[HN Gopher] Real estate giant China Evergrande will be liquidated
___________________________________________________________________
Real estate giant China Evergrande will be liquidated
Author : ChrisArchitect
Score : 170 points
Date : 2024-01-29 02:31 UTC (20 hours ago)
(HTM) web link (www.nytimes.com)
(TXT) w3m dump (www.nytimes.com)
| 2OEH8eoCRo0 wrote:
| What will the creditors even get? Unfinished projects? That seems
| like more of a burden than anything. Zoinks!
| seanmcdirmid wrote:
| It's worse than that. They have unfinished projects with units
| that have already been bought on mortgage. You have people
| making monthly payments for unfinished apartments (and I don't
| mean just unrenovated, which is expected).
|
| That guy who was banned from trading in Hong Kong in 2016 for
| shorting the stock in 2012 must feel vindicated, at least.
| voisin wrote:
| Jim Chanos?
| seanmcdirmid wrote:
| No, Andrew Left. See https://en.wikipedia.org/wiki/Andrew_L
| eft#:~:text=In%202016%... and
| https://markets.businessinsider.com/news/stocks/andrew-
| left-...
|
| Basically, the Hong Kong stock exchange is increasingly a
| scam as well.
| mcphage wrote:
| > "The finest line of poetry ever uttered in the history
| of this whole damn country was said by Canada Bill Jones
| in 1853, in Baton Rouge, while he was being robbed blind
| in a crooked game of faro. George Devol, who was, like
| Canada Bill, not a man who was averse to fleecing the odd
| sucker, drew Bill aside and asked him if he couldn't see
| that the game was crooked. And Canada Bill sighed, and
| shrugged his shoulders, and said, 'I know. But it's the
| only game in town.' And he went back to the game." --
| Neil Gaiman
| ratg13 wrote:
| You neglect to mention that they are unfinished on purpose.
|
| In reality these "homes" are nothing more than a concrete box
| for legal/tax reasons.
|
| These are second or third "homes" for people that were
| purchased as a poor investment.
|
| The investors should eat the losses.
| seanmcdirmid wrote:
| Many of them aren't second homes. The ones in the ghost
| cities sure, but Evergrande has (had?) more legit projects
| that were designed as actual housing. In any case, given
| that the mainland stock market is pretty much known as a
| sham, real estate has been the only investment option for
| much of the middle class. Investors "eating" their losses
| basically means huge widespread social upheaval in China.
| Imagine everyone being equivalent to their 401k going belly
| up, that wouldn't be pretty.
| greenhexagon wrote:
| There is much about China that I don't understand, but
| I'm curious about the ownership in the "ghost cities".
|
| Given the ability of the CCP to significantly control
| major industries and movement of people, is it not
| possible that someone might buy an apartment in a "ghost
| city" while living in a rural area or renting in another
| city, expecting that people and jobs would flow to the
| city once it was completed?
|
| Basically I don't really understand all the details,
| nuance and different corporate and governmental players
| involved in the "ghost city" phenomenon, but I'd almost
| expect that the government could make a "ghost city" into
| a "real city" in no time, by shutting down factories in
| one city and opening them there, or by changing internal
| migration restrictions.
| s1artibartfast wrote:
| That is certainly the less cynical take.
|
| Few real people buy homes knowing with certainty they
| would remain empty. People speculated on new development,
| future growth, and induced demand. For some reason,
| people online like to make them martyrs or idiots. lots
| of schadenfreude.
|
| The reality is a lot more mundane. They were just a risky
| investment bubble that popped.
| seanmcdirmid wrote:
| The Chinese government isn't as powerful as you think it
| is, nor as centralized. All of these ghost cities (more
| like ghost districts) are local government driven, so the
| central government doesn't care much to fill them. The
| local governments can push state activity there, like as
| happened in Ordos (city) and kangbashi (ghost district of
| city), but they can't really control the rest of the
| economic activity needed to make it a thriving place. In
| Ordos's case, the downfall of coal is going to depress
| the city no matter what, the central government won't
| bother to save them.
| gruez wrote:
| >Given the ability of the CCP to significantly control
| major industries and movement of people, is it not
| possible that someone might buy an apartment in a "ghost
| city" while living in a rural area or renting in another
| city, expecting that people and jobs would flow to the
| city once it was completed?
|
| Seems like it?
|
| https://en.wikipedia.org/wiki/Under-
| occupied_developments_in...
|
| >Many developments initially criticized as ghost cities
| did materialize into economically vibrant areas when
| given enough time to develop, such as Pudong, Zhujiang
| New Town, Zhengdong New Area, Tianducheng and malls such
| as the Golden Resources Mall and South China Mall.[15]
| While many developments failed to live up to initial
| lofty promises, most of them eventually became occupied
| when given enough time.[6][16]
|
| >Reporting in 2018, Shepard noted that "Today, China's
| so-called ghost cities that were so prevalently showcased
| in 2013 and 2014 are no longer global intrigues. They
| have filled up to the point of being functioning, normal
| cities".[17]
|
| >Writing in 2023, academic and former UK diplomat Kerry
| Brown described the idea of Chinese ghost cities as a
| bandwagon popular in the 2010s which was shown to be a
| myth.[18]: 151-152
| seanmcdirmid wrote:
| Kangbashi is never filling up like they planned, simply
| because coal is no longer booming like it once was. You
| can only do so much when the trend you were hoping for
| doesn't pan out. It's a district designed for a few
| million holding up at 50k or so.
