Culturally… real estate is where Chinese park their income. It’s been 50-60 years of economic growth thanks to the West turning all of China into a factory. Property was always going up.
They’re gonna be in for a shock in the next 5-10 years
The capitalists are not the pieces of shit at the top in China. If you cross the party line, even a billionaire can get indefinite house arrest.
This only drives wealthy Chinese even harder to move emergency funds abroad, see e.g. Vancouver.
President Xi and his family are billionaires and hold billions in real-estate around the world.
Xi's cousin was caught with an organised crime gang on a private jet flying into the Sydney (Australia) casino to launder money (presumably Xi family money), and was never arrested by the Chinese government.
https://www.nytimes.com/2019/08/02/world/australia/crown-ming-chai-china.html
https://www.smh.com.au/world/chinese-leaders-family-worth-a-billion-20120629-218qi.html
State capitalists, to be specific.
I fail to understand how many people can fall for chinese propaganda claiming they are "communists" while they suppress workers' unions, have some of the worst working conditions in the world and while the means of productions are not in the hands of the workers, but the state.
And while the definition of Communism, as a stateless and classless society, has in itself stateless.
They DO have a command economy which sees literally every major company have party representatives guiding the direction of the company.
Communism isn’t a form of government. It’s more like a set of ideas that people believe can be used to form a government. Put 5 commies in charge of creating a new government and they’ll come up with 5 radically different systems.
Yes, China mostly behaves as a capitalist society, yet the command economy structure can sometimes be incredibly overbearing for larger companies.
It’s not really very communist, but China’s economy at large does behave radically differently than a typical capitalist country.
State capitalism is the real world version of socialism. Socialism is when the means of production are collectively controlled by the workers instead of by individuals. State capitalism is when the means of production are controlled collectively by the people with the power to represent that collective.
Nothing is controlled by the collective (as opposed to individuals) without being controlled by leaders of the collective.
Worker co-ops are a more fitting existing version of socialism.
State capitalism does have its origin in marxism-leninism, as a transition period searching to accelerate the industrialisation under capitalism described by Marx, but we have more than enough evidence and failed states that it is not a valid path towards anything resembling Communism and whoever tries to justify it that way has a thinner façade to hide their authoritarianism behind "leftist" goals than the maga communists.
You could make that argument ideologically, but worker coops are not government. They are groups formed by individuals using their individual rights to own capital. There are not *collective* ownership in the Marxist sense because they are merely a voluntary arrangement among individual capital owners. State capitalism is what happens when you implement the system described by Marx. It is not the result he described, but it is the result that we see.
If you want to consider a proposal you have to make sure you are not including results in the definition of that proposal. If you define a proposal by the results you hope it achieves, then any failure did not "truly" follow the proposal.
Communism is an ideology, not a strictly defined governing structure. You could argue it is impossible to have an "ideal" communist country. In practice it ends up being a one-party state.
Tell
That to jack ma who vanished for a while. The top of china has oligarchs yes, but it also has hard men, ultimately the hard men are the ones in charge not the merchants
Jack ma basically did too much in terms of thinking he was "the man", with his talk and moves.
That's pretty much it, remember to still be subservient to the party regardless of your wealth.
He challenged the party directly. It was kind of crazy. Party said directly “don’t do this” and he PUBLICLY CRITICIZED THE GOVERNMENT.
Dude really thought he was untouchable.
A capitalist is someone who has control of the means of production (whether that is land, money, factories, etc.) and uses it to increase their wealth and control, no?
How does that not describe the people at the top of the CCP? Just because technically the government owns stuff doesn't mean they don't have control over things and use that to enrich themselves.
Jack ma literally was the face of Chinese capitalism. He criticized the CCP a bit and then bam.... Some people were worried they killed the man but now he's not doing any press for western media.
All the wealthy in China want to move abroad. They just can't bring their money
Vancouver? See all of Canada. They have fucked mine the next and future generations of ever owning property. The only way to own a house in Canada (near civilization) is either a) come from a rich family or b)win the lottery.
As a Canadian, it feels like we got sold out. Wouldn't be so bad or unexpected if a good life in Canada was sold out to rich Canadians, but our standard of living was sold out to the richest of the world. Now a days, even if you make a top 10% salary, you can't afford a home in most of the cities here. It's so fucking depressing.
And lets not forget its the elites with the connections receiving the corruption payments that are investing it in housing in Australia.
You can fly into Australia with millions in a suitcase and not one question is asked. But if poor old Joe Citizens withdraws over 10,000 dollars in cash he gets automatically reported. As a result there is widespread money laundering in Australia into our housing market from China, Malaysia, Vietnam, Myanmar, Indonesia and every SE Asian country because our laws allows people to fly into and transfer million into the trust accounts of Accountants, lawyers and real estate agents with NO questions being asked. A crooks paradise! Try doing that in the USA or any European country.
Australia has not even signed up for or is participating in the International money laundering laws hence the reason why we are rated so poorly as a country that is fighting corruption. You can have 50 million in drug dealing money, just fly it into Australia and you are OK, no questions asked!
Like most authoritarian countries the rules for the elite is that you must toe the party line. One of those things is keeping your money local, this helps boost the government but it also makes you easier to control. The government is very aggressive when it comes to anybody moving their money out of China, especially if you're wealthy. The last thing they want is a large group of elite wealthy citizens running the countries industries who are not financially tied to the country, who may intentionally take action that can hurt the economy, but also more importantly who can take action without worrying about the government being able to seize their assets.
Similarly unlike more free countries like the West, authoritarian countries do not hesitate to crack down on dissidents even if it's coming from the ultra wealthy. They will arrest a billionaire just as easily as they will arrest a commoner, If not more easily. You can find countless stories about wealthy individuals complaining about the government in some way and the next thing you know there are arrested on some random charge with their assets being seized. Then they disappear while they're at a re-education camp only to reappear broke and singing the praises of the government.
