How China's Banking Crisis Could hit the World

China's economy is struggling at the moment, and has been for a while. So in this video we look at the latest looming issue, China's banking crisis. It's small at the moment, but it could eventually impact the entire world.

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[TheNuclearGeek]

This is actually even more serious. This isn't just a housing crisis like it would be in the west. The vast majority of "investment" is done in housing. Rather than buying stocks, bonds or other "growth" markets like we would be in the west, Chinese buy a 2nd or 3rd house. THAT is their long term investing strategy.
If the housing market swings wildly or collapses it's literally taking a large portion of the populations investments with it.

[AdamQueen]

To add something, not only the smaller regional bans are affected. Even bigger banks, at least Bank of Nanjing, are affected (not to the bank run level though).

[neonbunnies]

It's also important to remember that a banking crisis won't just threaten the massive housing bubbles, but the local governments themselves. As taxes go to Beijing but local governments are responsible for social services, it means these governments usually have to borrow to pay its social services. As the local government directly owns the land is controls, it does this by giving land to Local Government Financing Vehicles or LGFVs, which they then use the land as collateral for loans. If the housing market crashes, so will land prices, and therefore threaten the very budgetary resources of local governments across China.

[draxisblackwood]

Bai lan or "let it rot" is gaining momentum and not just amongst the youth anymore, even so far as the middle class. If the property isn't built you can't get your investments money's worth, if you're not the getting income you can't pay your rent and if you default on your rent the bank takes your house. Great video as always.

[sivx]

The things is even the four largest Chinese state-owned banks have started to limit cash withdrawal, drawing the ire of the locals. If even the state backed institution are affected, thats means the situation is pretty serious in China.

[command_unit]

These once in a Generation crisis's just keep coming...

[gatb]

2019: Chinese netizens gleefully cheer on White Shirts wantonly beating Hong Kongers.
2022: Chinese citizens get beat by their Great Leader's White Shirts.

[halbrakt]

The people who stopped paying their mortgage is doing so because the developer stopped building first, you make it sound as if the people stopped paying and then the company stopped building due to lack of funds which is false. These developers have misused the money the buyers put in and stopped construction for months before the people started refusing to pay their mortgage.

[marlenaaj]

Nothing new here. Something similar happened in the US sometime in 2007. It is just another day where a scammer (the banks) gets hit. This goes on to reiterate the "Cash is thrash" cliché. I only feel for those who have their money with them. It's going to be a long long night for them.

[jsb]

New drinking game, take a shot every time TLDR mispronounces Henan. Gonna get drunk on that 白酒 real quick

[michaelmartin]

Listening to this happen is like a replay of 07-08 in the states. Even to the point of atms drying up. I still remember my buddy unable to get his paycheck out. The rapid mergers of banks. Peoples retirements vanishing.
Those who do not learn from history are doomed to repeat it I suppose.

[bikkiikun]

Protests, or even localised Uprisings are most certainly not rare. They are a (for the CPC) frightningly more and more frequent occurrence. It's just that the CPC is rather good in keeping this out of the news, because it might give their people "inappropriate" ideas.

[Jay_in_Japan]

I live in a part of Japan that's closest to China, and sometimes when it rains, the soot from the pollution in China stains the rain black a bit
It's most noticeable on white buildings

[charliecrome]

Whenever I'm in a bad mood I remember I don't live in China, and my problems don't seem so bad

[bigboyman]

2020s will be remembered as the decade of hopelessness

[idraote]

Evergrande's default was said to be a harbinger of doom for China's economy. For weeks.
Then Evergrande defaulted and the piece of news wasn't given any spotlight.
This is just to caution people from making assumptions. Economy is not really a science, it is often extremely irrational and or dependent on unscientific factors.
This banking crisis could lead to people losing money, to the property market finding a new balance and to a "no big deal for the international community".

[richardpapp]

Given that the majority of individuals use these housing developments (many of which are not even occupied) as retirement/savings. As ridiculous as it sounds it’s really the only asset in which individuals can invest. While the banks may be bailed out, the rapidly aging (and large) population will see the majority of their money evaporate.

[CombuskenKid]

Henan is pronounced Her-Naan. As in "Her naan bread looks tasty, if only I had some curry"

[mukamuka]

3:05 More context on this "stop pay mortgage"
1st- the construction company uses unfinished project as collateral to get even more loan from bank and now they can't pay back. So even if you pay full amount of Mortgage, Bank is the one who own those house at the end not you.
2nd- China has credit system, if you failed(stop) paying loan/mortgage it'll affected 3 generations of your family. Which mean your children financial is ruined. They will never receive another loans or get a good job. So this is a serious decision that most will only take it if you have no other choice.
**3rd- Because of covid lockdown and economic downturn. Most people blew through their saving and now...they are broke. So they simply doesn't have money to keep paying Mortgage even if they want to.

[AnimeOntheRoof]

Well, its not all doom and gloom if you think about it. This could potentially lead to good things in the long run. i do not know if it will pan out like that, but keeping a cautiously optimistic outlook is not necessarily a bad thing.