|
| Tianjin will always have a few ghost districts and
| skyscrapers. They eventually fill up after a decade or
| two or are razed for something else. It was like that
| when I first visited China in 1999 as well.
| ChrisArchitect wrote:
| https://archive.vn/uX5LB
| neonate wrote:
| http://web.archive.org/web/20240129132022/https://www.nytime...
| pama wrote:
| I hope this event has limited international implications, but I'm
| afraid it may be a mess.
| jacknews wrote:
| I remember reading a couple of analyses that suggested they
| were shifting a lot of the debt out of China, on to
| international investors, so thay'd be taking the hit. I guess
| they completed that process.
|
| Edit: should have read the piece - it seems this is exactly
| what they did - dangled (or at least, failed to deny) the
| prospect a government bailout, to offload the debt to
| international speculators.
| klipklop wrote:
| Ooof you would have to be a massive fool to take on the debt
| hoping the Chinese government would pay you, a foreign debt
| holder, back.
| s1artibartfast wrote:
| I cant help but recall a 2015 Peter Theil interview with Tyler
| Cowen [1] where he talked about the black magic predictive power
| of company names. Hard to unsee a company called "ever bigger"
| getting overextended.
|
| https://conversationswithtyler.com/episodes/peter-thiel/
| aspenmayer wrote:
| There's a word for that self-fulfilling prophetic
| philosophical/hypothetical principle: nominative determinism.
|
| https://en.wikipedia.org/wiki/Nominative_determinism
| anotherhue wrote:
| For a long time I thought Bernie Madoff was a joke on this
| because he 'made off' with everyone's money.
|
| It's almost as bad as the people who gave Ponzi their money
| despite the hint being right there in his name /s
| downvotetruth wrote:
| That is two words or a phrase. Also, it is understood to
| refer to the names of people and not all countries are known
| to be liberal as some in the legal equality of incorporated
| entities - maybe alethonym or an orthonym. More practically,
| in the US the SEC could take the initiative and at least
| extend https://www.sec.gov/news/statement/lizarraga-
| statement-names... to some of the absurd ticker names
| especially given the desire to focus on humorless freeway
| postings.
| aspenmayer wrote:
| > That is two words or a phrase.
|
| In a word: no. Specifically, it's a compound word
| (singular).
|
| https://en.wikipedia.org/wiki/Compound_(linguistics)
| calrain wrote:
| I think this example is called an open compound word, or
| a phrase.
| aspenmayer wrote:
| Yes, an open compound word, not two words in this
| technical context. Not a phrase, per se, which seems odd
| to me also, but in this linguistic context, words, uh,
| have meaning. /s
|
| From the Wikipedia link I posted above, especially the
| last quoted line:
|
| > Compounding occurs when two or more words or signs are
| joined to make a longer word or sign. If the joining of
| the words or signs is orthographically represented with a
| hyphen, the result is a hyphenated compound (e.g., must-
| have, hunter-gatherer). If they are joined without an
| intervening space, it is a closed compound (e.g.,
| footpath, blackbird). If they are joined with a space
| (e.g. school bus, high school, lowest common
| denominator), then the result - at least in English - may
| be an open compound. A group of words that is not a
| compound is a phrase.
| downvotetruth wrote:
| With very few exceptions, English compound words are
| stressed on their first component stem; yet, stress
| appears both on the first syllable of NOM-uh-nuh-tiv and
| the dih-TUR verb portion.
| colesantiago wrote:
| Great news.
|
| Hopefully this causes bitcoin and crypto to crash all the way
| below $10,000.
| HPsquared wrote:
| What's the mechanism?
| dheera wrote:
| It was suspected that a lot of USDT is backed by Evergrande
| notes, though they have denied it. Evergrande liquidation may
| cause a USDT liquidation and cause USDT to lose peg. There
| are often idiots that will drag the rest of crypto including
| bitcoin with it, though.
| jdewerd wrote:
| 5% on $100B can patch one hell of a balance sheet hole.
| pstrateman wrote:
| That kind of thing has usually had the opposite effect.
|
| If USDT is worthless then you want to sell it, causing the
| price of Bitcoin to rise on those exchanges.
| dheera wrote:
| If you sell it for BTC, yes, though it's more likely
| people will get spooked of crypto and sell it for USD.
| cko wrote:
| If USDT can no longer be redeemed for USD, then people
| may buy BTC instead?
| littlestymaar wrote:
| Why would someone accept your USDT and give you bitcoin
| if USDT is de-pegged and worthless?
| loeg wrote:
| De-pegged is just any value less than $1. If USDT is 50%
| collateralized, maybe it is worth $0.50, which is de-
| pegged but not worthless.
| Phlarp wrote:
| We said we were 100% collateralized, actually it's only
| 50% but you can trust us that it really is 50%
| collateralized this time and we aren't lying again.
| Transact with trust!
| cko wrote:
| Perhaps as the mass USD redemptions start to fail, there
| is a window of opportunity to buy BTC before exchanges
| put a stop to it.
