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Kuros
Joined: 27 Apr 2004
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 Posted: Mon Jan 09, 2012 6:13 am Post subject: |
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| Nowhere Man wrote: |
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Horrible debacle? For many Chinese, the pop of the urban real estate bubble will allow them to buy affordable housing. It'll be worst for the local and provincial governments, who may have to be bailed out.
Chinese exports will experience a slowdown, but it will have little to do with the pop of the property bubble. |
Ooh. Scary.
(Too bad Dr. Doom has left the house)
Good thing we have a replacement!
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| Roubini has it about right. Big slump in 2012 and crash and burn in 2013. |
Crash and burn. war with India...
One thing I'm fairly sure of:
China will time their harshest adjustments to coincide with a final resolution to Europe's crisis, and their housing bubble is a pimple by comparison.
I realize I've been short on sources, but here's a guy who can speak English (as opposed to the one Hong Konger who can't)
http://articles.moneycentral.msn.com/Investing/JubaksJournal/bubble-bubble-chinas-trouble.aspx |
Jubak makes several good points, and as he says, I don't think there was a substantial belief that the Chinese real estate bust would be nearly as bad as ours. But he leaves out an important point: state and local governments in China get most of their revenue from property taxes. They are not passive participants. They invest in their own local ventures and push real estate development. So they are doubly exposed to a property slowdown.
Luckily, the Chinese state has reserves to deal with such problems. Unfortunately, these reserves are much dwindled following gargantuan stimulus measures. The Chinese leadership may be more reticent to employ them because it is the last real tool they have to hold down their currency against the rapidly inflating dollar. A refusal to bail out the local and state governments may not be an option.
But Roubini's points still stand, as Roubini sees the property bubble more as a oblique symptom and sideshow to the more potent fixed-investment bubble. Oddly, the Chinese propensity to save will avert some of the evils of the property bubble, but this propensity is precisely what holds them back in the long-term. On the other hand, if the Chinese deplete their dollar reserves to stimulate/bail-out in the wake of the property bubble, then they will be following Roubini's cure.
None of this is to be construed as a special critique of China. After all, almost every developed country faces as serious or worse issues than the ones I have discussed (although China's environmental challenges are on par with Bangledesh's, but for very different reasons). These are all merely contraindications to the China Hype and the extreme WESTERN visions of a Chinese takeover of the world. |
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rollo
Joined: 10 May 2006
Location: China
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| Posted: Mon Jan 09, 2012 1:48 pm Post subject: |
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| Good summation Kuros. the cities are in deep debt because they borrowed to cash in on the housing boom. The Chinese are not going to stop saving. It is ingrained in them like breathing. The government has taken a few steps to right the ship but they will do nothing major until the new leadership comes in later this year. Probably not much they can do. they waited a little late and now they have to ride the tiger. Housing dropped for the fifth straight month. Inflation up! |
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caniff
Joined: 03 Feb 2004
Location: All over the map
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| Posted: Thu Jan 12, 2012 4:48 pm Post subject: |
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China Soaring Skyscrapers Latest Confirmation Of Housing Bubble, Barclays Finds
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| There has been an unhealthy correlation between construction of the next world's tallest building and an impending financial crisis over time. Barclays Capital points to their Skyscraper Index and the developments in New York 1930, Chicago 1974, Kuala Lumpur 1997, and Dubai 2010 but as they note "the world's tallest building is often simply the edifice of a broader skyscraper building boom, reflecting a widespread mis-allocation of capital and an impending correction." Incredibly, China has 53% of all the world's skyscrapers under construction (today's biggest bubble builder) and will expand the total number of skyscrapers by 87% by 2017. China is not alone as another hopeful driver of global growth, India, is ramping up its skyscraper development and now has 14 under construction (and is constructing the world's second tallest building, the Tower of India, which should be completed by 2016. As BARCAP concludes, if history is any guide, this building boom (and increasing geographic dispersion) in China (and India) is simply a reflection of massive mis-allocation of capital, which may result in an economic correction for two of Asia's largest economies in the next five years. |
http://www.zerohedge.com/news/china-soaring-skyscrapers-latest-confirmation-housing-bubble-barclays-finds |
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rollo
Joined: 10 May 2006
Location: China
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| Posted: Sat Jan 14, 2012 9:37 pm Post subject: |
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| China for the last two months has seen a drop in its foreign currency reserves. Sign that the economy is slowing very fast. Inflation is still loose in the economy and that is very bad news. Just an enormous number of empty buildings and more being build all on borrowed money. The belief that the profit off building apartments is endless sucks money out of other areas of the economy. Severe imbalance. |
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Kuros
Joined: 27 Apr 2004
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| Posted: Tue Jan 17, 2012 6:16 am Post subject: |
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China's Rich Consider Leaving Growing Nation
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A recent survey by Bank of China and Hurun Report, which tracks China's rich, found that 60 percent of Chinese millionaires have either emigrated, are in the process of doing so or thinking about it.
