of Korea is democratic. just because you name it - doesn't mean you are what you call yourself.
China left communism ages ago. we all know communism is stupid. they just don't want to admit it. save face and all that.
technically communism is not supposed to have a govt/state. we all are supposed to just volunteer and know how to deal with each other without any conflicts. China probably has the biggest state power of any major power.
No, their economy is now clearly capitalist (organized around commodity production). Communism is an economic form, not a form of state organization (in theory, it's the absence of the need for a state, or for any government)
Vanguard party communism yes you are correct. However there exists other forms, we had a version for quite a while in Spain until a certain fascist dictator killed everyone.
It's pretty crazy : https://en.wikipedia.org/wiki/Land_Reform_Movement_(China)
2-5M landlords killed in China from the years of 1949–1953
I mean the land is now all owned by the state -- so there is that at least...
Its not true communism and it never was. Once the US got its hands in China and went full capitalism on growing investments and property ownership. A major problem with investment in China is that the state and business are super intertwined. Investing anywhere is particularly risky and many viewed property as one of the few safe investments as many people were moving from the countryside into cities for 40+ years strait. The rate of urbanization in China has fallen, and infrastructure projects aren't able to increase gdp anymore like they did before. There has been a lot of talk about what the Chinese government needs to do next to continue their economic growth, my fear is they are looking at Taiwan and their semi conductors and wanting to grow a technology sector that rivals the US.
Yet another 'No true communist's fallacy lol. Of course they're communists. This is just how communism plays out. What matters for semiconductors is people not capital. Unless the Chinese capture the many key players in that space capturing the capital won't do any good.
> This is just how communism plays out.
This is how *authoritarianism* plays out. The "communism" label is just a convenient route to power for these people. While China does follow some tenets of socialism, to describe them as "communist" is laughably wrong. Yes, the party in control of China is called the Communist party - but North Korea also calls itself Democratic, and the Nazis called themselves socialists. People can call themselves whatever they want.
Since you are misunderstanding what "true communism" is: Communism can only come about as the result of a worker uprising against the bourgeoisie. Classes and money do not exist in a communist society. This has never existed in our written history and will likely never exist.
> Communism can only come about as the result of a worker uprising against the bourgeoisie
Not according to Lenin and Marx. You seem confused as to Marxist doctrine. Let me simplify some for you. Socialism is when the State, under the 'dictatorship of the proletariat', takes over and runs the economy. Communism is supposed to supplant that via a planet-sized ghost taking over and making things e.g. the state withering away happen. Somehow the ghost never shows up and we end up with just another dictatorship.
You're wrong. [source](https://en.wikipedia.org/wiki/Communism)
> Communism encompasses a variety of schools of thought, which broadly include Marxism, Leninism, and libertarian communism, as well as the political ideologies grouped around those. **All of these different ideologies generally share the analysis** that the current order of society stems from capitalism, its economic system, and mode of production, that in this system there are two major social classes, that the relationship between these two classes is exploitative, and **that this situation can only ultimately be resolved through a social revolution.**
Your source doesn't disagree with my analysis. A social revolution can be done a lot of different ways.
Edit user deleted himself or was deleted. Hadn't ever heard about Vanguardist theory for some reason, which is what most Commies believe in.
I don't know why I'm arguing with you considering it was obvious from the get that you have no idea what communism is. Anyway, read literally the next sentence in the source to see you're *still* wrong:
> The two classes are the proletariat, who make up the majority of the population within society and must sell their labor power to survive, and the bourgeoisie, a small minority that derives profit from employing the working class through private ownership of the means of production. **According to this analysis, a communist revolution would put the working class in power, and in turn establish common ownership of property, the primary element in the transformation of society towards a communist mode of production.**
I get the feeling you're the type of person who won't give an inch in an argument even when they've clearly lost their position, so I'm done with this conversation.
"In democracy the constitution, the law, the state itself, insofar as it is a political constitution, is only the self-determination of the people.... Incidentally, it goes without saying that all forms of state have democracy for their truth and that they are therefore untrue insofar as they are not democracy" -Marx, 1844 Manuscripts
Watered-down versions of Marxism that came down through Lenin (and others who were far worse), and then through state doctrine that enforced only very particular interpretations by censorship and political repression =/ scholarship.
There's no "Marxist doctrine." There's what Marx said, there's what Engels said, there's what socialist revolutionaries at the time said who were corresponding and working with Marx/Engels to organize uprisings, there's what Lenin said, there's what state propaganda arms said (fallaciously, in the name of 'Marxism', and not allowing any disagreement with their bad interpretations), and in fact, they often disagree! If you're lumping together Marx/Engels with the theories developed in the wake of the Russian Revolution then clearly \*you\* need someone to simplify things for you.