| loeg wrote:
| Isn't the point of USDT that the vast majority of its
| holders are locked out of USD? They can liquidate to BTC
| but it is unclear that they can actually get USD out.
| dheera wrote:
| It would be nice if the market worked that way and every
| coin helped each other out as a "crypto team" to beat out
| fiat together, but the reality is BTC holders are
| probably going to be spooked and not give you much BTC
| for your USDT.
|
| And then everyone gets spooked of crypto as a whole and
| sells for fiat.
|
| Basically whenever "shit" happens all of crypto goes
| down.
| loeg wrote:
| I don't think this is responsive to my comment. You
| wrote:
|
| > it's more likely people will get spooked of crypto and
| sell [USDT] for USD.
|
| I don't think (the vast majority of) USDT holders _can_
| sell for USD fiat -- because they are locked out of the
| US financial system for one reason or another. That is,
| actually, the reason they are holding USDT instead. They
| can (try) to exit via BTC, and maybe they can cash out
| for some other fiat currency. Just not USD.
| rekttrader wrote:
| USDT is the 25th largest holder of T-bills. This is a bit
| of bullshit fud.
| datadrivenangel wrote:
| If they only have 50% of the money they need, they're
| still missing half, even if that half is huge.
| timmytokyo wrote:
| Tether is an unaudited black box, so no one really knows
| what their reserves are composed of. Tether's also been
| caught lying about their reserves numerous times [1], so
| it would be insane to think they're a credible store of
| value. Given their history and opaqueness, it's
| reasonable to assume shenanigans.
|
| [1] https://www.dirtybubblemedia.com/p/examining-tethers-
| secret-...
| HWR_14 wrote:
| Why would the USDT tell anyone if they were no longer
| backed 1:1?
| rossdavidh wrote:
| I think if it had happened two years ago, this would have been
| the result, because at that time Tether was mostly in Chinese
| bonds (rumor has it), and Tether supported a large part of
| total bitcoin trade volume.
|
| However, it is possible that they have spent the last two years
| rotating out of Chinese bonds into T-bills. In fact, it's
| pretty likely that they have tried to do that; the question is
| how well they've been able to.
| rossdavidh wrote:
| For those interested in more background: https://crypto-
| anonymous-2021.medium.com/the-bit-short-insid...
| yread wrote:
| Best outcome would be housing getting cheaper. One can dream
| spywaregorilla wrote:
| Long time comin. Sounds like its only going to hit the non-china
| stuff though? How does that compare in terms of value? I would
| wager without much special insight that the bulk of their worst
| underwater assets are in china.
| datadrivenangel wrote:
| Contagion will be non-zero. World economy may not fall apart
| over this, but there will be some sympathy bubble bursting I
| think.
| spywaregorilla wrote:
| sorry I meant purely within the scope of evergrande and their
| "non china stuff"
| nwah1 wrote:
| The question is then whether they actually have enough assets to
| pay their debts.
| more_corn wrote:
| Ooh! I got this one. They do not.
| seanmcdirmid wrote:
| The bigger question is if China is going to prioritize local
| debt holders over overseas debt holder (everyone should take
| a massive haircut though), and what happens to the apartments
| they've sold but not built yet (since Chinese banks have lent
| money to people to buy those).
| rossdavidh wrote:
| Ooh! I got this one! They will.
| dageshi wrote:
| Is there that much chinese debt owned by overseas
| investors? I'd always thought the chinese deliberately
| insulated their financial system as much as possible to
| avoid foreign influence over their economy.
| seanmcdirmid wrote:
| Enough of it:
|
| https://www.reuters.com/business/china-evergrande-
| offshore-b...
|
| About $2b worth out of $300b of debt, so not that much,
| although I'm not sure if this is just one group of many.
| nwah1 wrote:
| I wonder what the approximate shortfall is.
| spywaregorilla wrote:
| 300B of debt is the common number. shortfall unclear.
| loeg wrote:
| Allegedly 240B in assets, but who knows how real any of
| those are: https://www.reuters.com/business/embattled-
| china-evergrande-...
| seanmcdirmid wrote:
| They might not be very liquid, and there might not be a
| market for them at the current "market price" (China will
| often suppress real estate sales to prevent market prices
| from dropping).
| loeg wrote:
| I think the current reporting is tens of billions of
| dollars (like ~$60B).
| https://www.reuters.com/business/embattled-china-
| evergrande-...
| foobarbaz33 wrote:
| Yo dawg. I heard you like leverage. So I put some leverage
| inside your leverage to help prevent the tower of leverages
| from falling.
| threeseed wrote:
| This is only the Hong Kong business.
|
| Which is why it hasn't had the impact you would expect.
| ericmay wrote:
| What is the expected impact? And for whom?
| xboxnolifes wrote:
| Evergrande is a massive property development company. Real
| estate makes up a _massive_ (20-25%) portion of China 's GDP,
| as well as a very large portion of individuals' net worth.
| The expected impact is a cascading housing crisis where homes
| that people have already paid for don't get built, the
| company bankrupts, and millions of individuals (or their
| banks) each lose hundreds of thousands of dollars per unbuild
| home.
| loeg wrote:
| The Hong Kong business is _the_ business.
| kayodelycaon wrote:
| CNN has quotes to the contrary. Most of their Chinese assets
| are owned by Hengda Real Estate Group, which is legally
| independent.