A China Merchant's Bank Report found the top reason was a better education for their children. The second: protecting assets.
"I think last year, all my clients bought a hundred houses in the United States," Yang says. "Yeah � a hundred houses." |
You can see the bubble mentality at play. I hope the Chinese investors are at least getting in touch with property management companies here to lease the properties.
BTW, the CCP's face-saving explanation for this phenomenon: almost all Chinese emigrating to the West are criminals fleeing retribution.
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rollo
Joined: 10 May 2006
Location: China
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| Posted: Wed Jan 18, 2012 10:08 pm Post subject: |
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| The state owns all property in china. when you buy a piece of property in China what you actually get is 70 years of ownership. The state can take the property back at any time for any reason there is no legal recourse. So wealthy chinese "vote with their feet". |
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Kuros
Joined: 27 Apr 2004
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| Posted: Thu Jan 19, 2012 5:43 am Post subject: |
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| rollo wrote: |
| The state owns all property in china. when you buy a piece of property in China what you actually get is 70 years of ownership. The state can take the property back at any time for any reason there is no legal recourse. So wealthy chinese "vote with their feet". |
Its called "land-use rights." Nobody knows what will happen at the end of that 70 years, by the way. |
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Nowhere Man
Joined: 08 Feb 2004
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| Posted: Fri Jan 20, 2012 11:05 am Post subject: ... |
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70 years of real estate speculation...
Which way is it gonna go?
This is not Kentucky. |
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rollo
Joined: 10 May 2006
Location: China
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| Posted: Fri Jan 20, 2012 6:14 pm Post subject: |
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I think that barring some drastic change in the government there is a trend in China to become more in line with Western laws concerning property. I would think in the next decade there will a major change in property laws.
it is interesting that what brought down the Nationalist government was inflation and most property being in the hands of mega rich landlords. Same Same. |
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Kuros
Joined: 27 Apr 2004
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rollo
Joined: 10 May 2006
Location: China
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| Posted: Sat Feb 18, 2012 2:57 am Post subject: |
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Beijing has become a semi disaster in a way. The public transport system is basically buried with people and it gets worse everyday. The millions who have poured into the city from the countryside have stretched the citys's resources to the breaking point. People living in abandoned buildings, legions of street beggars, 20 million people there right now and more arrive everyday.
The stimulus projects and the debt that was built up is the big big problem right now. The government just ordered the banks to roll over the debt. it seems many cities can not pay the debt servicing. Building a subway is a good idea but it should pull in enough funds to pay the servicing at least. Toll roads to nowhere, Gigantic train stations in villages where trains stop once a day. In Changsha they built a subway and it has entrances/exits out in rice paddies, miles from population centers. Growth has visably slowed. Now it is common to see the half finished building where they have walked off and just left it. They have pumped some of their reserves into the banking system but it just fuels inflation. The price of meat jupmed 30% in Jamuary. It is getting to the danger point. The people are angry. Jobs are drying up as exports diminish. Europe isnt buying. Chinese goods are not cost competitve and they can not compete with quality. This summer could be very interesting. |
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Kuros
Joined: 27 Apr 2004
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| Posted: Mon Feb 20, 2012 6:17 am Post subject: |
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Among those who sorely miss the Cold War, China serves as an endless source of fear and loathing
| Steve Chapman wrote: |
It's true that China has been upgrading its defense forces. But that's what you would expect of a country that has gotten much richer in the past few decades.