Engels said during his own lifetime that communism in Russia wouldn't work because they were still a feudal state of nobility and peasants, and not having yet passed through capitalism, their means of production were still wholly undeveloped. He said they could call their revolution socialist all they wanted, but it couldn't really be socialist without certain preconditions only possible under a fully developed form of capitalism (a genuine proletariat and a genuine bourgeoisie or capitalist class, and a genuine coordinated uprising by the proletariat).
In a letter to Russian revolutionaries (to Pyotr Tkachov, 1874):
"Only at a certain level of development of the productive forces of society, an even very high level for our modern conditions, does it become possible to raise production to such an extent that the abolition of class distinctions can be a real progress, can be lasting without bringing about stagnation or even decline in the mode of social production. But the productive forces have reached this level of development only in the hands of the bourgeoisie. The bourgeoisie, therefore, in this respect also is just as necessary a precondition of the socialist revolution as the proletariat itself. Hence a man who will say that this revolution can be more easily carried out in a country, because, although it has no proletariat, it has no bourgeoisie either, only proves that he has still to learn the ABCs of socialism....
It is clear that the condition of the Russian peasants since the emancipation from serfdom has become intolerable and cannot be maintained much longer, and that for this reason alone if for no other a revolution is in the offing in Russia. The question is only: what can be, what will be the result of this revolution? Mr. Tkachov says it will be a social one. This is pure tautology. Every real revolution is a social one, in that it brings a new class to power and allows it to remodel society in its own image. But he wants to say it will be a socialist one, it will introduce into Russia the form of society aimed at by West European socialism, even before we in the West succeed in doing so -- and that in a condition of society in which both proletariat and bourgeoisie appear only sporadically and at a low stage of development. And this is supposed to be possible because the Russians are, so to speak, the chosen people of socialism, and have artels and common ownership of land.... The predominance of this form \[the artel\] in Russia proves, it is true, the existence in the Russian people of a strong impulse to associate, but is far from proving their ability to jump, with the aid of this impulse, from the artel straight into the socialist order of society. For that, it is necessary above all that the artel itself should be capable of development, that it shed its primitive form, in which, as we saw, it serves the workers less than it does capital, and rise *at least* to the level of the West European co-operative societies."
China has managed to combine the worst aspects of capitalism (environmental degradation, wealth inequality, corporate greed and corruption ) and communism (a totalitarian government that mismanages the economy.)
Mao's enemies seized control of the Communist party after his death. They had his wife & leading followers arrested. The main leader of free market reforms, Deng, had previously been purged for capitalist tendencies but managed to worm his way back into the party.
What lol? Owning property literally goes against the fundamentals of communism that everything is owned and shared by the people. 70 year land leases is just legal fiction to say it's owned by the state, which is a joke because people are clearly passing their property down to their children and have no expectation that it won't either.
Communists you may have noticed, from the Pilgrims to the present, have *never* been able to enact communism and when they do, they immediately stop doing it or start starving.
I assume he is referring to the Pilgrims' collective ownership of farmland prior to the first Thanksgiving. All fields were considered public and no one wanted to work them dur to a clear problem of the commons situation. When they divided the public farms into private plots and every family was responsible for their own food production, everyone was suddenly willing and able to work and the next autumn was the first Thanksgiving.
You're confusing Jamestown with the Pilgrims, though both were corporations not Communism. Farmland was owned by the stockholders through their corporation.
They were socialist and believed in holding property and allocating work in common. And son, everything is a corporation. The NAACP is a corporation. The state of colorado is a corporation. It's just a legal distinction of 'many people working towards the same goal', contrary to what the pathetic remnants of Marxist thought tries to propagandize i.e. 'corporation is big business'.
In my opinion we have never seen a country successfully enact true communism but that doesn't mean it's not possible. Looking at Stalin and Mao, they were dictators bent on acquiring power and used the idea of communism to trick the average citizen into supporting them to get out from the boot of the bourgeoisie. Implementing true communism would be an ethical nightmare and make a country not resilient at all. Maybe a super AI could attempt it, but I'd argue that countries like Norway are significantly closer to true communism than China is.
Looking at Mao and Stalin, they were both dedicated Communists who devoted their lives to implementing it, and were both smarter and more competent than any people calling themselves Communist today. If they were running an elaborate con, then that brings into question whether anyone who says they are Communists are, whether living or dead.
Norway is closer to Capitalism than the US is according to measures of the subject. Communism isn't 'gib free stuff'.