|
| https://www.cnn.com/2024/01/29/business/evergrande-
| ordered-t...
| loeg wrote:
| Interesting. It's unclear how you liquidate the parent
| company without liquidating subsidiaries (who is going to
| buy Hengda RE?) and it seems like legally the HK decision
| should be binding:
|
| > Hong Kong and the mainland city of Shenzhen -- where
| Evergrande is based -- have a mutual insolvency recognition
| agreement, but it's "effectively inoperative"
|
| But China basically ignores HK in this.
| i_am_jl wrote:
| I'm very naive about all of this, can I ask what this
| means?
|
| Evergrande has been ordered to liquidate, on paper this
| means that the Chinese subsidiary Hengda must also
| liquidate, but China's just... not going to liquidate
| Hengda? So instead of Evergrande's creditors dividing up
| Evergrande+Hengda's assets only Evergrande's assets are
| going to be liquidated? If that's right, how does that
| work? Does Hengda get bought and the purchase price
| distributed to creditors? Does China just tell
| Evergrande's creditors "too bad"?
| chasd00 wrote:
| > Does China just tell Evergrande's creditors "too bad"?
|
| that sounds inline with standard operating procedures.
| colechristensen wrote:
| From CNN:
|
| >the implications for the company's vast business in
| mainland China are unclear.
|
| >Hong Kong and the mainland city of Shenzhen -- where
| Evergrande is based -- have a mutual insolvency
| recognition agreement, but it's "effectively inoperative"
| and courts in the city are "extremely unlikely" to
| recognize the offshore liquidator, Silvers said.
|
| What we have here is a complex set of semi-international
| legal issues on the other side of the world. I don't
| trust HN commentary on the subject. It seems very
| undecided for now and will be a sticky situation for
| China, Hong Kong, and foreign investors.
| kube-system wrote:
| > Does China just tell Evergrande's creditors "too bad"?
|
| In a broad sense, that's how bankruptcy works in the west
| too. The government has rules for who gets paid first,
| and everyone else is SOL.
| bozhark wrote:
| Depends on what chapter is filled and approved
| kube-system wrote:
| Discharge can happen under both 7 and 11 which are the
| most common in the US. Chapter 7 is the equivalent of
| what is being discussed in this particular case.
| loeg wrote:
| Yeah but in the west it is based on seniority rather than
| like, hose foreign creditors first.
| faeriechangling wrote:
| Which is why the west has been getting taken for a ride
| for years.
| kube-system wrote:
| No, in the US, claims are paid out based on the type of
| debt, outlined in the Absolute Priority Rule.
| vidarh wrote:
| Depends on how they operate. Selling subsidiaries as
| going concerns or handing their shares to creditors of
| the parent are often options.
|
| It's in no way a given that a subsidiary is insolvent
| just because the parent is.
|
| This isn't unusual. E.g. when Commodore went bankrupt
| several subsidiaries continued to operate as long as they
| had stock, and the UK subsidiary even tried to organize a
| buyout of its parent.
| onlyrealcuzzo wrote:
| HK is where the foreign debt is.
|
| This is freeing the Chinese business of its obligations
| of $25B in foreign debt.
|
| Presumably that makes for a better business.
|
| Who knows. Evergrande could easily be worth less than
| -$25B. No one wants to buy a business worth negative
| money. But it's definitely worth less negative money now.
| bozhark wrote:
| Amazon was negative for years.
|
| Temu is copying their old strategy.
|
| Many people want to buy businesses with negative income.
| Not for the reasons you'd think though.
| dayjaby wrote:
| What does income have to do with net worth?
| The_Colonel wrote:
| This reddit comment explains this quite well:
| https://old.reddit.com/r/Economics/comments/1adnx32/evergran...
|
| > HK is sort of what NY is to the US. It is a peripheral region
| with some minor degree of autonomy but because it just so
| happens to house the Chinese version of Wall Street this means
| it's judiciary is a little bit special when it comes to dealing
| with insolvency and other corporate issues.
|
| This means that it very likely means liquidation in China as
| well.
| Ericson2314 wrote:
| Comparing HK to NYC is very reductive lol.
|
| Though it's kinda funny to imagine the Dutch held onto NYC
| until the 1990s after which there was some sort of
| unification process.
| andruby wrote:
| > In 1664, the English took over New Amsterdam and renamed
| it New York after the Duke of York (later James II & VII).
|
| That's a good 300 years before 1990 :)
|
| https://en.m.wikipedia.org/wiki/New_Amsterdam
| dmoy wrote:
| GP is talking about an imaginary hypothetical situation
| in which NYC would be dutch held until the 1990s, not the
| real-world timeline
| hiddencost wrote:
| If DC took NYC by force.
| akeck wrote:
| Technically, I think replacing NY with Delaware may be a
| better comparison - specifically with respect to the Delaware
| Court of Chancery in which most large US companies litigate
| business issues.
| tsunamifury wrote:
| Even more like City of London vs England.
| Animats wrote:
| That's going to be a tough liquidation. Who wants to buy a half-
| finished building abandoned during construction due to lack of a
| market? Such things have negative value.
| toomuchtodo wrote:
| Wait until buyers stop making mortgage payments on half
| completed units.
