China Economy: News & Discussion

SexyChineseLady

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China exported more cars last quarter than Korea. This is a sea change that was building for years but only a few outside of the industry saw coming. What's more is this is just the beginning, China might beat Germany this year or the next and then challenge Japan as the top auto exporting country:



In 2018, China’s annual automobile exports were approximately one million units. The figure fell to 995,000 in 2020 but soared to 2,015,000 in 2021. South Korea’s annual exports were 3,063,000 in 2014, 1,886,000 in 2020 and 2.04 million in 2021.
...
According to some industry sources, China’s annual automobile exports are estimated to exceed three million this year, which means it may beat Germany and become the second-largest exporter in the industry. Last year, Japan was the biggest with 3.82 million.
 
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SexyChineseLady

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The more the US bans, the faster Chinese companies grow!

 

rockdog

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The Chinese have gone completely bonkers. Lockdowns were only necessary and needed when there were no viable vaccines. Now we have vaccines, the need for lockdowns have abated and should be treated as the same level as the flu.
its still controversial, since the supply chain needs 0 case environment.

For May 2022 all the major export powers like Japan Korea and Germany had trade deficit. But China had record high surolus as 78.7 billion usd in one month....

IMG_20220710_225604.jpg
 
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another_armchair

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China's real estate developer, Evergrande Group, which is currently struggling with huge debt problems, is the first prominent real estate company to face serious problems in response to the government's efforts to curb overheating in the real estate market.

However, the company may not be the last to fall into a predicament.

While the Chinese real estate boom, which many economists describe as one of the largest in history, is entering the final stage, the side effects of the boom are enormous. According to Nomura Holdings, the debt accumulated by the country's real estate development industry during the boom has reached $ 5 trillion (about 561 trillion yen).

This amount of debt is nearly double the amount at the end of 2016, exceeding the gross domestic product (GDP) of Japan, the world's third largest economy.

With about two-fifths of the country's real estate developers issuing bonds to foreign investors giving a warning signal, the global market is preparing for a series of defaults. There is.

Chinese leaders are becoming more serious about correcting the debt problem in the real estate industry and are taking a series of measures to curb excessive borrowing. But what is it for Chinese leaders to take these steps without damaging the real estate market, putting more real estate developers into financial trouble, or disrupting the course of the Chinese economy? It is rapidly developing into one of the largest economic problems in a year. And if mishandled, this problem could spread to the global economy.

Fantasia Holdings Group, a luxury real estate developer, was unable to redeem the $ 206 million dollar-denominated bond that matured on October 4. At the end of September, the Evergrande Group, which had a debt of more than $ 300 billion, was unable to complete its two bond interest payments in time.

The Asian junk bond market was hit by a lot of sales last week. On the 8th, 24 of the 59 Chinese real estate developers included in the ICE Bank of America's (ICE BofA) Asian corporate dollar-denominated bond index had bond yields of over 20%. This level indicates a high risk of default.

Some of the people who were considering buying a home have turned cautious, and real estate developers are being forced to cut prices to secure cash income. If this trend continues, the deterioration of the management of these companies may accelerate.
According to CRIC, a research division of the real estate service company Ehaus China Enterprise Holdings, the top 100 real estate development companies in China had year-on-year sales in September. It decreased by 36%. Sales of the top 10 companies, including Evergrande, Country Garden, and Vanke, fell 44% year-on-year.

Economists say that most real estate development companies in China are still in a relatively healthy business condition. In addition, the Chinese government has the crisis control capability and strict financial system management system necessary to prevent the so-called "Lehman Moment" (a situation such as during the Lehman shock in which corporate bankruptcies lead to a series of financial crises). It is said that it is.

The Wall Street Journal (WSJ) reported in late September that the Chinese government has instructed local governments to be prepared for the potential for evergrande problems. Was there.

However, many economists, investors and analysts agree that the underlying business model is likely to change even for sound businesses. The underlying business model is for real estate developers to raise funds to provide a stable supply of new properties with debt, even though demographics are becoming less favorable for new property sales. Economists point out that some developers may not be able to survive changes in their business models.

Of particular concern is the practice of some developers who strongly rely on "pre-sale". In pre-sale, the buyer pays for the apartment while it is still under construction.

In China, this practice is more common than in the United States. This effectively allows developers to borrow money from millions of households at no interest rate. This makes it easier for developers to expand their business, but if the developer goes bankrupt, the purchaser may not be able to deliver the completed property.

According to the National Bureau of Statistics of China, pre-sale and similar transactions were the largest source of income in the sector from January to August this year.

"China's real estate market cannot return to its previous growth model," said Song Atsawa, a senior researcher at the Paulson Institute, a Chicago think tank that specializes in Sino-US relations. He said he is likely to continue to maintain a set of restrictions on corporate borrowing, called the "three red lines" imposed by the Chinese government last year. This restriction has recently caused problems for some developers, but he said the Chinese government could relax some other restrictions.

While the Chinese government hasn't made clear and formal comments on how it plans to deal with the most debt-ridden developers, many economists believe that leadership will have to continue to put pressure on developers. ..

Policy makers have decided to reform the debt and speculation-driven model as part of President Xi Jinping's broad efforts to eliminate hidden risks that destabilize society by the important next year's party convention. Seems to be determined. Mr. Xi is expected to break the precedent and enter his third term at the party convention next year.

According to economists, the Chinese government has been socially uncertain as wealth inequality widens as some people are unable to climb the "house acquisition ladder" after years of sharply rising house prices. I am concerned that it may increase. Young couples in big cities are getting stuck in real estate, making it harder to have a family. According to JP Morgan Asset Management, the median housing prices in Beijing and Shenzhen are more than 40 times the median disposable income for a year.

