[Everything Everywhere]

https://asiatimes.com/2023/08/property-s...-fiefdoms/

[Levin]

By DAVID P. GOLDMAN
AUGUST 18, 2023


Comparing the shakeout of China’s property sector to America’s Great Financial Crisis of 2008 has become a popular meme in the commentariat. Stock markets don’t see it that way

......

The chart below compares the S&P’s Financials sub-index in the leadup to the GFC (October 31, 2007, through August 15, 2008) to the performance of the financials sub-index of the Shenzhen 300 Index during the same months of 2022-2023.



......

There is no systemic crisis in China, which has no subprime market, no 5% down mortgages and no “liar’s loans” – the toxic ingredients of America’s toxic 2008 crisis.

China has a different sort of problem: The migration of nearly 700 million Chinese from countryside to city produced history’s greatest land boom, and allowed local governments to fund themselves and their friends with land sales. Real estate ballooned to a quarter of China’s GDP, and lazy capital flowed into the property market.

China’s marginal efficiency of capital (GDP growth per unit of gross fixed capital formation) fell from 0.3% in the 1990s to only .15% in 2020. That’s what Beijing is determined to change.

......

“Common prosperity” and “Houses are for living, not for speculation” are the populist slogans that the government has put forward, but the underlying issue is simpler: Xi Jinping wants to centralize government finances and impose fiscal discipline on local governments that have lived off the windfall of land prices for the past thirty years.

The central government could push a button and stop the bleeding in the property market whenever it wants. But it won’t let a good crisis go to waste

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Mortgage balances in China amount to less than 40% of the value of the financed property, according to the International Monetary Fund. Compare this with the United States in 2008, where the average loan-to-value ratio for conventional single-family mortgages was close to 80%

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Despite these enormous differences, US think tanks draw parallels to the 2008 crisis.

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The financial war of attrition between local governments and Beijing will depress China’s GDP growth in the short term, and keep private capital investment subdued for the time being.

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The volume of interest payments at risk is small relative to the cash flow of the Chinese government.


https://asiatimes.com/2023/08/property-s...-fiefdoms/

[Bigbluedot]

David has the insider info.

[Blin]

[winbig]

Your kuku mari kita?

[Sentinel]

Blin has suicidal tendencies?

[singlon]

not true
Dola rises and rises
Dola M2 shrank more than 15% rate
inflated more than 45% supply and then shrank by PLANdemic
cut rate also cham don't becomes more than 15% angle of progressionSTARVATION acute

singlion is a studyboy

[Alice Alicia]

US economy about to hit the wall.

https://youtu.be/d3MHTHnSkT4

[sgbuffett]

Some of the maths in the article is wonky.

The claim that the China govt can easily take over and solve the debt problems of local govt is far fetch.

The amount is around RMB$70T. The article say the china givt can just take over and pay then interest of $200B every year.

To put in perspective $200B is size of China military budget.

Also by paying only interest the debt will stay woth the govt forever.

There are important aspects tye article missed.

China has currency control which means no matter how bad the debt situation is....they only need to defense the offshore Yuan. ...thus can avoid a currency crisis unlike Malaysia and Indonesia during Asian crisis.

Local govt are crippled by debts and cannot invest anymore. There is no choice except for central govt to slowly take.over the debts .....the only monetary trick js slowly QE away the debt without causing inflation.

[Levin]

Some of the maths in the article is wonky.

The claim that the China govt can easily take over and solve the debt problems of local govt  is far fetch.

The amount is around RMB$70T. The article say the china givt can just take over and pay then interest of $200B every year.

To put in perspective $200B is size of China military budget.

Also by paying only interest the debt will stay woth the govt forever.

There are important aspects tye article missed.

China has currency control which means no matter how bad the debt situation is....they only need to defense the offshore Yuan. ...thus can avoid a currency crisis unlike Malaysia and Indonesia during Asian crisis.

Local govt are crippled by debts and cannot invest anymore. There is no choice except for central govt to slowly take.over the debts .....the only monetary trick js slowly QE away the debt without causing inflation.

The figures from the article are:

There are between RMB 35 trillion and 70 trillion in off-the-books government financing through local government financing vehicles (LGFVs) and other instruments, according to the International Monetary Fund.


Assume an RMB 50 trillion float and an extreme 20% default rate, or RMB 10 trillion of nonpaying bonds. At the current yield of quasi-governmental bonds, that’s RMB 250 billion in skipped coupon payments, or about 1% of China’s central government revenues in 2022.

I don't really see these figures as wonky.

China has never done QE and I doubt it will start soon. Not that it won't do it in the long term future but I just don't see it now.

As to whether they want to do anything to let the local governments off, I don't know. Just watch the show.

[singlon]

Dola situation like Japonee but many many time more dangerous
she can bring supply of Dola into balance but the violent of the operations 10 thousands times Greenspan cannot do.
Once she moves all players free to float and to STING.
Now Dola rises and rises

[singlon]

if u no understand perhaps the Grandfather of Unclesam words of wisdom can make u to be so:
if u allow the bad people to first inflate and then deflate
You will lose your sarong
Tell me when IT hapan:

In Singapore IT hapan when sotong Klaus schwab arrived.

[singlon]

Klaus schwabED

[singlon]

Singapore ministers with Klaus schwab

[singlon]

Think-tank

[webinarian]

Some of the maths in the article is wonky.

The claim that the China govt can easily take over and solve the debt problems of local govt  is far fetch.

The amount is around RMB$70T. The article say the china givt can just take over and pay then interest of $200B every year.

...

US has national debts of USD 32 trillion. China's debt of RMB 70 trillion (USD 10 trillion)  is nothing compared with US.     

Why you don't look at US debts which are 3 times larger?   

.

[Sentinel]

We will know the situation when HSI opens tomorrow

[revealer]

China’s housing slump is much worse than official data shows'

existing-home prices falling at least 15 per cent in prime neighbourhoods of major metropolitan areas such as Shanghai and Shenzhen, as well as in more than half of China’s tier-2 and tier-3 cities. Existing homes near Alibaba Group Holding’s headquarters in Hangzhou have dropped about 25 per cent from late 2021 highs, according to local agents.

https://www.businesstimes.com.sg/propert...data-shows

[revealer]

China’s state developers warn of major losses as crisis spreads

Eighteen out of 38 state-owned enterprise (SOE) builders listed in Hong Kong and the mainland reported preliminary losses in the six months ended Jun 30, up from 11 that warned of full-year losses in 2022, according to a Bloomberg tally based on corporate filings. Two years ago, only four firms with controlling or major state shareholdings posted losses.

https://www.businesstimes.com.sg/propert...is-spreads