China’s economic woes deepen with Evergrande US bankruptcy filing | DW Business

Embattled Chinese property giant Evergrande has filed for bankruptcy protection in the United States. It’s another sign of trouble in the Chinese economy. Anchor Chiponda Chimbelu speaks to Natixis Senior Economist Gary Ng in Hong Kong about what the latest bad news from China means.

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[jadek]

I am not an economist, but I lived in China for the past 6 years and just returned home. When I arrived in 2017, I could not believe the amount of overbuilding that I witnessed and I thought China was primed for a major real estate bubble rupture. I feel very confident predicting that we haven't seen the worst yet. Also, anyone that believes that China's GDP grew this year hasn't been living in China. There is NO WAY that their economy is growing right now. In fact, after living in China, I cannot believe any numbers that I hear coming out of there. The economy is much worse than we are led to believe in the west.

[SoYappy]

Every Chinese classmate I knew in college owned several apartments in China. Then I realized that every Chinese I knew own multiple apartments. Now I know that those apartments do not bring incomes and bubbles are busting.

[kdnofyudbn]

This guy got his talking points from the CCP. I can tell you Chinese Banks are having huge liquidity issues right now.

[AnbarMarine]

Been waiting for what seems like forever to see what came next in the Evergrande saga, it’s still nowhere near over

[SeeLasSee]

They have been kicking this can down the road since 2016 at least. The chickens are coming home to roost.

[DeusShaggy]

How many Ghost Cities did Evergrande waste their resources building?

[SeeLasSee]

China was quite condescending towards the west for the financial crisis of 2007. The funny thing is that is precisely when they stimulated their economy and then liked the effect so just continued with nonstop stimulus and easy money. The PRC is more able to rollover and obscure problems that pure market economies are, and accordingly their problems are now much larger. This will drag us all down. 45 million empty apartments that may never be inhabited.

[nighle]

This is why super-rich Chinese buy lands in the US, a much safer investment than in their own country.

[nbooky]

To put things in perspective, China total housing stock is 56B m2, which translates to 40m2 per person. For US total housing stock is 256B m2 and 72m2 per person. So, every US person has 1.8 more m2 of housing, but US per capita GDP is 5.5x China. It’s oversupplied in China and not affordable. This will be a painful correction.

[MajCyric]

@4:25 The difference about "buying" a home/apt in China from other countries is that in China you only "own" a bought property (building) for 20 to 70 years (based on the terms) and that the land it sits on is always owned by the State.. IE in China you never really "Buy" a house or property but rather you only 'Lease' it...

The YT channel "China Insights" does a really good job at explaining the going ons 'issues' in China.. The CCP isn't going to 'bail out' these real-state companies, and the banks hold way too many bad loans from companies/people (many banks are in debt) to do anything to help (many banks are limiting or out right blocking withdraws by avg people)..
Also every provincial government (31 total regional governments) in China are VERY in debt (23 trillion total) and any "help" the banks could/can give will only be given to provincial/city governments... Also remember any numbers that the CCP gives out uses the CCP's "New Math" system (ie Manipulated Statistics/Numbers)...

So many of these properties are unfinished and/or tofu dreg projects that sits on land which that has tanked in 'value'.. Then factor in the lack of jobs that pay any living wages and you get people that pre-bought (spent 80 years of family wealth) unfinished houses/apt to start defaulting on their mortgages with the banks (IE bad loans held by the banks).. The Chinese job market is also so bad at the momment, that so many people who have Masters and/or PHDs are forced to be delivery drivers, and anyone over the age of 35 aren't able to find any jobs...

[moderatelyapathetic]

How can Chinese citizens not be leveraged when we know these property prices are on the order of 15+ times the average annual income? Even if it is true, Japanese savings rate was also huge. Japanese citizens also had a huge savings rate and it didn’t stop them from having a crash

[agustinenzoa]

We must take into consideration that buildings in China are of very poor quality which loose a lot of value very FAST. Also the chinese don't believe in maintanence so you can imagine what they look like 5 or 10 yrs after built.

[meawwow]

Let's hope winnie the pooh doesn't cause a skirmish on the India China border to distract his country from their economic woes.

[sting]

Buyers in US 🇺🇸 and Japan 🇯🇵 don’t need to pay 💰 their mortgages until their house is done . In china 🇨🇳 developers start spending buyers money on their Mercedes before their houses is done . Chinese 🇨🇳 governments need to change that

[chrisj]

How does a Chinese company get to use US bankruptcy law

[kenmowrey]

good interview. I enjoyed hearing the guest being allowed to fully answer questions,

[georgeszurbach]

This is just the beginning the tofu dreg chinese economy
Is falling down, next the EV industry and so on.

[bgregg]

Who knew building all those poorly constructed ghost cities would not end well?

[ngrader]

It only took 10 years of paying the mortgage but not getting to live there, that made The Everyman stop chasing the dream.

[amanoso]

In China, personal debt, bank loans, and shadow bank funds that are invested by personal funds, and most of them go to real estate is a big problem.

Unexpectedly for the Chinese, real estate prices have fallen. Many people go bankrupt when the value of their property falls below the cost of borrowing. If the shadow bank financial instruments invested in real estate become worthless, many people will be penniless. If the value of real estate falls below the collateral, financial institutions will also go bankrupt due to bad debts. Local governments, which were financed by selling land titles, will not be able to pay for public investment. Moreover, if banks reduce lending to improve their balance sheets, the whole economy will come to a halt.

Currently, there is a large-scale outflow of foreign capital from China, which is a major cause of economic deterioration. China needs to raise rates, but if they do, it will be a disastrous catastrophe.

Dispose of non-performing loans of financial institutions with taxes. Taxes cover shadow bank losses. Buy and dispose of bad real estate with taxes.
Chinese government might have been able to do those if the size of the bad assets was small.
The bubble is so huge that even the Chinese government can't handle it.

I think China has entered a deflationary spiral.