Posted on 02/08/2024 7:57:40 AM PST by SeekAndFind
Last week, a court in Hong Kong ordered that Evergrande, China’s massive property developer, must be liquidated. Real estate accounts for about one-quarter of China’s GDP, and Evergrande isn’t the only troubled part of the Chinese real estate sector. While I’d always like to see China constrained, not only is a collapsing China dangerous, but real estate collapse also reminds us of what’s happening domestically.
Business Insider reported on Evergrande’s liquidation, which has long been expected and which will be carried out in an orderly fashion. The assets are valued at $245 billion (which I suspect is inflated), while the company’s debts are $300 billion. As with an American bankruptcy, secured creditors get first dibs on any money from the liquidation, with the people carrying out the liquidation then getting their fees. The dregs will be for unsecured creditors and shareholders. Offshore investors will be lucky to see pennies on the dollar.
What’s more interesting about the report by Huileng Tan is what’s going on with the rest of China’s real estate market. That’s because Evergrande isn’t the only company hurting. While restructuring is possible, writes Tan,
At large, Evergrande’s fate reads like a warning sign to other companies in China, Margulies said.
That’s because the court order to liquidate Evergrande signals that problems of this size in China “will likely end up in some form of liquidation, whether onshore or offshore,” Margulies said.
[snip]
China’s economy has been struggling to recover since it started lifting pandemic-related restrictions more than a year ago. It’s facing significant headwinds from a property crisis, deflationary pressure, and a demographic crisis.
China, the world’s second-largest economy, grew 5.2% in 2023. While that was better than the COVID-battered performance of 3% in 2022, it’s still one of the economy’s worst showings in three decades.
(Excerpt) Read more at americanthinker.com ...
Currently, China’s economy is a Potemkin Village. It looks very grand, but behind the scenes, it’s hollow. Its real estate market is a shambles; its Belt and Road initiative, which seemed to be the perfect example of economic colonization, is fading; and its population is in demographic freefall.
Meanwhile, I keep hearing that the US economy is "booming".
We aren't China. But our economic data is also fake.
It is certainly booming for the rich.
The Chinese economy is suffering from corruption and miss allocation of resources but their industrial base and national infrastructure is gigantic and solid solid compared to America. I’m pretty certain that Chinese universities put out more and better engineers and scientists than our field western universities.
We are going to pay dearly for the mistakes and outright malice of our evil, criminal, and degenerate establishment.
On balance, there is little reason to fear the Chinese undertaking a military adventure as a way to distract from their economic problems. Even quickly taking Taiwan would not help China’s economy but would trigger devastating sanctions and counter moves by the US as well as Japan and other regional powers.
That’s true...but still, the insanity of their Real Estate market at ALL levels is astonishing.
We have problems with our Industrial Real Estate market due to COVID, but theirs is top to bottom totally fraudulent.
I have been told that Real Estate is the only thing ordinary citizens were allowed to invest in, and any that did were depending on using and renting it out, but...it is a giant scam, with buildings unfinished, uninhabited, etc.
When Biden says “our economy is booming,” he means
Hunter and the Biden Crime Family are rolling in dough.
Their downfall is massive over speculation in the housing market. In the US, the danger is in the Commerical Real Estate market.
Overall, there is a lot of debt and not a ton of liquidity. When the “crisis” really kicks off, people will be selling assets at a loss in order to cover their debts. That kind of downward liquidity crisis is the type of thing that leads to massive market crashes and depressions.
I am not saying we are heading towards a depression. I am saying that a lot of people around the world are leveraged and were counting on the cheap money spigot to remain on for a lot longer.
When the Chinese communist party allowed capitalism to florish among the people, it kept control of the central bank and in effect the allocation of capital. There have been some spectacular successes but huge amounts of capital have been squandered on bizarre projects. Much “wealth” that has been the basis of loans is in the form of highly leveraged, grossly overvalued real estate. The huge investments in the army, navy air force and untested weapon systems that stay unused have been another huge drain. Things are indeed difficult in China and the rest of the world is aware. the Australians and Indonesians are demanding prepayment in hard currency before they ship desperately needed coal to China.
Even quickly taking Taiwan would not help China’s economy but would trigger devastating sanctions and counter moves by the US as well as Japan and other regional powers.
~~~
Don’t forget, there is a lot of precedent for that leading to war. Just WWII as an example, Japan attacked the US mostly because of the embargos and sanctions we had on Japan because of it’s actions in China. Hitler was a bizard fanatic nutjob, but the main reason such a radical rose to power in Germany was because of how stiffing the Treaty of Versailles had been to their economy and autonomy.
We aren’t China. But our economic data is also fake.
************************************************************
“Fake” because marxists, whether China’s or the one’s running the White House, cannot tell the truth. Their DNA won’t allow it.
> But our economic data is also fake. <
Yep. And when things get dicey, governments will often manufacture a foreign conflict to distract the masses. That holds for China. That holds for the US.
I don’t know how sane and prudent China’s Xi is. But I do know that Biden is neither sane nor prudent.
China has the capacity to build PLA combat ships at 200 times the rate that the US can, per leaked US Navy intelligenceAs it stands right now, we would lose a protracted war against China. The only thing guarding us is our nuclear weapons.
Kwan Wei Kevin Tan
Sep 14, 2023, 10:33 PM MST
https://www.businessinsider.com/us-navy-chinas-shipbuilding-capacity-200-times-greater-than-us-2023-9?op=1
All Chinese urban land is owned by the government.
The buildings are on ground leases from local governments.
I think the typical term is 30 years, but I don’t know for sure and the terms may vary.
Business Insider is a propaganda publication of the Democrats/Globalists
Yes, we are. Seems like no one cares or wants to listen to what needs to be done. Apparently the vast majority of people simply do not believe that God exists nor means what He says in His word.
“I don’t know how sane and prudent China’s Xi is.”
I think he is getting to understand how to use power in a more careful way. That has positives and negatives.
“Treaty of Versailles”
After 1871 France had to live under similar conditions but paid off their comparably sized ‘reparations’ burden and boomed too.
More on the Chinese collapse - pick you sector:
China Observer
https://www.youtube.com/@ChinaObserver0/videos
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