It's also what you would expect of a country surrounded by neighbors with which it has had military conflicts -- including Russia, Japan, India and Vietnam. Not to mention that it has 9,000 miles of coastline on the Pacific Ocean, which is effectively owned and operated by the U.S. Navy.
Like any normal regional power, China aspires to have some capacity to dictate to others rather than be dictated to. That ambition could bring it to blows with the United States over Taiwan or over free passage in the South China Sea.
Rising powers often collide with established powers, which means there is certainly potential for China to clash with the United States. But the two sides have proved able to peacefully manage their chief disagreement, Taiwan, decade after decade.
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As long as it remains an authoritarian state, China is not going to be our BFF. But it is not fated to be an enemy, unless we decide to make it one. |
As a rising power, China has behaved itself, externally, quite well. Those of us who have lived in China have special complaints about the idiocy of its gov't mouthpieces. But let's be real, China is not a global troublemaker. I disagree that economic openness will necessarily lead to political liberalization, as I would also characterize China's economic openness as revolutionary only relative to Mao's backward policies. We also need to view China's investments in its military as inevitable. It is surrounded by threats and its oil comes in by sea. It will take decades before China can even hope to achieve parity with the US navy, much less the navies of all the powers arrayed against it. |
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rollo
Joined: 10 May 2006
Location: China
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| Posted: Mon Feb 20, 2012 7:38 am Post subject: |
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| It would be irresponsible for Chinat not to upgrade its navy They must have the ability to keep the sea lanes open. Also it is surrounded by countries that it has had small wars and flare ups in the last 50 years. Much of China's buildup is aimed at Russia and India and of course Japan not to challenge the U.S. China has a weird love.hate thing about the U.S and the U.S has a similar thing about China. China bashing is senseless but thinking they are angels in international affairs is also senseless They still occupy Tibet. They still threaten Taiwan. They still occupy an area claimed by India. But it will not be military spending that brings down the house of cards. |
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Kuros
Joined: 27 Apr 2004
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| Posted: Mon Feb 20, 2012 10:30 am Post subject: |
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| rollo wrote: |
| China bashing is senseless but thinking they are angels in international affairs is also senseless They still occupy Tibet. They still threaten Taiwan. They still occupy an area claimed by India. But it will not be military spending that brings down the house of cards. |
These are all regional tensions. Every country has regional tensions and territorial disputes with neighbors, even the US and Canada. Yes, China is especially disputatious with neighbors when it comes to territory.
But globally? China is not a troublemaker.
Compare China with global troublemakers Israel, Iran, and yes, the United States. |
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Nowhere Man
Joined: 08 Feb 2004
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| Posted: Tue Feb 21, 2012 8:03 am Post subject: ... |
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| As long as it remains an authoritarian state, China is not going to be our BFF. But it is not fated to be an enemy, unless we decide to make it one. |
But, in a way, China already has BFF status because authoritarianism does pretty much zilch to curb trade.
http://www.reuters.com/article/2007/06/28/us-books-madeinchina-idUSN2425061320070628
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| It would be irresponsible for Chinat not to upgrade its navy They must have the ability to keep the sea lanes open. |
a) You don't need much to keep sea lanes open in terms of advanced weaponry vis a vis the neighbors.
b) which neighbor, in their foggiest dream world, would try to close shipping lanes in the far east?
NB: Iran is not in the far east
I think I've already said this, but...again, after watching the Soviets die in an arms race, AND, considering that war is going to inhibit economics (where it's already winning), what motivation does China have to spend stupid amounts of money on what is, honestly, an outmoded military concept based on 20th century wars of conquest?
A couple of nuclear subs takes care of the outlandish prospect that someone on Earth is going to try and invade China. What more do you really need?
Now, it's all about guerillas infiltrating and executing simple but effective attacks on the populace. Things that aircraft carriers do not solve.
Let the US spend craploads of money on new F-whatever-number-it-is-now-but-doesn't-quite-work-but-costs-1bn-a-plane-to-build. The Soviets may not be the last to crumple under military largesse.
In any event, now that we know what's happening to Greece (as of today), I predict interesting events in the near future.
BTW: Rollo, I might have missed it, but I'm still looking for your evidence of Chinese troops firing on Nepalese border guards. Please repost if you already have or direct me to where you did account for this claim. |
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