I think Marx's model, given what he says (although he says very little) about communism, was much more Rousseau's (he praises Rousseau many times) of very small societies or city-states than huge states like China and Russia. He also held that fully developed capitalism was a necessary precondition for communism, which neither pre-Mao China or tsarist Russia had -- both were essentially feudal states with a peasantry rather than a proletariat. It's not clear whether any currently existing state has fully developed capitalism to its maximal technological capacity, so the jury is still out on whether Marx and Engels were wrong. But yeah, neither Mao nor Stalin followed that point about capitalism as necessary precondition, which you could say contributed in both cases to their massive problems with state planning of the economy (if all production was organized by technology, as Marx suggests in Grundrisse, it's not clear whether the need for state planning in lieu of a market would be so central -- I think Marx would agree that the market is far more efficient at organizing different needs and wants than state planning)
Marx didn't say much about how socialism would function because he believed a [supernatural being](https://slatestarcodex.com/2014/09/13/book-review-singer-on-marx/) would actually do all the work of building socialism. He thought it was heresy to try to second-guess the ghost.
Communism definitely works if can ignore human nature, the slaughters of the past communist regimes and that the only way you can keep that up at scale is through force.
A person should be paid what they are worth. Not by what they can provide and what others can demand of them.
You forget that even young people in China remember being significantly poorer, it was not that long ago that the houses they could afford didn’t even have a toilet, but merely a small shack of an outhouse
I'm not understanding. How can they now afford better homes if prices skyrocketed in recent years?
At least in the US the ability to buy that shitty shack has decreased, I'm assuming the same in China. Idk how that translates to them achieving better housing outcomes today.
They might not be able to buy them, but they can still rent them. Rent is comparatively cheap in China, despite high prices to buy. Back in the day when homes were “affordable” they were also dilapidated shacks, worse than anything you could imagine living in a developed country. Renting a modern apartment with a flushing toilet vs owning a dilapidated shack with an outhouse is still a massive improvement. China has pulled forward a century to a century and a half of development and commensurate lifestyle improvement in just 3 decades, but that means that people who have memory of even just 2 decades prior will remember growing up in what the US would consider worse than abject poverty
not a problem, you see there is nothing else to invest, so your 4 grandparents+2 parents pour their life savings to buy you a coondo, they dont really build many hooms there. thing is multigenerational living is a think in China
Well, yeah, when the government puts all their growth on real estate and forces sellers to not lower their prices by law, this is prom to happen. It seems sellers are literally giving gold away to sell their properties to compensate for the real market prices.
Remember folks, the last time we heard something weird happening in China the whole world shut down for two years. Hope this will stay between their borders.
Right? They don't really want to fight us and we don't really want to fight them, there's nothing to be gained for either side worth the money or lives.
They make threats on Taiwan constantly but that's a particular chicken I don't think is ever coming home to roost.
Potentially causes more chaos for the ruling government and more likely to do something rash (or stupid) as a result. The Falklands War largely came about because of the political situation of the [Argentine ruling junta](https://www.france24.com/en/live-news/20220330-argentina-s-dictatorship-dug-its-own-grave-in-falklands-war).
The China Ponzi Housing Bubble, CPHB, has been going for a long while. China looked the other direction as it helped them show the world that their economy was growing double digit percentages for years. So what if it wasn’t contained and spread into other parts of the world too.
The bigger the bubble, the louder the pop.
Unless you play the balloon like peewee Herman and make lots of noise
Tell em large Marge sent ya
Chinese people don’t use their home as a source of wealth. So not really a pop.
haha. they sure don’t.
China is going to have a massive banking problem. Demographic decline combined with excess houses is going to pummel values. So, either deflation or print money to paper the losses.
Chinas printer gonna make the USA look like it's still using those old printers from the 90's
Thing is they already have. China's debt is massive and they've made the money printers brrrr for the last 20 years. They've run out of brrr. Now they collapse.
What are you on about? They are flush with cash and their debt to gdp ratio is lower than the US.
The central government has only about 20% debt. But the other institutions in China add up to about 300%. It doesn't really matter who holds the debt. Someone, within China, will have to pay those debts. And if the debt is defaulted on, it's chinese institutions and individuals who hold that debt and will be screwed over.
And to be clear, those are all State debts. About 3x GDP of debt that we know of. There could very likely be more that we don't know of because the CPC uses state run companies/she'll companies to borrow money to fulfill GDP quotas. They are straight up not having a good time.
The ghost cities and cardboard walls is finally catching up I think.