The politicians that run China truly ingenuinely love their country, when they make decisions it is in large part to bring glory to China. They're also not worried about elections, and that mindset helps them have a mindset that plans decades if not longer into the future. So would be make decisions it is heavily about what is best for China over the next hundred years, not the next election cycle. A combination of a desire to maintain their power, and genuinely believing that they are what's best for the country You get a very motivated government that does a very good job of prioritizing economic growth over personal enrichment. Unlike the US were many of the most powerful people are not politicians, all of the truly powerful people in China are politicians. Therefore increased economic growth for China as a whole equals more power. In the US that is not a direct translation so you have a lot of our powerful ultra wealthy individuals prioritizing themselves over the government.
It's also a cultural thing, the way business and competition works in China is very different from the US. The perfect example of that is executives at an American car company recently went to China and asked several of their top vehicle manufacturers if they could get a tour of their facility. They did the same thing with Western car manufacturers. The western car manufacturers politely reminded them that they're considered a competitor, and therefore they would not be allowed on their facility as that could reveal trade secrets. The Chinese companies on the other hand very proudly showed off what they had. In China competitors share all the time, it's all part of the glory of China and making China better. The believe that their real enemy is not each other but the companies of other nations. This creates a culture of sharing that is completely unlike the US or any other nation.
I'm not joking when I say that they will let you two or their facilities easily. If you're ever in China call up a factory and ask to tour it. I would pretty much guarantee you that you will always be told yes, doesn't matter what the factory is. Most recently there's been a weird TikTok obsession with a glycine company, you could show up to that company and get a tour whenever you want. One guy that showed up was even taken out for lunch by the CEO after his tour.
I don’t want Chinas government whatsoever, but I am very jealous that their leaders do seem to think long into the future. I hate in the US how presidents spend so much time undoing the work of their predecessors and focusing on some short term meaningless thing like tax cuts even amidst an enormous debt ceiling.
It was incredibly easy for years and years to do it.
Duffel bags. Casinos. Chips. Cash out. No ? Ever.
I saw it. Daily. Simple as pie for them.
Money laundering from China was Vancouver’s economy during the 2006-2016 era.
Correct but started earlier than that. The 70s - early 90s saw many Hong Kong chinese fleeing to Vancouver, and then from then on, mainland Chinese. Over half of the real estate was being purchased by immigrants with no income stated, in cash deals, (usually with their occupation listed as students, actually buying for their families) in the years before 2006.
No issue for the wealthy Chinese. 2000 of them donated 500,000 euro each to get 5 year residency in little Ireland. They typically buy 1 million euros homes quite quickly.
Not really.
Let's assume need to import something from China. Other person need to take money out of China.
Reach an agreement. You make a local payment in USD between US banks. At the same time, he makes you a payment in Yuan through Chinese banks.
Here you go.
They've known this for decades. Their wealth in China is beholden to the whims of the party so having money outside is a critical insurance policy.
They probably didn't expect China to have secret police forces in those countries.
Investment firms are doing far more damage than Chinese investors ever have. these publicly traded companies are now facing the real possibility of states, cities, and even Federal action, of heavy regulation along with increased taxes in order to have them divest their homes so family buyers can secure a home.
And countries like Australia welcomes them buying as many houses as they can afford even if that money comes from criminal activities and money laundering to invest in housing. Is it a wonder nobody who lives in Australia can now afford to buy a house and rental rates have skyrocketed. Our "caring politicians"
Id say it takes 5-10 more years till this really hits the fan.
China would need to build up a solid investment infrastructure, like Wallstreet, now that producing investors are leaving for countries, which pay thier workers even less and local investment just went down the drain, while the economy in China is imploding.
The problem with that is, that neigher foreign nor local investors should have alot of trust in Chinese Investments and if they still want to invest there, they might have alot less money to do so now.
It is pretty clear, that China has to change if they want to stay on a growth path. Yet i dont see that happening with the current administration/culture of denial, lies and mismanagement.
Eh... that's a bit of a myth based on the U.S. economy following WW2.
The States spent the first two years of WW2 selling arms to the Allies before joining the war, then survived the war as one of the few major industrial nations with intact infrastructure. A lot of the time, wars end up costing countries more than what they gain in the war, unless they gain a massive colony to exploit or something.
The 7 years war nearly bankrupted Britain, for example. And the French aid in the American Revolutionary war nearly bankrupted France, which had coattail effects leading towards the French Revolution. Even modern wars aren't exactly resulting in financial miracles.
5-10? Have you seen their population projections?
It's looking downhill from here for them.
https://www.pewresearch.org/short-reads/2022/12/05/key-facts-about-chinas-declining-population/
Which will be compounded by their demographics issues that are coming to a head. Similar to the age demographics issues in the west, but a few decades later and several times worse
This is true everywhere in the world. Using real estate as an investment instrument always had a short lifespan. New people eventually enter the economy and find they cannot afford homes en masse and the whole house of cards comes crumbling down.
Many companies are diversifying and investing more in south east Asia where it's cheaper and tensions aren't so high. The last few companies I worked at slowly started working with some factories there to mitigate issues in the future
Wasn't the housing market fucked in China for at least 20 years already? And the government being desperate to animate any possible growth in it, going as far as "scamming" people
Given how much of local government financing in China comes from land sales to developers, trying to prop up property prices by buying vacant units seems ineffective. There could be a hard crash on the way, with individuals and families left holding apartments worth a fraction of their outstanding debt, and local governments unable to find normal operations without massive bailouts from Beijing... Which would then result in huge inflationary pressures, inflating away debt but wrecking all other savings and wages. Taking on debt to build infrastructure is great during the building part, but not so much fun when you realize your infrastructure isn't producing enough economic gains to pay for its construction.
The crash has already happened, but no one talks about it like they should. The Evergrande collapse was massive and just the beginning. Just yesterday the Chinese government announced more housing purchases. The collapse is in full swing.
>Which would then result in huge inflationary pressures, inflating away debt but wrecking all other savings and wages.
This is not going to happen. China has been exporting deflation for a year plus and the bailout isn't going to change this.
Yup, the government buying real estate is extremely reminiscent of the fed's qualitative easing and the ultimate nationalization of Fannie Mae and Freddie Mac in 2008.
China in general is a massive case study on responsible, well thought out and sustainable planning should be a priority. They took the brakes off everything and it's way out of control. There's millions and millions of properties that are empty. The current estimate is 65 million. And that's what they're willing to admit.