Authorities have stated that they are concerned that the real estate market poses risks to the financial system. But by curbing developers' business models and limiting debt, it's almost certain that investment will slow down and the real estate market will suffer at least some downturn. The real estate market is one of the biggest drivers of China's growth.

The real estate and construction industry is a big part of the Chinese economy. In a 2020 paper published by Kenneth S. Rogoff and Yuanchen Yang, both industries account for approximately 29% of China's economic activity, well above that of many other countries. Showed the guess. Slow growth in the housing market can spread to other parts of the economy, affecting consumption and employment.

According to Chinese government statistics, the residential floor space of the building under construction as of the end of last year is about 1.6 million acres (about 6.47 billion square meters). This is equivalent to the floor area of about 21,000 Burj Khalifa buildings in Dubai, United Arab Emirates (UAE), the world's tallest building.

According to Oxford Economics calculations, housing construction fell by 13.6% as of August this year compared to before the pandemic (a global epidemic of infectious diseases) due to the enforcement of borrowing restrictions last year.

The income earned by the local government by selling the land to a real estate development company decreased by 17.5% in August compared to the same month of the previous year. Local governments also have large debts and rely on land sales for most of their income.

Banks could be exposed to more bad debts if the real estate market becomes more slumping. As of the end of June this year, real estate lending accounted for 27% of China's total bank lending of $ 28.8 trillion, according to Moody's Analytics. Loans are mainly mortgages, but there are also loans to real estate development companies.

With increasing pressure on the housing sector, some research firms and banks have lowered China's growth outlook. On the 6th, Oxford Economics lowered China's gross domestic product (GDP) growth forecast for the third quarter of this year from 5% to 3.6% year-on-year. The company has also lowered its 2022 growth forecast for China from 5.8% to 5.4%.

Until around the 1990s, residents of urban areas of China lived in bleak housing provided by their employer, a state-owned enterprise. As the country began to change due to market reforms and more people moved to cities, it became necessary to supply a large number of new high-quality apartments. Private developers have entered there.

According to Julian Evans Pritchard, an economist at Capital Economics, the company's survey of real estate developers' repayment capacity based on their cash holdings suggests that most companies aren't on the brink of default. However, he said, citing demographic changes and declining domestic migrants, "We are now at a turning point where demand for new housing in urban areas will actually decline over the next decade. Will play a battle for a shrinking pie. "

Den Lin, a 33-year-old lawyer living in Shanghai, planned to sell two real estate properties he owns to buy a larger home after giving birth to twins this summer. The government's debt risk control measures have stalled her plans to relocate to a three-bedroom home. Her estimate for the new home was $ 1.86 million.

Due to the tightening of mortgage regulations, Mr. Lin will have to pay 80% of her expenses in advance. Banks are taking time to approve Lin's loan application.

"There is really too much uncertainty in the market," Lin said.

https://jp.wsj.com/articles/beyond-...rket-faces-a-5-trillion-reckoning-11633926575

English article was paywalled so used Google translate.
 

Hari Sud

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With $5 trillion in Real Estate debt which built empty cities, a trillion in Railways debt where trains to nowhere were built and $3 trillion in roads and highway debt; it is wonderful to know that China is built on somebody else’s money not their own. Most investors are bond holders from outside are regretting to ever got into investing in China.

Already the Clinton Administration experiment of 1995, to relocate all smoke stack industry out of US into China is a great failure. Yes it is relocated with American FDI but produces third class products which last only a little while and then replaced now and then plus the great supply chain disruption when a single source from a single country gets disrupted by pandemic, floods, cyclone etc., is a great calamity in itself. Hence how come Americans and Europeans are not thinking properly. Could the great minds there not anticipate all these sooner or later

On top of it, Chinese with extra cash at their disposal are building a military machine to challenge US itself. They seem to say that they have a missile to sink American Aircraft carriers, if they interfere in their ambition to dominate Indo-Pacific………. What a tragedy.
 

ym888

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With $5 trillion in Real Estate debt which built empty cities, a trillion in Railways debt where trains to nowhere were built and $3 trillion in roads and highway debt; it is wonderful to know that China is built on somebody else’s money not their own. Most investors are bond holders from outside are regretting to ever got into investing in China.

Already the Clinton Administration experiment of 1995, to relocate all smoke stack industry out of US into China is a great failure. Yes it is relocated with American FDI but produces third class products which last only a little while and then replaced now and then plus the great supply chain disruption when a single source from a single country gets disrupted by pandemic, floods, cyclone etc., is a great calamity in itself. Hence how come Americans and Europeans are not thinking properly. Could the great minds there not anticipate all these sooner or later

On top of it, Chinese with extra cash at their disposal are building a military machine to challenge US itself. They seem to say that they have a missile to sink American Aircraft carriers, if they interfere in their ambition to dominate Indo-Pacific………. What a tragedy.
It's no big deal,



In the past three decades, China's economy has collapsed several times a year in some media.
 

rockdog

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That doesn't apply in China,



This kind of luxurious and modern library building has only appeared since 2000.



This is a product of the economic boom
This is the similiar building in Helsinki, also newly opened, i visited it on 2020.


Industrilized nations provide good public infrastructures to its people, our Indian members will need time to understand it.
 

ym888

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This is the similiar building in Helsinki, also newly opened, i visited it on 2020.


Industrilized nations provide good public infrastructures to its people, our Indian members will need time to understand it.
It's amazing



Helsinki has a population of 650,000


Capitalist countries have Culture for huge libraries ! @Love Charger
 

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