| NicoJuicy wrote:
| And the reserve requirements of banks were just lowered to
| help spur growth:
|
| https://www.reuters.com/world/china/china-will-cut-banks-
| res...
| toomuchtodo wrote:
| Pushing the string! Can't win against demographics, young
| folks can't find jobs [1] and China got old fast [2]. 30%
| of GDP is domestic real estate that is about to fall off a
| cliff [3].
|
| [1] https://www.cnbc.com/2024/01/25/china-youth-
| unemployment-wil...
|
| [2] https://en.wikipedia.org/wiki/Aging_of_China
|
| [3] https://www.axios.com/2023/10/11/chart-chinas-real-
| estate-st...
| rossdavidh wrote:
| My impression was this had already started a while back.
| toomuchtodo wrote:
| There has been evidence that it has been occurring, but
| China is notoriously hostile to citizens who default on
| financial obligations, so I would expect with liquidation
| proceeding you'll see a lot more folks decide to stop
| making payments than those with a more activist appetite
| previously.
|
| > ANZ's senior China economist Betty Wang believes the
| scale of the problem is much bigger. She estimates that 1.5
| trillion yuan ($223 billion) of mortgage loans, or 4% of
| banks' total outstanding mortgage loans, could be affected
| by the movement.
|
| > "What concerns us is if more home buyers cease payment,
| the spreading trend will not only threaten the health of
| the financial system but also create social issues amid the
| current economic downturn," she wrote in a report on
| Thursday.
|
| https://www.cnn.com/2022/07/14/economy/china-property-
| crisis... (2022)
| Kon-Peki wrote:
| > Who wants to buy a half-finished building abandoned during
| construction
|
| This is actually not a big deal at all if you are following
| modern high-rise construction techniques.
| berserk1010 wrote:
| A couple of things to note:
|
| 1.) Why did it take Evergrande 3 years to liquidate? In western
| countries, liquidation happens in a few months. One should note
| that Evergrande did not get that big by itself; obviously it had
| the support of CCP elites to secure huge bank loans. Therefore,
| when it went bankrupt, the delay was to allow these elites to
| pull money/liquidable assets out of Evergrande. Thus after 3
| years, Evergrande probably has pretty bad mark-to-fantasy assets
| left. This bodes very ill for creditors. Foreign creditors
| account only for $25B of the $300B liabilities for Evergrande.
| https://apnews.com/article/china-evergrande-property-liquida...
|
| 2.) This event implies that most of the Chinese real estate
| developers are bankrupt/insolvent. excluding for Li Ka Shing's
| portfolio most likely.
|
| 3.) Evergrande's assets are mostly comprised of lands in China.
| This means, most of the lands will get returned to local
| governments, which will increase land inventory massively. This
| will accelerate the real estate price decline in all parts of
| China, on top of the 30-40% drop we're seeing in Tier 1 cities,
| on top of the 50-60% drop we're seeing in non-Tier 1 cities.
|
| 4.) What does this mean for China's 3 pillars of economic engine
| (real estate, consumer spending, export)? real estate comprises
| of 25-30% of Chinese economy, so the economy will be forced to
| mark to reality these assets, and will take a huge hit. Consumer
| spending is tied to real estate engine, since most of the
| citizens' wealth is in real estate. Thus we are seeing consumer
| spending decline and downgrade substitution patterns. Case in
| point: recent $1 McDonald burger deal was causing shortages in
| China. Haidilao has been focused on a cheaper version of their
| hot pot, which costs $10. $1 bread shops are spreading across
| China.
|
| 5.) If real estate and consumer spending is crashing, then China
| can only rely on export, and thus the trend of dumping abroad
| will continue. Especially cars and solar. Europe is in the middle
| of looking into applying tariffs to Chinese EVs. US is already
| set with heavy tariffs on Chinese EVs. Note that Chinese export
| to US and Europe has dropped 10% and 20% y/y.
|
| EDIT: also coincidently, Chinese authorities just banned short
| selling https://www.reuters.com/world/china/china-securities-
| regulat.... This is following the Chinese stock market decline of
| 11% this year. and 3 year cumulative decline.
| datadrivenangel wrote:
| It will be very interesting to see how the CCP navigates this
| coming recession.
| berserk1010 wrote:
| I would call it a Great Depression https://www.forbes.com/sit
| es/miltonezrati/2024/01/22/chinas-.... And the depression
| probably started in 2021 or 2022.
| bigbillheck wrote:
| > And the depression probably started in 2021 or 2022.
|
| GDP is generally a bogus metric but it's an odd kind of
| depression that has a 5% growth in it.
| onlyrealcuzzo wrote:
| You can easily get 5% growth and worse living standards.
|
| Expand your balance sheet to pay everyone to dig a hole.
|
| GDP goes up.
|
| As long as you ignore debt, GDP doesn't really mean
| anything.
|
| Look at China's debt.
| MrPatan wrote:
| Is that 5% growth? Or is that a piece of paper with a
| number "5" in it? There is a difference.
| chasd00 wrote:
| my guess is the CCP will declare it a mild economic
| correction and anyone saying otherwise will be jailed.
| NicoJuicy wrote:
| Some insights I didn't knew/consider, especially 2 and 3.
|
| Can I ask the source of how you gained those insights?