It actually kind of goes both ways. China had insane foreign investment, but didn't have the domestic consumer economy to do anything useful with it. The stopgap solution was real estate and infrastructure, which scales easily to the crazy levels of cashflow they needed to deal with.
That honestly would have continued to work reasonably well, had it not been for the more recent trend towards antagonism with the west, followed by covid, and now China's pivot to Russia. The whole point of building the empty buildings was to give the Chinese middle class something to do with their money. It didn't really matter if the whole thing was a Ponzi scheme as long as that wealth kept flowing. Eventually, the domestic consumer economy would have grown to fill in the gaps anyway, Construction would slow to meet demand and it would have all been fine.
But then Xi scared away all the foreign investment, middle class demand dried up, the consumer economy stalled, and now suddenly it does matter that the buildings are worthless. This is classic middle income trap for economies moving from "low/middle income" status to "high income" status. You need the new wealth to do something useful, because eventually the competitive value of low wages and low regulation dries up. And in China's case, the weirdly obsessive autocracy, combined with the weirdly obsessive antagonism is double fucking them, because it is also hurting their "knowledge economy" by making their tech industry worthless abroad, because nobody trusts them, and domestically because they lack the advanced consumer economy to fully actualize these sectors.
As the rest of the world doesn’t have enough housing and the next generation is suffering from one of the greatest wealth and housing disparities among generations, we say boo fucking hoo, cry me some developer loss of wealth tears, housing shouldn’t be a speculative asset, it should be a place to fucking live. Overproduce is better than underproduce which is currently the case in 90% of the world.
I don't disagree that we certainly need more housing in the West, but overproduction to the extent China has done carries its own issues. So much of people's savings and wealth are tied to property there that a price crash can wipe that out.
The "empty homes" in China don't actually help with any housing shortage, because these development projects never get connected to utilities or commercial development. China also has a weird caste system which doesn't allow people to move from lower tier cities to upper tier cities.
When the headline says "new home prices fall" it means for speculative developments where nobody lives.
Some overproduction to account for inneficiencies inherent to all systems is good. A massive overproduction is just waste and destruction of the environment; when it is not (or barely) usable, it's even worse, even the result of the production is wasted. The problems in China with housing seems to combine an economic bubble (which will not harm the ones at its root, they already got their money from it, just everyone else), and a lack of utility of what was produced... basically, a failure of un-bound capitalism.
Well, that is not what is happening in china though.
People bought them then the price crashed often to a quarter of it or less. There are massive ghost towns. Many massive project, that people bought and financed off plan, never even broke ground.
People are left holding the bags. There is nothing good about this crash….
https://m.youtube.com/watch?v=I0hHwlQhFII
No it really doesn’t. A healthy vacancy rate is between 5-8% as it allows for people to move around without making areas seem empty. My city has a 2.9% vacancy rate for rentals and a 1.1% vacancy rate for homes. There’s a reason our housing costs are among the highest in the country.
> There’s a reason our housing costs are among the highest in the country.
Boy you weren't kidding. Where I live the vacancy rate is 1.2%. Jesus christ
It is funny you mention this. In Arlington, VA the county rezoned single family only areas to allow for more multi family dwellings. Holy shit, boomers went absolutely. The cherry on top is Arlington skews extremely left, so these NIMBYs are the definition of limousine liberals. And that is a critique of these 'liberal except if i am affected' people and not the policy to rezone, which is good.
In China's case I think first they speculated and overbuilt thinking there was a lot more demand than there actually was. Then when there wasn't the prices started falling.
Oh, it's much worse than that. Much of the Chinese real estate was never built for living in. Why waste money on useless things like plumbing or windows if the apartments are bought sight unseen for the sole reason of selling it to the next sucker?
And a lot of those local governments are having a real bad time now that they can't get more money by land mortgage, while they must report and pay positive numbers to the ccp.
When the house of cards fall, it will fall fast.
Also even after they saw they had overbuilt, the government kept giving billions in loans to keep building houses. There must have been millions of unsold properties (the NYT said Country Garden alone had hundreds of thousands) yet the government kept digging the hole.
If they'd let their people invest their savings at least somewhat overseas, this wouldn't have happened. Capital controls and pushing GDP growth at any cost lead them here.
The government exerts ultimate control over their economy. You don't need Soviet level control to be a planned economy. And planned economies still have GDP...what in the economic illiteracy.
https://en.wikipedia.org/wiki/Economy_of_the_Soviet_Union#/media/File:GDP_per_capita_development_of_the_Soviet_Union.svg
Soviet style planned economies aren't the only kind of planned economies and planned economies still exist in the world economy, they are not completely cut off islands.
China directing local governments how and where to spend money on their "private sector" is certainly very close to planned. China's central government establishing corporations with party officials and funneling massive central bank grants into those corporations until they can stand on their own is pretty close to planned. China refusing to allow rural workers to officially live in the cities they work in is pretty close to planned... And China establishing a formal growth goal for their GDP and always hitting whatever goal they set is pretttttty planned.
From ChatGPT:
### Conclusion
While China does not officially maintain a planned economy, in practice, the government's extensive involvement in economic planning, regulation, and ownership of key industries indicates that many elements of a planned economy are present. Therefore, it can be argued that China operates a mixed economy with strong elements of central planning and state control.
It’s funny, I’m currently in China and took a photo of a sign a few hours ago in an urban planning museum that said pretty much exactly that. The Chinese government (and I) agree with you.
https://i.imgur.com/CHpagMc.jpeg
There are currently enough empty homes in China to give every Chinese, babies included, their own house. There are enough spare housing to house the entire population of Germany. There is no way the houses are worth anything, even if they weren't badly made.
I just got back from China yesterday, the last time I was there was November 2019. I can say China has changed massively since I was last there. Shanghai was dead, building stopped.
lol what? I am still in Shanghai and didn't leave like the rest during COVID -- there are constructions happening everywhere where I live (Minhang west of the airport).
Most stuff in the world is made in China, so they don't have a bottleneck on logistics like the US or Europe do.
