China’s real estate sector is a bursting bubble! Collapse here we come! REALLY? China Rising Radio Sinoland 221121

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By Jeff J. Brown

Pictured above: Shenzhen today, which before 1980 was a small fishing village. Everything you see has been built in the last 40 years, which would be impossible in a global capitalist economy. The difference? China is communist-socialist.


Sixteen years on the streets, living and working with the people of China, Jeff

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Talking notes:

Search China’s RE bubble on the internet and articles have been screaming Chicken Little going back to 2013.

Just like the thousands of headlines screaming about the collapse of China’s economy since the 1980s. Good luck with that. China is communist-socialist, not Western capitalist and that makes all the difference.

Note: 85-90% of Chinese own their own homes and 2/3 of those are paid-off. These are some of the best statistics in the world for real estate.

Need 20% down, many put even more.

China’s people-owned banks are more patient and work with borrowers before resorting to foreclosure. Not the Western two months late and BAM! the courthouse filings start.

Remember, no one can buy green land/dirt in China. All RE is in the form of 70-year long term leases, be it Chinese, foreign individuals and businesses.

China is not financializing mortgages into collateralized debt obligations (CDOs), selling off bundles of high-risk variable interest, subprime loans, with low to no down payments, to institutional investors. China’s banks are people-owned, highly, highly regulated; they are not Western bank roulette tables. They exist to serve the citizens. Remember, the four biggest banks on Planet Earth are Chinese, people-owned and VERY profitable.

The big problem is millions of Chinese bought second homes as rentals or speculation on appreciation (where too many sit empty) and this is where Baba Beijing is passing tax regulations and other laws to reduce this national RE portfolio.

Along with the above in mind, what they are currently doing to help the situation,

Chinese Local Governments, SOEs Buy Housing in Latest Salve for Embattled Property Market https://www.caixinglobal.com/2022-10-14/chinese-local-governments-soes-buy-housing-in-latest-salve-for-embattled-property-market-101951882.html

Some cities, including Wuhan, Tianjin and Guiyang, have so far eased interest rates to below the national floor of 4.1% jointly set by both financial watchdogs. Qingyuan in Guangdong province has one of the lowest rates at 3.7%, while several other cities in the region, including Zhanjiang and Jiangmen, have temporarily scrapped the floor on mortgage interest rates for first-time buyers altogether.

China regulators roll out property rescue for embattled developers

Two of China’s top regulators are encouraging STATE OWNED financial institutions to provide more support for the country’s troubled real estate sector, calling on them to help developers extend or swap their debts, according to a notice dated Friday.

The notice, released by the People’s Bank of China (PBOC) and the China Banking and Insurance Regulatory Commission (CBIRC), sends a stronger signal of government support for the struggling real estate industry because the two agencies are more senior than other authorities that have announced detailed supportive measures, a banking source who declined to be identified told Caixin.

Let’s say things get really bad. With the banks, insurance companies and green land all being publicly owned, in other words the whole FIRE sector belongs to the people, Baba Beijing has many, many tools to manage and stabilize the real estate sector. They can move assets and liabilities around, have the banks make less money for 2-3 years, to help main residence owners, mortgage payment reductions or holidays, lower the cost on the millions of low-income housing being built each year (where my wife, daughter and I lived for several years), etc. Their options are endless.

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Why and How China works: With a Mirror to Our Own History


ABOUT JEFF BROWN

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JEFF J. BROWN, Editor, China Rising, and Senior Editor & China Correspondent, Dispatch from Beijing, The Greanville Post

Jeff J. Brown is a geopolitical analyst, journalist, lecturer and the author of The China Trilogy. It consists of 44 Days Backpacking in China – The Middle Kingdom in the 21st Century, with the United States, Europe and the Fate of the World in Its Looking Glass (2013); Punto Press released China Rising – Capitalist Roads, Socialist Destinations (2016); and BIG Red Book on China (2020). As well, he published a textbook, Doctor WriteRead’s Treasure Trove to Great English (2015). Jeff is a Senior Editor & China Correspondent for The Greanville Post, where he keeps a column, Dispatch from Beijing and is a Global Opinion Leader at 21st Century. He also writes a column for The Saker, called the Moscow-Beijing Express. Jeff writes, interviews and podcasts on his own program, China Rising Radio Sinoland, which is also available on YouTubeStitcher Radio, iTunes, Ivoox and RUvid. Guests have included Ramsey Clark, James Bradley, Moti Nissani, Godfree Roberts, Hiroyuki Hamada, The Saker and many others. [/su_spoiler]

Jeff can be reached at China Rising, je**@br***********.com, Facebook, Twitter, Wechat (+86-19806711824/Mr_Professor_Brown, and Line/Signal/Telegram/Whatsapp: +33-612458821.

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