|
| Interesting to note: they have higher debt levels than the US (
| GDP wise). If GDP would go down, that would mean a vicious
| circle and they wouldn't be able to "fund" their way out with
| low risk.
|
| Which seems to indicate a lot of advantages to fiddle with the
| GDP growth numbers and explains limiting access to economic
| statistics:
| https://www.bloomberg.com/news/articles/2023-08-16/china-is-...
| berserk1010 wrote:
| You would have to know mandarin (to read through government
| economic reports), and have access to Douyin videos. And
| these videos get taken down by the authorities fairly quickly
| yorwba wrote:
| There's probably a dozen people reading this thread who
| know enough Mandarin to handle a few short Douyin videos if
| you could provide us with links.
|
| Though as a platform it lends itself well to amplifying
| extreme claims backed by speculation that play into
| people's fears, so unless the accounts in question have a
| history of well-sourced factual reporting, I'd be rather
| skeptical.
| berserk1010 wrote:
| I'll paste one sample, it's safer
|
| 1, Heng Da ,Long Tou Fang Qi ,Fu Zhai Gui Mo Yue 2.6Mo Yi
| ,2021Nian 9Yue Zheng Shi Xuan Gao Bao Lei .
|
| 2, Zhong Liang ,Zhe Jiang Fang Qi ,Fu Zhai Gui Mo Yue
| 2000Yi ,2022Nian 4Yue Gong Gao Mei Yuan Zhai Xun Qiu Zhan
| Qi ,Xuan Gao Bao Lei .
|
| 3, Jun Fa ,Yun Nan Fang Qi ,Fu Zhai Gui Mo Yue 1200Yi
| ,2022Nian 4Yue 2.19Yi Xin Tuo Dai Kuan Wei Dui Fu ,Xuan
| Gao Bao Lei .
|
| 4, Rong Chuang ,Long Tou Fang Qi ,Fu Zhai Gui Mo Yue 1Mo
| Yi ,2022Nian 3Yue Mei Yuan Zhai Zhan Qi ,Xuan Gao Bao Lei
| .
|
| 5, Shi Mao ,Long Tou Fang Qi ,Fu Zhai Gui Mo Yue 4000Yi
| ,2022Nian 3Yue Gong Gao 60Yi Xin Tuo Zhan Qi ,Xuan Gao
| Bao Lei .
|
| 6, Long Guang ,Yue Xi Fang Qi ,Fu Zhai Gui Mo Yue 2000Yi
| ,2022Nian 3Yue Gong Gao Mei Yuan Zhai Wei Yue ,Xuan Gao
| Bao Lei
|
| 7, Xiang Sheng ,Zhe Jiang Fang Qi ,Fu Zhai Gui Mo Yue
| 1500Yi ,2022Nian 3Yue ,1200Mo Mei Yuan Li Xi Wei Yue
| ,Xuan Gao Bao Lei .
|
| 8, Da Fa ,Shang Hai Fang Qi ,Fu Zhai Gui Mo Yue 300Yi
| ,2022Nian 3Yue 2228Mo Yuan Mei Yuan Zhai Li Xi Wu Fa
| Chang Huan ,Xuan Gao Bao Lei .
|
| 9, Yu Zhou ,Min Xi Fang Qi ,Fu Zhai Gui Mo Yue 900Yi
| ,2022Nian 3Yue Mei Yuan Zhai Li Xi 2125Mo Mei Yuan Wei
| Yue ,Xuan Gao Bao Lei .
|
| 10, Zheng Rong ,Min Xi Fang Qi ,Fu Zhai Gui Mo Yue 2000Yi
| ,2022Nian 2Yue Gong Gao Mei Yuan Zhai Wei Yue ,Xuan Gao
| Bao Lei .
|
| 11, Fu Li ,Yue Xi Fang Qi ,Fu Zhai Gui Mo Yue 3000Yi
| ,2021Nian 12Yue 7Yi Mei Yuan Zhai Zhan Qi ,Xuan Gao Bao
| Lei .
|
| 12, Hua Xia Xing Fu ,Chan Cheng Di Chan Long Tou ,Fu Zhai
| Gui Mo Yue 2600Yi ,2021Nian 2Yue Shou Ci Cheng Ren 52Yi
| Zhai Wu Yu Qi ,Xuan Gao Bao Lei .
|
| 13, Jia Zhao Ye ,Yue Xi Fang Qi ,Fu Zhai Gui Mo Yue
| 2300Yi ,2021Nian 11Yue 3Yi Li Cai Chan Pin Wei Dui Fu
| ,Xuan Gao Bao Lei .
|
| 14, Yang Guang Cheng ,Min Xi Fang Qi ,Fu Zhai Gui Mo Yue
| 3500Yi ,2021Nian Gong Si Li Cai Wei Dui Fu ,Xuan Gao Bao
| Lei .
|
| 15, Ao Yuan ,Yue Xi Fang Qi ,Fu Zhai Gui Mo Yue 2500Yi
| ,2021Nian 11Yue ,6590Mo Yuan Xin Tuo Dai Kuan Wei Yue
| ,Xuan Gao Bao Lei .
|
| 16, Xin Li ,Jiang Xi Fang Qi ,Fu Zhai Gui Mo Yue 1000Yi
| ,2021Nian 10Yue 2.5Yi Mei Yuan Zhai Wei Yue ,Xuan Gao Bao
| Lei .