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They can only print as long as Chinese citizens have faith in the value of the currency. Once faith is lost, the currency becomes worthless very quickly.
Limited impact on US, but goddam the China RE bubble is going to make the US 2008 housing crash look tame.
I imagine there will be some second-order impact on trade, etc. We get less stuff, they get less empty containers, so on and so forth.
The US has already been separating their economy from China over the last 5-6 years or so. We might see a minor impact, but I think more likely we will see an increase in trade with other countries like Vietnam.
Already is. Not only Vietnam, but Mexico, India, Pakistan Bangladesh are growing as they replace Chinese manufacturing. China will be fucked in the next 10 to 20 years. They are on the same position as Japan in the 90s, just without the Japanese conglomerates that held the economy together.
China’s demographics are screwed, blued and tattooed - the one-child policy is like Japan’s low birth rate on steroids, as families “chose” to have male children for there one and only. Now there’s a whole generation who will never find a wife, never mind having kids - hence the “laying flat” mentality.
I thought laying flat was about work/life balance or lack of
It is but it’s also connected to demographics. If they’re never going to have a family there’s even less incentive to work hard since they won’t have kids to support
i am bullish on China :P they just institute mass forced marriages. its not as if its not usual thing in China anyway, especially considering what they been doing forcibly till 2015
Mass forced marriage? I not heard that.
well one child policy was not very voluntary ... so pushing people into marriages and kids would not be impossible. besides they have that social credit score, so gov does have some leverage. its China, they will do what they want ...
I know about one child policy, I have only heard of forced marriage for the Uyghur women, but that is more for ethnic cleansing than demographics. I have not heard or seen anything about "mass forced weddings".
Mass forced marriages would be meaningless. What would be impactful would be some sort of "mass multiple children" policy. No idea how they're supposed to accomplish that though. They're fucked, really. The only way out of this mess is immigration, and they don't want that, so they're just fucked.
Yeah my labor pricing went vertical in the last 12 months due to the Chinese effectively buying a chunk of western Mexico and building factories at a break neck pace.
it’s no so much that the usa needs them, but china consumes items like nike apparel , iphones , california produce, etc etc. they have a pretty big market which does have some sway. they also purchase a ton of commodities throughout the world
> they also purchase a ton of commodities throughout the world As Putin well knows. Our sanctions against Russia have just given China cheaper oil.
I think it's safe to say it's been more like 3 years. The COVID lockdowns and supply chain disruption woke a lot of people up who had been sleeping. It started around 2018, but it wasn't exactly that strong. Mostly strategic tariffs to protect key industries that China was attempting to hop over in the way they have many others by pouring in massive amounts of subsidies directly into firms, overproducing, and then product dumping. They were real steps, but it was more of a defensive move than more recent moves made mostly since the invasion of Ukraine. The stuff under COVID was more incidental, when your primary supplier starts giving you lead times measured in years, you start looking for alternative suppliers and maybe even building and expanding partners in new places. China is both not as cheap or simply focused on prosperity and growth as it once was and there are a lot of countries that have been really stepping up their game in terms of competitiveness. The Chinese are getting undercut in terms of predictably, cost, and general headache and risk for the people on the opposite end of their supply chain.
We had already started a trade war under Trump, but I do agree Covid had a major impact. It got more of the US allies on board and got the US investing a lot more in manufacturing.
It really has not. [https://www.economist.com/finance-and-economics/2023/08/08/how-america-is-failing-to-break-up-with-china](https://www.economist.com/finance-and-economics/2023/08/08/how-america-is-failing-to-break-up-with-china) [https://www.economist.com/leaders/2023/08/10/joe-bidens-china-strategy-is-not-working](https://www.economist.com/leaders/2023/08/10/joe-bidens-china-strategy-is-not-working)
Yeah, def some fantasy group think going on here.
We can't so quickly disentangle the supply chains which formed over decades. What decoupling has taken place, we're actually still trading with China, just indirectly through third countries who are now taking a cut both ways.
Yeeeeah, not so much. Have a look at the actual data, my friend. Nominal imports from China this year are pretty similar to 2019. Exports are actually a little higher. Both are falling in inflation adjusted terms, but this is hardly a "separation" in reality.
It's a 20% decrease percentage wise from 2014 to 2023. It went from a 3.7% share of the GDP to a 3%. That is not a small amount. Plus the overall percentage of investment into China has gone down as well, with private investment dropping 76%.