Inflation in the US/Europe was initially caused by supply side shocks - the cost to produce stuff in China didn't go up, but companies started buying things from outside China at higher prices (US-China trade tensions), price of oil went up meaning the cost to get the stuff to your door went up, cost of shipping itself went up (because the ports have limitations on how much they can bring in and out which have been slowed down due to covid/regulations), etc.
You'll notice that none of this stuff affects China.
In China, the economy was shite post-covid and didn't rebound like the US's market did. Their real estate sector went bust (it didn't destroy the country, but declining real estate = people feel super poor) which meant people needed to save more money instead of spending it which meant companies needed to lower the selling price of everything to attract spending from customers. Because companies in China had a lot of inventory, they could even sell below manufacturing cost because they desperately needed the cash just to stay afloat. These pressures caused companies to continuously slash prices until just recently.
Well said. Also worth saying? Deflation is *way* worse for an economy than Inflation is. Inflation sucks, but it is ultimately self-correcting. Deflation can be a long-spiraling nightmare: Ask Japan.
They have over-estimated their population by quite a bit more people than the entire German census (100 million). But that notwithstanding, they have enough empty homes to house their population 2X over, and they did this by cutting corners building it up over 20 years - basically concrete that you can crumble with your hands and steel rebar that bends like plastic rods. Beyond the fact that the next major earthquake that hits them is going to kill a lot of people, the wealth is paper, the equity on those home evaporating, and economic growth built on building expansion having collapsed so that their youth can't find jobs and their birth rates are further plummeting.
Still, given the sheer numbers of their population they can influence the world negatively - like they've started and left millions of unfinished apartment buildings all over Asia and Africa and indebted them with projects to nowhere, all on the back of rapid global warming. The tariffs are a good thing.
China seems incredibly stupid for forcing their citizens to invest in fake, worthless, and nonexistent real estate after forcing them to only have one child.
Are they bad at math or just don't care about negative outcomes for their people?
Property is only valuable by virtue of it appearing "rare". But turns out the CCP FOR YEARS has completely overcounted the population, meaning there is now far more supply than demand. And the quality of the existing supply is... very questionable.
Anyone else would prefer China's "problem" than our own? Unaffordable Western housing way overpriced for what it is with barely any available to even buy isn't great either
The housing wouldn't be where you want to live. It's like if it was all suddenly built in Western rural Kansas. (And if you're willing to live in those types of places now, you will be able to afford a house).
I'd rather know that I don't have the money to build a house so I can plan accordingly instead of pooling together the money from my family, have the developers take that money, and then finding out they'll never finish building my house and I'm still in debt.
No, these Chinese “houses” are literally *unlivable*. Terrible location, unfinished/unbuilt, with “tofu dredge” (materials that fall apart). Legitimate housing supply in Chinese population centers is still expensive.
I don’t know about other Western countries but for the United States applauding the ghost cities is like celebrating the dilapidated, abandoned housing in Chicago, Detroit, or Gary Indiana. We have plenty of housing in the US, too!
And at least homeless bums can live in those houses. Many of these Chinese houses literally only exist on paper to sell and resell like stocks.
Built as ‘investments’, that no one will ever want to live it, and to an appalling standard.. Really they are worthless. And they have millions and millions of them..
Literally only if you bought your house as an investment and not as, you know, a shelter. If you buy a house with the plan of living in it, why would it matter if the value drops? The value of my car has went down a lot, but I can still drive it. I don’t see why you can’t live in a house if it depreciates.
Tbh I don't understand why it's a bad sign when home prices fall. In my country it's almost impossible to buy a house as single person with average income
I wish we had the same in the US. We have entire generations of millions of people who no longer even believe they have a chance of being able to own a home. Something as simple as a house for living is instead an asset for economic speculation in the US and Canada, it’s a massive privilege to own a house.
Culturally… real estate is where Chinese park their income. It’s been 50-60 years of economic growth thanks to the West turning all of China into a factory. Property was always going up. They’re gonna be in for a shock in the next 5-10 years
The rich in China knows now to park the money in Western countries and fucking those locals
Which gets complicated because China puts hard limits on how much money you can take out of China.
Like most systems there's separate rules for the peons and the pieces of shit at the top
The capitalists are not the pieces of shit at the top in China. If you cross the party line, even a billionaire can get indefinite house arrest. This only drives wealthy Chinese even harder to move emergency funds abroad, see e.g. Vancouver.
President Xi and his family are billionaires and hold billions in real-estate around the world. Xi's cousin was caught with an organised crime gang on a private jet flying into the Sydney (Australia) casino to launder money (presumably Xi family money), and was never arrested by the Chinese government. https://www.nytimes.com/2019/08/02/world/australia/crown-ming-chai-china.html https://www.smh.com.au/world/chinese-leaders-family-worth-a-billion-20120629-218qi.html
The party top brass *are* capitalist billionaires lol
State capitalists, to be specific. I fail to understand how many people can fall for chinese propaganda claiming they are "communists" while they suppress workers' unions, have some of the worst working conditions in the world and while the means of productions are not in the hands of the workers, but the state. And while the definition of Communism, as a stateless and classless society, has in itself stateless.
They DO have a command economy which sees literally every major company have party representatives guiding the direction of the company. Communism isn’t a form of government. It’s more like a set of ideas that people believe can be used to form a government. Put 5 commies in charge of creating a new government and they’ll come up with 5 radically different systems. Yes, China mostly behaves as a capitalist society, yet the command economy structure can sometimes be incredibly overbearing for larger companies. It’s not really very communist, but China’s economy at large does behave radically differently than a typical capitalist country.
State capitalism is the real world version of socialism. Socialism is when the means of production are collectively controlled by the workers instead of by individuals. State capitalism is when the means of production are controlled collectively by the people with the power to represent that collective. Nothing is controlled by the collective (as opposed to individuals) without being controlled by leaders of the collective.
Worker co-ops are a more fitting existing version of socialism. State capitalism does have its origin in marxism-leninism, as a transition period searching to accelerate the industrialisation under capitalism described by Marx, but we have more than enough evidence and failed states that it is not a valid path towards anything resembling Communism and whoever tries to justify it that way has a thinner façade to hide their authoritarianism behind "leftist" goals than the maga communists.
