Jump to content

China's Real Estate Ponzi


Recommended Posts

Has the fears of the past come home to roost?  Is China's debt-fueled, real estate bubble about to get taken down?  China has managed to keep things afloat so far, but watching this video and reading the stuff I've read regarding how overbuilt China is...is it a global calamity about to show its fangs!  Cheers!



Link to comment
Share on other sites

Real estate has been the big growth engine that has driven the Chinese economy the past couple of decades. I think the video Parsad linked to above said something like 1/3 of the economy is tied to real estate. Crazy high. 

Zi has decided to hard pivot their economy/society. I get WHY. But i will be very surprised if it happens smoothly. 

Major policy error in China (leading to slower than expected economic growth) is one of the major risks i see in 2022.

Link to comment
Share on other sites

Building in middle of nowhere is always risky. 





China’s Ghost Cities Are Finally Stirring to Life After Years of Empty Streets


Vast new urban districts that stood vacant are gaining residents and businesses.

Edited by fareastwarriors
Link to comment
Share on other sites

Yea see something I struggle with, albeit in a minimal degree because I dont invest in Chinese RE and have little desire to at this point, but who picks up pieces here? In the US, or Canada, shit blows up and the knives come out. BAM, BX, and the like. Now US investors and especially of late, foreign institutional investors even starting to come around to asset classes like industrial and multifamily, dips here are bought and money gets made. With the capital controls and outward perception of hostility to foreigners, who buys this Chinese real estate? At what price? A little too vague for me. 

Link to comment
Share on other sites

  • 1 month later...

Looks a bit like Lehman. I am sort of surprised the stock only goes down 8% when the bonds crash more.

Also who the hell bought the rebound on those bonds after the Nov warning shot from Evergrande?

For those that don't remember the financial crisis - Bear Stearns failed in march 2008 and after the initial shock, the SPY almost rebounded and all seemed reasonably well until late summer 2008. Then hell broke lose in September 2008. the old saying about "How do you go bankrupt?" comes to my mind. First slowly - then suddenly.


Link to comment
Share on other sites

This is pretty telling too, if you think about it:



To put it in simple words, - the economy in China is weak and reale state is becoming unglued, so they won’t to lower interest rates (which are higher than in the US). Now they are afraid of the Fed raising interest rates because they decided to peg their currency to the USD which means that they also peg their monetary policy. Sounds to me like this is his problem not ours.

Edited by Spekulatius
Link to comment
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
  • Create New...