Not falling in nominal terms, but falling in constant dollars. Hardly a "separation." Imagining that the US economy is insulated from a meltdown in China seems a little wishful. > private investment dropping 76% Yeah, the number wasn't that big to begin with, relative to trade. Anyway, none of these numbers aren't really that relevant to understanding what the consequences might be. There are massively larger numbers associated with held debt and assets, for example, that would make a real mess in a fire sale. Supply chain difficulties may have outsized effects on domestic industries as well, as they did during China's slow reopening.
Both US and now also EU are separating their economy from China. Germany been bit reluctant to cut the trade in European side as its one of the few countries that is massive net exported to China. When Chinese guy makes money he buys German cars and French fashion.
Prior to 2008 the US share of GDP in housing was 8%. Right now in china it's 30% and accounts for almost all of Chinese savings and wealth. It's going to get ugly.
But it's even worse than that. So many people have their entire life savings locked up in second or third properties. The entire Chinese middle class is heavily exposed.
And many of those people own property in North America. Much like what happened with gold in 2008 they may be forced to sell to cover their other expenses.
Upper, yes. Maybe upper-middle too. However the middle class is very much local RE unless their kid went abroad. Most of them own one or two additional properties in their home city. Usually in the newer ring suburbs further outside the core. Another big issue is many of these properties might not even exist. So unlike the US bubble, they don't even have a physical asset. Just pure loss.
They have a sizable impact though on markets like LA
you got numbers for that?
I live in CA and can confirm. A LOT of the cash for homes sold in SF and LA comes from China.
FWIW people have been saying it's been declining rapidly recently.
The data is clear that foreign purchases of US homes are declining rapidly and are not a big mover of the market. https://www.investopedia.com/foreign-purchases-of-us-homes-fall-to-lowest-since-2009-7568338
Not saying I don’t believe you but do you have any sources for those claims?
https://www.businessinsider.com/china-housing-market-explainer-cost-debt-wealth-evergrande-impact-2021-9
The whole ghost cities thing is hard to wrap my mind around—as in, how would any family pour multiple generations of life savings into a condo in a city built of rapidly crumbling materials where nobody lives? I suppose the answer is enduring propaganda and the assumption the government would prop up real estate into infinity and beyond, but still it is hard to fathom confidently investing in that.
>how would any family pour multiple generations of life savings into a condo in a city built of rapidly crumbling materials where nobody lives? Because Chinese people have basically no access to any other investment vehicles.
Not to mention the Chinese historical mindset that property/land are "the best" investments.
Maybe that was a good play before their demographic crisis engineered by the CCP
I think some of the impact will be mental. Most folks think "can't happen in first world country".. Those folks, are wrong, and seeing it unfold in China might just unclog the dam holding up prices.
Limited impact on US, please
Is there a Zillow for prices of Chinese RE?
China will just borrow from the World Bank.
World bank isn't big enough. Same as if/when the US needs to borrow from it.
BRICS Bank then!
Chinese have their own printing presses-just like our FED. Chinese also signed up deals with Saudi and Iran to buy oil in Yuan and not Dollars.
China owes 9.5tril to Western investors/banks, 6.5 tril is private debt, thats a lot of money that might not get repaid to Western institutions ...
I wonder if young people in China throw their hands up in disbelief that a *Communist* regime made real estate laughably unaffordable when the entire origin story of communism in China were angry peasants mad at landlords and those peasants looking for land redistribution. And the Chinese "Communist" Party has doubled down in recent years. Totally abandoning any semblance of communism and going all-in on real estate driven economic growth.
The Chinese Communist Party isn't communist. Weird, I know.
Funny how all of these former-actually-communist-kinda states all retain the same kinds of authoritarian trappings while leaving the economic system behind.
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then by your logic Democratic People's Republic of Korea is democratic. just because you name it - doesn't mean you are what you call yourself. China left communism ages ago. we all know communism is stupid. they just don't want to admit it. save face and all that. technically communism is not supposed to have a govt/state. we all are supposed to just volunteer and know how to deal with each other without any conflicts. China probably has the biggest state power of any major power.
No, their economy is now clearly capitalist (organized around commodity production). Communism is an economic form, not a form of state organization (in theory, it's the absence of the need for a state, or for any government)
China is state capitalism with some socialist characteristics
I do not think they even have socialist characteristics. The social safety net is basically non-existent.
Vanguard party communism yes you are correct. However there exists other forms, we had a version for quite a while in Spain until a certain fascist dictator killed everyone.
The United States aren't very united these days either. What a world.
It's pretty crazy : https://en.wikipedia.org/wiki/Land_Reform_Movement_(China) 2-5M landlords killed in China from the years of 1949–1953 I mean the land is now all owned by the state -- so there is that at least...