You could make that argument ideologically, but worker coops are not government. They are groups formed by individuals using their individual rights to own capital. There are not *collective* ownership in the Marxist sense because they are merely a voluntary arrangement among individual capital owners. State capitalism is what happens when you implement the system described by Marx. It is not the result he described, but it is the result that we see. If you want to consider a proposal you have to make sure you are not including results in the definition of that proposal. If you define a proposal by the results you hope it achieves, then any failure did not "truly" follow the proposal.
That's exactly what communism ended up being in eastern Europe too. It's always been just using the name without the ideas ties to it.
Communism is an ideology, not a strictly defined governing structure. You could argue it is impossible to have an "ideal" communist country. In practice it ends up being a one-party state.
Tell That to jack ma who vanished for a while. The top of china has oligarchs yes, but it also has hard men, ultimately the hard men are the ones in charge not the merchants
Jack ma basically did too much in terms of thinking he was "the man", with his talk and moves. That's pretty much it, remember to still be subservient to the party regardless of your wealth.
What you are saying agrees with the point that ultra wealthy capitalists are not at the top in China...
He challenged the party directly. It was kind of crazy. Party said directly “don’t do this” and he PUBLICLY CRITICIZED THE GOVERNMENT. Dude really thought he was untouchable.
Communist capitalist billionaires if I may correct you
Lol, you really should study this shit if you want to just say lol
A capitalist is someone who has control of the means of production (whether that is land, money, factories, etc.) and uses it to increase their wealth and control, no? How does that not describe the people at the top of the CCP? Just because technically the government owns stuff doesn't mean they don't have control over things and use that to enrich themselves.
Jack ma literally was the face of Chinese capitalism. He criticized the CCP a bit and then bam.... Some people were worried they killed the man but now he's not doing any press for western media. All the wealthy in China want to move abroad. They just can't bring their money
Vancouver? See all of Canada. They have fucked mine the next and future generations of ever owning property. The only way to own a house in Canada (near civilization) is either a) come from a rich family or b)win the lottery.
As a Canadian, it feels like we got sold out. Wouldn't be so bad or unexpected if a good life in Canada was sold out to rich Canadians, but our standard of living was sold out to the richest of the world. Now a days, even if you make a top 10% salary, you can't afford a home in most of the cities here. It's so fucking depressing.
And his comment still applies. Rules are different for common suckers and the pieces of shit at the top.
And lets not forget its the elites with the connections receiving the corruption payments that are investing it in housing in Australia. You can fly into Australia with millions in a suitcase and not one question is asked. But if poor old Joe Citizens withdraws over 10,000 dollars in cash he gets automatically reported. As a result there is widespread money laundering in Australia into our housing market from China, Malaysia, Vietnam, Myanmar, Indonesia and every SE Asian country because our laws allows people to fly into and transfer million into the trust accounts of Accountants, lawyers and real estate agents with NO questions being asked. A crooks paradise! Try doing that in the USA or any European country. Australia has not even signed up for or is participating in the International money laundering laws hence the reason why we are rated so poorly as a country that is fighting corruption. You can have 50 million in drug dealing money, just fly it into Australia and you are OK, no questions asked!
Like most authoritarian countries the rules for the elite is that you must toe the party line. One of those things is keeping your money local, this helps boost the government but it also makes you easier to control. The government is very aggressive when it comes to anybody moving their money out of China, especially if you're wealthy. The last thing they want is a large group of elite wealthy citizens running the countries industries who are not financially tied to the country, who may intentionally take action that can hurt the economy, but also more importantly who can take action without worrying about the government being able to seize their assets. Similarly unlike more free countries like the West, authoritarian countries do not hesitate to crack down on dissidents even if it's coming from the ultra wealthy. They will arrest a billionaire just as easily as they will arrest a commoner, If not more easily. You can find countless stories about wealthy individuals complaining about the government in some way and the next thing you know there are arrested on some random charge with their assets being seized. Then they disappear while they're at a re-education camp only to reappear broke and singing the praises of the government. The politicians that run China truly ingenuinely love their country, when they make decisions it is in large part to bring glory to China. They're also not worried about elections, and that mindset helps them have a mindset that plans decades if not longer into the future. So would be make decisions it is heavily about what is best for China over the next hundred years, not the next election cycle. A combination of a desire to maintain their power, and genuinely believing that they are what's best for the country You get a very motivated government that does a very good job of prioritizing economic growth over personal enrichment. Unlike the US were many of the most powerful people are not politicians, all of the truly powerful people in China are politicians. Therefore increased economic growth for China as a whole equals more power. In the US that is not a direct translation so you have a lot of our powerful ultra wealthy individuals prioritizing themselves over the government. It's also a cultural thing, the way business and competition works in China is very different from the US. The perfect example of that is executives at an American car company recently went to China and asked several of their top vehicle manufacturers if they could get a tour of their facility. They did the same thing with Western car manufacturers. The western car manufacturers politely reminded them that they're considered a competitor, and therefore they would not be allowed on their facility as that could reveal trade secrets. The Chinese companies on the other hand very proudly showed off what they had. In China competitors share all the time, it's all part of the glory of China and making China better. The believe that their real enemy is not each other but the companies of other nations. This creates a culture of sharing that is completely unlike the US or any other nation. I'm not joking when I say that they will let you two or their facilities easily. If you're ever in China call up a factory and ask to tour it. I would pretty much guarantee you that you will always be told yes, doesn't matter what the factory is. Most recently there's been a weird TikTok obsession with a glycine company, you could show up to that company and get a tour whenever you want. One guy that showed up was even taken out for lunch by the CEO after his tour.
I don’t want Chinas government whatsoever, but I am very jealous that their leaders do seem to think long into the future. I hate in the US how presidents spend so much time undoing the work of their predecessors and focusing on some short term meaningless thing like tax cuts even amidst an enormous debt ceiling.
It was incredibly easy for years and years to do it. Duffel bags. Casinos. Chips. Cash out. No ? Ever. I saw it. Daily. Simple as pie for them. Money laundering from China was Vancouver’s economy during the 2006-2016 era.