|
| 17, Hua Yang Nian ,Yue Xi Fang Qi ,Fu Zhai Gui Mo Yue
| 600Yi ,2021Nian 10Yue 2Yi Mei Yuan Zhai Wei Yue ,Xuan Gao
| Bao Lei .
|
| 18, Dang Dai Zhi Ye ,Fu Zhai Gui Mo Yue 800Yi ,2021Nian
| 10Yue 3Yi Mei Yuan Zhai Wei Yue ,Xuan Gao Bao Lei .
|
| 19, Zhong Geng Di Chan ,Min Xi Fang Qi ,Fu Zhai Gui Mo
| 300Yi ,2021Nian 10Yue 9.3Yi Zhai Wu Wei Yue ,Xuan Gao Bao
| Lei .
|
| 20, Guang Yao Di Chan ,Yue Xi Fang Qi ,Fu Zhai Gui Mo
| 100Yi ,2021Nian 9Yue Xuan Gao Po Chan .
|
| 21, Lan Guang ,Chuan Yu Fang Qi ,Fu Zhai Gui Mo Yue
| 2000Yi ,2021Nian 5Yue Zhong Qi Piao Ju Wei Yue ,Xuan Gao
| Bao Lei ,Mu Qian Yu Qi Wei Chang Huan Zhai Wu Yi Da 300Yi
| .
|
| 22, Yang Guang 100,Lao Pai Fang Qi ,Fu Zhai Gui Mo Yue
| 400Yi ,2021Nian 8Yue Zhai Quan Wei Yue ,Xuan Gao Bao Lei
| .
|
| 23, De Run Chuang Zhan ,Shen Zhen Fang Qi ,Fu Zhai 20Yi
| ,2021Nian 8Yue Xuan Gao Po Chan .
|
| 24, Yan Zhou Yue Tai ,Yue Xi Fang Qi ,Fu Zhai Gui Mo 80Yi
| ,2021Nian 8Yue Xuan Gao Po Chan .
|
| 25, Bao Neng Di Chan ,Shen Zhen Fang Qi ,Fu Zhai Gui Mo
| 2000Yi ,2021Nian 8Yue Li Cai Chan Pin Yu Qi ,Xuan Gao Bao
| Lei .
|
| 26, Shi Di ,Yue Xi Fang Qi ,Fu Zhai Gui Mo Yue 200Yi
| ,2021Nian 7Yue Shang Piao Ju Fu ,Xuan Gao Bao Lei .
|
| 27, San Sheng Hong Ye ,Shang Hai Fang Qi ,Fu Zhai Gui Mo
| Yue 500Yi ,2019Nian 10Yue Yuan Gong Li Cai Wei Dui Fu
| ,Xuan Gao Bao Lei ,Gong Si Lao Ban Shi Zong ,Bei Fa Yuan
| Xuan Shang 1000Mo .
|
| 28, Fu Cheng ,Min Xi Fang Qi ,Fu Zhai Gui Mo Yue 700Yi
| ,2019Nian 12Yue 3Yi Ji Jin Wei Yue Dui Fu ,Xuan Gao Bao
| Lei .
|
| 29, Tai He ,Min Xi Fang Qi ,Fu Zhai Gui Mo Yue 2000Yi
| ,2020Nian 7Yue Zhai Quan Wei Yue ,Xuan Gao Bao Lei ,Mu
| Qian Yu Qi Wei Chang Huan Zhai Wu Yi Da 430Yi .
|
| 30, Zhuo Da Di Chan ,Bei Fang Fang Qi ,Fu Zhai Gui Mo
| 300Yi ,2018Nian Kai Shi ,Zhuo Da 24Ci Bei Lie Ru Bei Zhi
| Xing Ren ,Ci Wai Huan You 7Qi Gu Quan Dong Jie ,She Ji
| Jin E Yue 9.14Yi .
|
| Zhe 30Jia Fang Qi De Fu Zhai Zong Gui Mo Shi 7.48Mo Yi
|
| also, https://www.reddit.com/media?url=https%3A%2F%2Fi.re
| dd.it%2F%...
| yorwba wrote:
| Thanks, I much prefer text over video anyway, and now
| even people who can't read Chinese can join in on the
| fun, though Google Translate struggles a bit with the Bao
| Lei slang
| https://en.wiktionary.org/wiki/%E6%9A%B4%E9%9B%B7#Verb
| onlyrealcuzzo wrote:
| > This bodes very ill for creditors. Foreign creditors account
| only for $25B of the $300B liabilities for Evergrande.
|
| I'm sorry - but any foreigner who lent Evergrande money
| thinking this wasn't a huge risk is a moron.
|
| > This will accelerate the real estate price decline in all
| parts of China, on top of the 30-40% drop we're seeing in Tier
| 1 cities, on top of the 50-60% drop we're seeing in non-Tier 1
| cities.
|
| According to "official" sources - property prices aren't even
| down 5%. Where are you seeing that they're down 30-40% in Tier
| 1 cities?
|
| It would take the median couple >7 years saving 100% of post-
| tax income to afford a downpayment on the median 100 m^2 condo.
| If you assume even 3% interest - thereafter - the monthly
| payment would be >80% of their COMBINED post-tax income.