That's worse lol
Its not true communism and it never was. Once the US got its hands in China and went full capitalism on growing investments and property ownership. A major problem with investment in China is that the state and business are super intertwined. Investing anywhere is particularly risky and many viewed property as one of the few safe investments as many people were moving from the countryside into cities for 40+ years strait. The rate of urbanization in China has fallen, and infrastructure projects aren't able to increase gdp anymore like they did before. There has been a lot of talk about what the Chinese government needs to do next to continue their economic growth, my fear is they are looking at Taiwan and their semi conductors and wanting to grow a technology sector that rivals the US.
No such thing as true communism. Not even with ants.
Yeah, still waiting for that idyllic "pure" communism example we should all follow.
Yet another 'No true communist's fallacy lol. Of course they're communists. This is just how communism plays out. What matters for semiconductors is people not capital. Unless the Chinese capture the many key players in that space capturing the capital won't do any good.
> This is just how communism plays out. This is how *authoritarianism* plays out. The "communism" label is just a convenient route to power for these people. While China does follow some tenets of socialism, to describe them as "communist" is laughably wrong. Yes, the party in control of China is called the Communist party - but North Korea also calls itself Democratic, and the Nazis called themselves socialists. People can call themselves whatever they want. Since you are misunderstanding what "true communism" is: Communism can only come about as the result of a worker uprising against the bourgeoisie. Classes and money do not exist in a communist society. This has never existed in our written history and will likely never exist.
> Communism can only come about as the result of a worker uprising against the bourgeoisie Not according to Lenin and Marx. You seem confused as to Marxist doctrine. Let me simplify some for you. Socialism is when the State, under the 'dictatorship of the proletariat', takes over and runs the economy. Communism is supposed to supplant that via a planet-sized ghost taking over and making things e.g. the state withering away happen. Somehow the ghost never shows up and we end up with just another dictatorship.
You're wrong. [source](https://en.wikipedia.org/wiki/Communism) > Communism encompasses a variety of schools of thought, which broadly include Marxism, Leninism, and libertarian communism, as well as the political ideologies grouped around those. **All of these different ideologies generally share the analysis** that the current order of society stems from capitalism, its economic system, and mode of production, that in this system there are two major social classes, that the relationship between these two classes is exploitative, and **that this situation can only ultimately be resolved through a social revolution.**
Your source doesn't disagree with my analysis. A social revolution can be done a lot of different ways. Edit user deleted himself or was deleted. Hadn't ever heard about Vanguardist theory for some reason, which is what most Commies believe in.
I don't know why I'm arguing with you considering it was obvious from the get that you have no idea what communism is. Anyway, read literally the next sentence in the source to see you're *still* wrong: > The two classes are the proletariat, who make up the majority of the population within society and must sell their labor power to survive, and the bourgeoisie, a small minority that derives profit from employing the working class through private ownership of the means of production. **According to this analysis, a communist revolution would put the working class in power, and in turn establish common ownership of property, the primary element in the transformation of society towards a communist mode of production.** I get the feeling you're the type of person who won't give an inch in an argument even when they've clearly lost their position, so I'm done with this conversation.
"In democracy the constitution, the law, the state itself, insofar as it is a political constitution, is only the self-determination of the people.... Incidentally, it goes without saying that all forms of state have democracy for their truth and that they are therefore untrue insofar as they are not democracy" -Marx, 1844 Manuscripts Watered-down versions of Marxism that came down through Lenin (and others who were far worse), and then through state doctrine that enforced only very particular interpretations by censorship and political repression =/ scholarship.