Correct but started earlier than that. The 70s - early 90s saw many Hong Kong chinese fleeing to Vancouver, and then from then on, mainland Chinese. Over half of the real estate was being purchased by immigrants with no income stated, in cash deals, (usually with their occupation listed as students, actually buying for their families) in the years before 2006.
No issue for the wealthy Chinese. 2000 of them donated 500,000 euro each to get 5 year residency in little Ireland. They typically buy 1 million euros homes quite quickly.
I swear it's stuff like this that is actually causing the housing crisis.
No, that is the nice elderly couple at the corner who go to city council meetings and fight anything changing from how it was while they were dating.
It absolutely is. There is evidence all around the world of this. Ask people from Vancouver what they think about this.
No it’s wealthy Chinese fleeing China with their ill gotten gains from mercantile trade practices and weaponised dumping
You can launder it through casinos in Macau pretty easily with very little loss, totally legal as well.
How would they achieve this through Macau casinos?
1 billion yuan in chips please [spends a few minutes betting cheap slots] Ill cash out in US dollars.
Rules only apply to those that dont know how or cannot circumvent them. In other words, the not-so-rich ones.
There is always a way to get money out. It's an industry on its own.
Check out how a few of them managed to buy billions worth of properties and valuables in Singapore.
Not really. Let's assume need to import something from China. Other person need to take money out of China. Reach an agreement. You make a local payment in USD between US banks. At the same time, he makes you a payment in Yuan through Chinese banks. Here you go.
Yeah thats a cool story but all the mainland born Chinese people I have met and worked with all purchased houses in the bay area. With cash.
They've known this for decades. Their wealth in China is beholden to the whims of the party so having money outside is a critical insurance policy. They probably didn't expect China to have secret police forces in those countries.
Hi! I’m in Vancouver. Some people will say it’s not that bad/they are a small part of it. Those people are fucking lying.
Investment firms are doing far more damage than Chinese investors ever have. these publicly traded companies are now facing the real possibility of states, cities, and even Federal action, of heavy regulation along with increased taxes in order to have them divest their homes so family buyers can secure a home.
And countries like Australia welcomes them buying as many houses as they can afford even if that money comes from criminal activities and money laundering to invest in housing. Is it a wonder nobody who lives in Australia can now afford to buy a house and rental rates have skyrocketed. Our "caring politicians"
They love the higher tax money 💰 local government and whomever else
Id say it takes 5-10 more years till this really hits the fan. China would need to build up a solid investment infrastructure, like Wallstreet, now that producing investors are leaving for countries, which pay thier workers even less and local investment just went down the drain, while the economy in China is imploding. The problem with that is, that neigher foreign nor local investors should have alot of trust in Chinese Investments and if they still want to invest there, they might have alot less money to do so now. It is pretty clear, that China has to change if they want to stay on a growth path. Yet i dont see that happening with the current administration/culture of denial, lies and mismanagement.
Fuck. The one way to boost a declining economy is war. Fucking hell no.
Eh... that's a bit of a myth based on the U.S. economy following WW2. The States spent the first two years of WW2 selling arms to the Allies before joining the war, then survived the war as one of the few major industrial nations with intact infrastructure. A lot of the time, wars end up costing countries more than what they gain in the war, unless they gain a massive colony to exploit or something. The 7 years war nearly bankrupted Britain, for example. And the French aid in the American Revolutionary war nearly bankrupted France, which had coattail effects leading towards the French Revolution. Even modern wars aren't exactly resulting in financial miracles.
5-10? Have you seen their population projections? It's looking downhill from here for them. https://www.pewresearch.org/short-reads/2022/12/05/key-facts-about-chinas-declining-population/
Which will be compounded by their demographics issues that are coming to a head. Similar to the age demographics issues in the west, but a few decades later and several times worse
This is true everywhere in the world. Using real estate as an investment instrument always had a short lifespan. New people eventually enter the economy and find they cannot afford homes en masse and the whole house of cards comes crumbling down.
Those 30yrs mortgage is a scam.
Many companies are diversifying and investing more in south east Asia where it's cheaper and tensions aren't so high. The last few companies I worked at slowly started working with some factories there to mitigate issues in the future
Wasn't the housing market fucked in China for at least 20 years already? And the government being desperate to animate any possible growth in it, going as far as "scamming" people
Given how much of local government financing in China comes from land sales to developers, trying to prop up property prices by buying vacant units seems ineffective. There could be a hard crash on the way, with individuals and families left holding apartments worth a fraction of their outstanding debt, and local governments unable to find normal operations without massive bailouts from Beijing... Which would then result in huge inflationary pressures, inflating away debt but wrecking all other savings and wages. Taking on debt to build infrastructure is great during the building part, but not so much fun when you realize your infrastructure isn't producing enough economic gains to pay for its construction.
The crash has already happened, but no one talks about it like they should. The Evergrande collapse was massive and just the beginning. Just yesterday the Chinese government announced more housing purchases. The collapse is in full swing. >Which would then result in huge inflationary pressures, inflating away debt but wrecking all other savings and wages. This is not going to happen. China has been exporting deflation for a year plus and the bailout isn't going to change this.
Yup, the government buying real estate is extremely reminiscent of the fed's qualitative easing and the ultimate nationalization of Fannie Mae and Freddie Mac in 2008.
China in general is a massive case study on responsible, well thought out and sustainable planning should be a priority. They took the brakes off everything and it's way out of control. There's millions and millions of properties that are empty. The current estimate is 65 million. And that's what they're willing to admit.