|
| China's property prices have astounded me since 2000 - and yet
| they continued to rocket higher for a solid two decades.
|
| People are NUTS in the US at Price to Income levels of 4:1 -
| when this is some of the lowest Price to Income for housing in
| the world. We consider places like Vancouver and London and
| Sydney ludicrous bubbles - and yet they are usually below 10:1.
| China was at 11:1 in 2000 and climbed to 17:1 by 2020:
| https://lipperalpha.refinitiv.com/2020/06/chart-of-the-week-...
| Places like Shanghai have ratios of 38:1 and higher.
| brianwawok wrote:
| Your math just says the median person doesn't buy a condo. If
| only the top 10% can afford them, that's still a huge pool of
| people.
|
| Pretty sure median US income can't afford a condo in NYC.
| onlyrealcuzzo wrote:
| At the end of the day - prices need to be supported by
| incomes (buyers or renters) or magic beans.
| berserk1010 wrote:
| cursory searches on western media reviews shows 20%, 25%,
| 30%.
|
| https://medium.com/alpha-beta-blog/even-beijing-home-
| prices-...
|
| https://fortune.com/2023/08/17/china-home-sales-worse-
| than-o...
|
| https://sccei.fsi.stanford.edu/china-briefs/tier-3-cities-
| ho...
|
| My sources are from real estate agents in China.
|
| Not sure why anyone would actually trust official numbers
| from China. China still claimed 5% gdp growth last year.
| pretty laughable.
|
| Also, you can just watch what multinationals are doing. They
| have retail numbers from their Chinese stores. And it's
| pretty clear Japanese and Taiwanese and South Korean and
| American and European multinationals are all withdrawing.
| onlyrealcuzzo wrote:
| A Medium post isn't a source.
|
| Your fortune article says PRICES are only down 2.4%
| (roughly the "official" stats).
|
| Your other article is about T3 cities.
| berserk1010 wrote:
| It's all in the articles
|
| "Existing homes near Alibaba Group Holding Ltd.'s
| headquarters in Hangzhou have dropped about 25% from late
| 2021 highs, according to local agents."
|
| "Even as of March, before a fresh slowdown, more than
| half of tier-2 and tier-3 cities saw existing-home prices
| fall more than 15% from peaks,"
|
| "residential housing prices in tier 3 cities dropped by
| nearly 20%."
|
| EDIT: Again, to get the real numbers, you need to have
| access to Chinese real estate agents. And these folks
| aren't going to be posting articles for everyone to read.
| Or if they post a video in anger, it will get taken down.
| onlyrealcuzzo wrote:
| A small section of a New Tier 1 city is not indicative of
| an entire T1 city.
| seanmcdirmid wrote:
| Is HZ really considered a T1 city now? It is more like a
| rich T2 city.
| onlyrealcuzzo wrote:
| According to Wikipedia it is a "New Tier 1" city. T1 is
| still just Shanghai, Beijing and Shenzhen/Guangzhou.
| pphysch wrote:
| That user is a new single-purpose account with a clear
| interest in shaping narratives around a certain country,
| so I would take their claims with a big grain of salt.
| berserk1010 wrote:
| What can I say, all I know about/care about is Chinese
| economy. I do provide a lot of valuable facts/links to
| the site
| HWR_14 wrote:
| The foreigners probably loaned money to Evergrande a long
| time ago, before the issues started appearing.
| onlyrealcuzzo wrote:
| The issues were apparent since 2000.
|
| The vast majority of Evergrande's outstanding foreign debt
| is from >2012.
|
| BlackRock, HSBC, and UBS poured in about $3B of the $25B in
| 2021 alone...
|
| And, I'm sorry - if you didn't see a risk doing that in
| 2021 - you're gonna lose all your money sooner or later.
|
| In BlackRock's case - it was primarily for 401k-ers for
| exposure to Chinese bonds. I think the US should've made it
| illegal - and probably will soon - to offer a product like
| that.
|
| Why anyone in the US would want exposure to Chinese bonds
| that don't even have good yields for "diversity" is
| incredible. Up next - Russian and Venezuelan 100-year bonds
| at 0% interest!
| djbusby wrote:
| If only someone had warned us!
| seanmcdirmid wrote:
| 2012 was the year that Andrew Left publicized why he was
| shorting Evergrande stock, which he got banned for in
| 2016. I would say 2010 was when Evergrande started
| popping up in the news as possibly insolvent, 2000 is too
| early.
| MrPatan wrote:
| > any foreigner who lent Evergrande money thinking this
| wasn't a huge risk is a moron.
|
| Or they are very smart while investing your money. Check your
| country's pension fund, see who manages it and what they
| invest in. Or better yet, don't.
| r00fus wrote:
| > 1.) Why did it take Evergrande 3 years to liquidate?
|
| Because this isn't "the West". China/CCP is specifically
| unwinding this slowly to avoid cross-market contagion.
| lifestyleguru wrote:
| It took them two years to bankrupt twice and this isn't even
| their final bankruptcy yet.
| lainga wrote:
| In Dengist-Trotskyist synthesis, the revolutionary class must
| be constantly and permanently going bankrupt.
___________________________________________________________________
(page generated 2024-01-29 23:01 UTC)