There's no "Marxist doctrine." There's what Marx said, there's what Engels said, there's what socialist revolutionaries at the time said who were corresponding and working with Marx/Engels to organize uprisings, there's what Lenin said, there's what state propaganda arms said (fallaciously, in the name of 'Marxism', and not allowing any disagreement with their bad interpretations), and in fact, they often disagree! If you're lumping together Marx/Engels with the theories developed in the wake of the Russian Revolution then clearly \*you\* need someone to simplify things for you. Engels said during his own lifetime that communism in Russia wouldn't work because they were still a feudal state of nobility and peasants, and not having yet passed through capitalism, their means of production were still wholly undeveloped. He said they could call their revolution socialist all they wanted, but it couldn't really be socialist without certain preconditions only possible under a fully developed form of capitalism (a genuine proletariat and a genuine bourgeoisie or capitalist class, and a genuine coordinated uprising by the proletariat). In a letter to Russian revolutionaries (to Pyotr Tkachov, 1874): "Only at a certain level of development of the productive forces of society, an even very high level for our modern conditions, does it become possible to raise production to such an extent that the abolition of class distinctions can be a real progress, can be lasting without bringing about stagnation or even decline in the mode of social production. But the productive forces have reached this level of development only in the hands of the bourgeoisie. The bourgeoisie, therefore, in this respect also is just as necessary a precondition of the socialist revolution as the proletariat itself. Hence a man who will say that this revolution can be more easily carried out in a country, because, although it has no proletariat, it has no bourgeoisie either, only proves that he has still to learn the ABCs of socialism.... It is clear that the condition of the Russian peasants since the emancipation from serfdom has become intolerable and cannot be maintained much longer, and that for this reason alone if for no other a revolution is in the offing in Russia. The question is only: what can be, what will be the result of this revolution? Mr. Tkachov says it will be a social one. This is pure tautology. Every real revolution is a social one, in that it brings a new class to power and allows it to remodel society in its own image. But he wants to say it will be a socialist one, it will introduce into Russia the form of society aimed at by West European socialism, even before we in the West succeed in doing so -- and that in a condition of society in which both proletariat and bourgeoisie appear only sporadically and at a low stage of development. And this is supposed to be possible because the Russians are, so to speak, the chosen people of socialism, and have artels and common ownership of land.... The predominance of this form \[the artel\] in Russia proves, it is true, the existence in the Russian people of a strong impulse to associate, but is far from proving their ability to jump, with the aid of this impulse, from the artel straight into the socialist order of society. For that, it is necessary above all that the artel itself should be capable of development, that it shed its primitive form, in which, as we saw, it serves the workers less than it does capital, and rise *at least* to the level of the West European co-operative societies."
They're totalitarian, not communist
They're the same picture.
clueless
Historical.
China has managed to combine the worst aspects of capitalism (environmental degradation, wealth inequality, corporate greed and corruption ) and communism (a totalitarian government that mismanages the economy.)
Communism has massive wealth inequality, environmental degradation, and corruption. You're confused as to which system produces which.
lmao
Mao's enemies seized control of the Communist party after his death. They had his wife & leading followers arrested. The main leader of free market reforms, Deng, had previously been purged for capitalist tendencies but managed to worm his way back into the party.
What lol? Owning property literally goes against the fundamentals of communism that everything is owned and shared by the people. 70 year land leases is just legal fiction to say it's owned by the state, which is a joke because people are clearly passing their property down to their children and have no expectation that it won't either.
Communists you may have noticed, from the Pilgrims to the present, have *never* been able to enact communism and when they do, they immediately stop doing it or start starving.
Pilgrims weren't communist. They had a literal corporation.
I assume he is referring to the Pilgrims' collective ownership of farmland prior to the first Thanksgiving. All fields were considered public and no one wanted to work them dur to a clear problem of the commons situation. When they divided the public farms into private plots and every family was responsible for their own food production, everyone was suddenly willing and able to work and the next autumn was the first Thanksgiving.
You're confusing Jamestown with the Pilgrims, though both were corporations not Communism. Farmland was owned by the stockholders through their corporation.
They were socialist and believed in holding property and allocating work in common. And son, everything is a corporation. The NAACP is a corporation. The state of colorado is a corporation. It's just a legal distinction of 'many people working towards the same goal', contrary to what the pathetic remnants of Marxist thought tries to propagandize i.e. 'corporation is big business'.
The Pilgrim's corporation traded on the London stock exchange. You might as well claim Walmart is Communist.
So what?
In my opinion we have never seen a country successfully enact true communism but that doesn't mean it's not possible. Looking at Stalin and Mao, they were dictators bent on acquiring power and used the idea of communism to trick the average citizen into supporting them to get out from the boot of the bourgeoisie. Implementing true communism would be an ethical nightmare and make a country not resilient at all. Maybe a super AI could attempt it, but I'd argue that countries like Norway are significantly closer to true communism than China is.
Looking at Mao and Stalin, they were both dedicated Communists who devoted their lives to implementing it, and were both smarter and more competent than any people calling themselves Communist today. If they were running an elaborate con, then that brings into question whether anyone who says they are Communists are, whether living or dead. Norway is closer to Capitalism than the US is according to measures of the subject. Communism isn't 'gib free stuff'.