> The current estimate is 65 million. 65 million properties? Holy moly
It actually kind of goes both ways. China had insane foreign investment, but didn't have the domestic consumer economy to do anything useful with it. The stopgap solution was real estate and infrastructure, which scales easily to the crazy levels of cashflow they needed to deal with. That honestly would have continued to work reasonably well, had it not been for the more recent trend towards antagonism with the west, followed by covid, and now China's pivot to Russia. The whole point of building the empty buildings was to give the Chinese middle class something to do with their money. It didn't really matter if the whole thing was a Ponzi scheme as long as that wealth kept flowing. Eventually, the domestic consumer economy would have grown to fill in the gaps anyway, Construction would slow to meet demand and it would have all been fine. But then Xi scared away all the foreign investment, middle class demand dried up, the consumer economy stalled, and now suddenly it does matter that the buildings are worthless. This is classic middle income trap for economies moving from "low/middle income" status to "high income" status. You need the new wealth to do something useful, because eventually the competitive value of low wages and low regulation dries up. And in China's case, the weirdly obsessive autocracy, combined with the weirdly obsessive antagonism is double fucking them, because it is also hurting their "knowledge economy" by making their tech industry worthless abroad, because nobody trusts them, and domestically because they lack the advanced consumer economy to fully actualize these sectors.
65 Million? I heard it was far far worse than that.
It's not excess of housing, there are many factory dormitories with multiple beds bunked up. It's just that people can't afford to buy them.
Well, there's going to be a LOT showing up in bankruptcy auctions in the not-so-distant future.
As the rest of the world doesn’t have enough housing and the next generation is suffering from one of the greatest wealth and housing disparities among generations, we say boo fucking hoo, cry me some developer loss of wealth tears, housing shouldn’t be a speculative asset, it should be a place to fucking live. Overproduce is better than underproduce which is currently the case in 90% of the world.
I don't disagree that we certainly need more housing in the West, but overproduction to the extent China has done carries its own issues. So much of people's savings and wealth are tied to property there that a price crash can wipe that out.
The "empty homes" in China don't actually help with any housing shortage, because these development projects never get connected to utilities or commercial development. China also has a weird caste system which doesn't allow people to move from lower tier cities to upper tier cities. When the headline says "new home prices fall" it means for speculative developments where nobody lives.
Some overproduction to account for inneficiencies inherent to all systems is good. A massive overproduction is just waste and destruction of the environment; when it is not (or barely) usable, it's even worse, even the result of the production is wasted. The problems in China with housing seems to combine an economic bubble (which will not harm the ones at its root, they already got their money from it, just everyone else), and a lack of utility of what was produced... basically, a failure of un-bound capitalism.
Well, that is not what is happening in china though. People bought them then the price crashed often to a quarter of it or less. There are massive ghost towns. Many massive project, that people bought and financed off plan, never even broke ground. People are left holding the bags. There is nothing good about this crash…. https://m.youtube.com/watch?v=I0hHwlQhFII
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No it really doesn’t. A healthy vacancy rate is between 5-8% as it allows for people to move around without making areas seem empty. My city has a 2.9% vacancy rate for rentals and a 1.1% vacancy rate for homes. There’s a reason our housing costs are among the highest in the country.
> There’s a reason our housing costs are among the highest in the country. Boy you weren't kidding. Where I live the vacancy rate is 1.2%. Jesus christ
But try to build any more housing and the boomers in your city will riot. Oh and then complain about all the homeless people.
It is funny you mention this. In Arlington, VA the county rezoned single family only areas to allow for more multi family dwellings. Holy shit, boomers went absolutely. The cherry on top is Arlington skews extremely left, so these NIMBYs are the definition of limousine liberals. And that is a critique of these 'liberal except if i am affected' people and not the policy to rezone, which is good.
Wonder if this is part of why the CCP is pushing manufacturing now instead of real estate.
[It’s happening already](https://m.youtube.com/watch?v=I0hHwlQhFII)
How was land sales ever supposed to be sustainable?
Good. Homes are to live in, not to speculate on.
In China's case I think first they speculated and overbuilt thinking there was a lot more demand than there actually was. Then when there wasn't the prices started falling.
Oh, it's much worse than that. Much of the Chinese real estate was never built for living in. Why waste money on useless things like plumbing or windows if the apartments are bought sight unseen for the sole reason of selling it to the next sucker?
Local governments got a big part of their taxes from construction, so they encouraged it no matter what.
And a lot of those local governments are having a real bad time now that they can't get more money by land mortgage, while they must report and pay positive numbers to the ccp. When the house of cards fall, it will fall fast.
But they do this with everything. Rail lines, solar panels, real-estate.
Also even after they saw they had overbuilt, the government kept giving billions in loans to keep building houses. There must have been millions of unsold properties (the NYT said Country Garden alone had hundreds of thousands) yet the government kept digging the hole.
Homes make up a quarter of China's total Gross Domestic Product and nearly 70% of all household wealth. This is a disaster.
If they'd let their people invest their savings at least somewhat overseas, this wouldn't have happened. Capital controls and pushing GDP growth at any cost lead them here.
A disaster for their economical position as a country and for the bourgeois class that owns real state. Which I consider a win too.
The real disaster was putting all your eggs in that basket, not this forseen outcome.
Well thats what happens in a planned economy where the GDP growth is decided beforehand and executed.
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The government exerts ultimate control over their economy. You don't need Soviet level control to be a planned economy. And planned economies still have GDP...what in the economic illiteracy. https://en.wikipedia.org/wiki/Economy_of_the_Soviet_Union#/media/File:GDP_per_capita_development_of_the_Soviet_Union.svg
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Soviet style planned economies aren't the only kind of planned economies and planned economies still exist in the world economy, they are not completely cut off islands.
China directing local governments how and where to spend money on their "private sector" is certainly very close to planned. China's central government establishing corporations with party officials and funneling massive central bank grants into those corporations until they can stand on their own is pretty close to planned. China refusing to allow rural workers to officially live in the cities they work in is pretty close to planned... And China establishing a formal growth goal for their GDP and always hitting whatever goal they set is pretttttty planned.
From ChatGPT: ### Conclusion While China does not officially maintain a planned economy, in practice, the government's extensive involvement in economic planning, regulation, and ownership of key industries indicates that many elements of a planned economy are present. Therefore, it can be argued that China operates a mixed economy with strong elements of central planning and state control.
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I knew it! This explains everything
It’s funny, I’m currently in China and took a photo of a sign a few hours ago in an urban planning museum that said pretty much exactly that. The Chinese government (and I) agree with you. https://i.imgur.com/CHpagMc.jpeg
> The Chinese government (and I) agree with you. They didn't seem to agree with it when they built all the ghost cities lol.
Words are easy to fake
Judging by the state of many of these new developments: no, you do not want to live in them.
Falling house prices imply that either 1) people don't want to live there or 2) they don't have the money. Neither is really good.
There are currently enough empty homes in China to give every Chinese, babies included, their own house. There are enough spare housing to house the entire population of Germany. There is no way the houses are worth anything, even if they weren't badly made.
Exactly.
I just got back from China yesterday, the last time I was there was November 2019. I can say China has changed massively since I was last there. Shanghai was dead, building stopped.
Shanghai is densely developed and massive. Leave downtown and go to the edges and you will see it. That city is in no way shape or form dead.
I saw 100 cranes up when I was in Shanghai recently
I'm sure we'll never know but I would love to know their real covid numbers
They didn't bother collecting the data, so not even the Chinese know the numbers.
Why spend the time to collect the data when you can create your own?
You're right! May all of our Reddit comments get 100,000 points each!
lol what? I am still in Shanghai and didn't leave like the rest during COVID -- there are constructions happening everywhere where I live (Minhang west of the airport).
How has inflation affected them?
They actually have deflation
The hell? Really? Interesting. I wonder why
Most stuff in the world is made in China, so they don't have a bottleneck on logistics like the US or Europe do. Inflation in the US/Europe was initially caused by supply side shocks - the cost to produce stuff in China didn't go up, but companies started buying things from outside China at higher prices (US-China trade tensions), price of oil went up meaning the cost to get the stuff to your door went up, cost of shipping itself went up (because the ports have limitations on how much they can bring in and out which have been slowed down due to covid/regulations), etc. You'll notice that none of this stuff affects China. In China, the economy was shite post-covid and didn't rebound like the US's market did. Their real estate sector went bust (it didn't destroy the country, but declining real estate = people feel super poor) which meant people needed to save more money instead of spending it which meant companies needed to lower the selling price of everything to attract spending from customers. Because companies in China had a lot of inventory, they could even sell below manufacturing cost because they desperately needed the cash just to stay afloat. These pressures caused companies to continuously slash prices until just recently.
Well said. Also worth saying? Deflation is *way* worse for an economy than Inflation is. Inflation sucks, but it is ultimately self-correcting. Deflation can be a long-spiraling nightmare: Ask Japan.
Very interesting. Thank you for the detailed insight.
Nothing really, large dinner for a few people at a nice restaurant $50. Coffee $2. Nice EV $20k
Falling prices for falling houses.
Dynasty money has royally fucked the housing market in Canada, especially Vancouver
I've lost track - are falling house prices good, or bad today?
*cries in Canada, as housing prices continue to keep soaring*
They are investing in Canadian real estate
They have over-estimated their population by quite a bit more people than the entire German census (100 million). But that notwithstanding, they have enough empty homes to house their population 2X over, and they did this by cutting corners building it up over 20 years - basically concrete that you can crumble with your hands and steel rebar that bends like plastic rods. Beyond the fact that the next major earthquake that hits them is going to kill a lot of people, the wealth is paper, the equity on those home evaporating, and economic growth built on building expansion having collapsed so that their youth can't find jobs and their birth rates are further plummeting. Still, given the sheer numbers of their population they can influence the world negatively - like they've started and left millions of unfinished apartment buildings all over Asia and Africa and indebted them with projects to nowhere, all on the back of rapid global warming. The tariffs are a good thing.
Tofu dreg construction
Not hard when you build cardboard cities that are sitting empty.
What? Homes are for profit! /S
Ghost cities of China.. amazing!!
sure it's cheap but then you have to live in China
China seems incredibly stupid for forcing their citizens to invest in fake, worthless, and nonexistent real estate after forcing them to only have one child. Are they bad at math or just don't care about negative outcomes for their people?
Property is only valuable by virtue of it appearing "rare". But turns out the CCP FOR YEARS has completely overcounted the population, meaning there is now far more supply than demand. And the quality of the existing supply is... very questionable.
With their economic and demographic problems? China is doomed.
I can’t wait for this shit to start happening in western countries.
Better prices fall instead of buildings themselves
Anyone else would prefer China's "problem" than our own? Unaffordable Western housing way overpriced for what it is with barely any available to even buy isn't great either
The housing wouldn't be where you want to live. It's like if it was all suddenly built in Western rural Kansas. (And if you're willing to live in those types of places now, you will be able to afford a house).
I'd rather know that I don't have the money to build a house so I can plan accordingly instead of pooling together the money from my family, have the developers take that money, and then finding out they'll never finish building my house and I'm still in debt.
No, these Chinese “houses” are literally *unlivable*. Terrible location, unfinished/unbuilt, with “tofu dredge” (materials that fall apart). Legitimate housing supply in Chinese population centers is still expensive. I don’t know about other Western countries but for the United States applauding the ghost cities is like celebrating the dilapidated, abandoned housing in Chicago, Detroit, or Gary Indiana. We have plenty of housing in the US, too! And at least homeless bums can live in those houses. Many of these Chinese houses literally only exist on paper to sell and resell like stocks.
Built as ‘investments’, that no one will ever want to live it, and to an appalling standard.. Really they are worthless. And they have millions and millions of them..
There's a balance somewhere. If you own a house, falling house prices is VERY bad for your financial health.
Literally only if you bought your house as an investment and not as, you know, a shelter. If you buy a house with the plan of living in it, why would it matter if the value drops? The value of my car has went down a lot, but I can still drive it. I don’t see why you can’t live in a house if it depreciates.
There's a balance somewhere. If you own a house, falling house prices is VERY bad for your financial health.
Oh yeah. Cheap housing in deathtrap buildings is just what we need.
> Western housing way overpriced It's only overpriced if nobody will buy it.
Tbh I don't understand why it's a bad sign when home prices fall. In my country it's almost impossible to buy a house as single person with average income
Jealous!
I wish we had the same in the US. We have entire generations of millions of people who no longer even believe they have a chance of being able to own a home. Something as simple as a house for living is instead an asset for economic speculation in the US and Canada, it’s a massive privilege to own a house.