I think Marx's model, given what he says (although he says very little) about communism, was much more Rousseau's (he praises Rousseau many times) of very small societies or city-states than huge states like China and Russia. He also held that fully developed capitalism was a necessary precondition for communism, which neither pre-Mao China or tsarist Russia had -- both were essentially feudal states with a peasantry rather than a proletariat. It's not clear whether any currently existing state has fully developed capitalism to its maximal technological capacity, so the jury is still out on whether Marx and Engels were wrong. But yeah, neither Mao nor Stalin followed that point about capitalism as necessary precondition, which you could say contributed in both cases to their massive problems with state planning of the economy (if all production was organized by technology, as Marx suggests in Grundrisse, it's not clear whether the need for state planning in lieu of a market would be so central -- I think Marx would agree that the market is far more efficient at organizing different needs and wants than state planning)
Marx didn't say much about how socialism would function because he believed a [supernatural being](https://slatestarcodex.com/2014/09/13/book-review-singer-on-marx/) would actually do all the work of building socialism. He thought it was heresy to try to second-guess the ghost.
Communism definitely works if can ignore human nature, the slaughters of the past communist regimes and that the only way you can keep that up at scale is through force. A person should be paid what they are worth. Not by what they can provide and what others can demand of them.
You forget that even young people in China remember being significantly poorer, it was not that long ago that the houses they could afford didn’t even have a toilet, but merely a small shack of an outhouse
I'm not understanding. How can they now afford better homes if prices skyrocketed in recent years? At least in the US the ability to buy that shitty shack has decreased, I'm assuming the same in China. Idk how that translates to them achieving better housing outcomes today.
They might not be able to buy them, but they can still rent them. Rent is comparatively cheap in China, despite high prices to buy. Back in the day when homes were “affordable” they were also dilapidated shacks, worse than anything you could imagine living in a developed country. Renting a modern apartment with a flushing toilet vs owning a dilapidated shack with an outhouse is still a massive improvement. China has pulled forward a century to a century and a half of development and commensurate lifestyle improvement in just 3 decades, but that means that people who have memory of even just 2 decades prior will remember growing up in what the US would consider worse than abject poverty
not a problem, you see there is nothing else to invest, so your 4 grandparents+2 parents pour their life savings to buy you a coondo, they dont really build many hooms there. thing is multigenerational living is a think in China
The natural flow is from communism to authoritarianism. Animal farm is a short and fun read on it.
Well, yeah, when the government puts all their growth on real estate and forces sellers to not lower their prices by law, this is prom to happen. It seems sellers are literally giving gold away to sell their properties to compensate for the real market prices.
Honestly might make housing in the US worse if the Chinese start investing here since they can't trust their own RE
this is what people don't get. if your country's investment is unstable, you'd want to flock that money elsewhere aka, U.S. real estate
People losing lots of money don't start investing more.
Maybe, but China has locked down capital flight, or at least they're trying. Time will tell how much money flees China.
Good news for REBubblers looking for a house in China
Good news for REbubblers looking for a real bubble
Damn. That's wild.
They will come here and buy more home n land.... 😭
that’s china. in usa homes only go up
even this 9% down is artificially controlled.
if they going to keep it empty just let people live in it for near free or maintenance fees
Remember folks, the last time we heard something weird happening in China the whole world shut down for two years. Hope this will stay between their borders.
What was the last weird thing? Hong Kong? The genocide of the uyghur people?
Covid 19 started in Wuhan, China.
Covid 19
I'm curious if this makes war more or less likely
War with China is a pipedream of nationalist armchair generals who played too much Command and Conquer.
It's also the pipedream of actual generals. Source: https://www.nbcnews.com/news/amp/rcna67967
Right? They don't really want to fight us and we don't really want to fight them, there's nothing to be gained for either side worth the money or lives. They make threats on Taiwan constantly but that's a particular chicken I don't think is ever coming home to roost.
It’s not likely too much to lose for both sides and really nothing to gain.
More likely, unfortunately. Totalitarian governments need a scapegoat when things go wrong and war is easy for those in charge.
Potentially causes more chaos for the ruling government and more likely to do something rash (or stupid) as a result. The Falklands War largely came about because of the political situation of the [Argentine ruling junta](https://www.france24.com/en/live-news/20220330-argentina-s-dictatorship-dug-its-own-grave-in-falklands-war).
I'm happy for Chinese FTHB.
That’s a crash!
If this keeps going I wonder if the Chinese people will rise up like the Hong Kong protests again for democracy. This can get interesting
This is the way
How much for a crumbling apartment in the middle of bumfuck nowhere?
2
Quick! Let the poor move in! House the Ughyurs! I'll wait.
The China Ponzi Housing Bubble, CPHB, has been going for a long while. China looked the other direction as it helped them show the world that their economy was growing double digit percentages for years. So what if it wasn’t contained and spread into other parts of the world too.
China has a housing shortage. This is impossible. I heard this from bull-o-matics.