I don't super blame Chinese citizens for doing this. There just aren't a lot of ways to actually invest, in China. This guy was doing far better than most as well: living in Beijing, having an...
When he bought an apartment near a good high school in northeast Beijing in 2020, Zhou Fujin expected that renting it out would cover most of his mortgage.
I don't super blame Chinese citizens for doing this. There just aren't a lot of ways to actually invest, in China. This guy was doing far better than most as well: living in Beijing, having an income property, car, travels. Tough times for all.
“When the real estate market is booming, people believe that they are very rich,” said He-Ling Shi, an associate professor of economics at Australia’s Monash University. “If people believe that they’re rich, they tend to spend their income on consumption. But with the decrease in the price of housing in most parts of China, people believe that they’re no longer as rich as before, so … they want to increase their savings and reduce their consumption.”
Cautionary tale that won't be heeded by our governments. When real estate prices are up, the politicians get pats on their backs, homeowners (eg voters) are happy with them, everyone* wins. No politician wants to do anything like risk cooling down the market. It's not just democracies of course, but we're even more exposed to this kind of "rah rah party now by creating more cans, kick increasing number of cans down the road" attitude than a permanent central ruling party.
Lu’s family has burned through its savings [...] The government has sought to encourage more spending
This reminds me of the second recession of my career: our boss wants us to work harder to push through, but he was also upset that we weren't being team players because we were still clocking in 40 hours a week. He wasn't crazy though, from his perspective he really did need us to do both: we needed to work super hard to complete the existing projects as fast as possible so he gets money from the customers. BUT the payroll was also killing him.
And that's what China needs people to do: they need to spend like crazy, but they also need people to just hold on and not panic about running out of money to spend. They need to let a lot of excess capacity'd industries and businesses die and destroy a TON of empty apartments, but they also need those newly unemployed and bankrupted to keep spending money like there's no tomorrow.
Edit: when "everyone wins" in a real estate propped up "economy", "everyone" does not include the working poor, the renters, the over in debt, the elderly, the fixed incomers, the disabled, the new comers, the students, the precariously housed and the un-housed. Each sold separately, batteries not included, ask your priest if late stage capitalism is right for you.
And at the same time, contrary to what I see mentioned elsewhere, the current geopolitical earthquake is at this juncture not good for China. In fact, I'd argue it's a disaster. America and Russia...
And that's what China needs people to do: they need to spend like crazy, but they also need people to just hold on and not panic about running out of money to spend. They need to let a lot of excess capacity'd industries and businesses die and destroy a TON of empty apartments, but they also need those newly unemployed and bankrupted to keep spending money like there's no tomorrow.
And at the same time, contrary to what I see mentioned elsewhere, the current geopolitical earthquake is at this juncture not good for China. In fact, I'd argue it's a disaster. America and Russia aligning isolates them in Central-Asia and the Middle East. Meanwhile, the EU and India are more and more likely to cooperate as both of them want to be less reliant on the US and China. With the tariffs, unpaid loans to Africa, and many nations in the ASEAN framework already viewing China with skepticism at best, their trade network too is endangered.
And I'm not cheering for a recession in China, that would also hurt everyone in the process - especially ordinary Chinese people. But pair your comment with what I said above along with issues around water distribution/quality, corruption, demographics etc. and the picture for China's future is pretty bleak...
Reading back, I think it was pretty poorly phrased - the loans in Africa that China handed out. It may seem like a solid move to build allies but it's questionable whether most of them will be...
Reading back, I think it was pretty poorly phrased - the loans in Africa that China handed out. It may seem like a solid move to build allies but it's questionable whether most of them will be paid back, which is not nice when you're struggling economically yourself. That said, Chinese defense spending is also increasing so 😬
I kind of thought not having them paid back was part of the plan though, no? The point was to be onerous so that they could take ownership of the assets instead. I guess if your finances are...
I kind of thought not having them paid back was part of the plan though, no? The point was to be onerous so that they could take ownership of the assets instead. I guess if your finances are tight, maybe you'd rather have the money than the assets.
To reply to both you and @Z009 , that's uncertain but could be a part of it. An alternative perspective I've heard is that it's due to supply and demand. Having so many construction workers and...
To reply to both you and @Z009 , that's uncertain but could be a part of it. An alternative perspective I've heard is that it's due to supply and demand. Having so many construction workers and companies, while Africa lacks such development (to an extend, Africa is a huge continent), supply and demand may have created this too.
The bigger question is though, will the countries give said assets if China does not have the international presence for it. We're moving away from a rule-based world order. But moving aggressively and militarily would still cost them lots of international influence.
We'll have to see in either case. If the upcoming American recession hurts them a lot, they may make bold moves anyway. This world is so unstable that predicting anything is even more difficult than before. All that said, loans is one thing, whether the assets can actually benefit them if they get it due to loan defaults is another. It would be even more infrastructure for them to maintain when their economy is already addicted on it.
I was under the impression that was, in part, China's goal. They knew those counties would default on their Belt and Road loans and have established collateral (such as ports, road ownership) that...
I was under the impression that was, in part, China's goal. They knew those counties would default on their Belt and Road loans and have established collateral (such as ports, road ownership) that they can seize as payment. Their goal is/was to expand influence, not secure a reasonable rate of return.
...just an aside but, based upon the ridiculously-oversized bundles marketed here, i never expected to see 'rising cost' and cilantro in the same sentence...
Even street-food vendors are hiking prices, driven by the rising cost of raw ingredients like pork and coriander.
...just an aside but, based upon the ridiculously-oversized bundles marketed here, i never expected to see 'rising cost' and cilantro in the same sentence...
:) where's "here" ? in the western world we tend to use cilantro as a sort of garnish. When I see Northern aunties making dumplings, cilantro is a major component of the fillings, esp if meat is...
:) where's "here" ? in the western world we tend to use cilantro as a sort of garnish. When I see Northern aunties making dumplings, cilantro is a major component of the fillings, esp if meat is expensive and you're using things like, say, eggs and noodles and such to "pad" the filling.
Just some quick math says that was a dumb investment without the recent deflation issues. That ROI is not worth it. At $316/month, it would take 72 years to make up the initial investment of...
Zhou’s apartment, in Beijing’s Miyun district, cost 2 million yuan ($275,000) when he bought it in 2020, and he financed it with an 800,000 yuan ($110,000) bank loan. The rent he charges has fallen from 2,300 yuan ($316) monthly to 1,700 yuan ($234).
Just some quick math says that was a dumb investment without the recent deflation issues. That ROI is not worth it. At $316/month, it would take 72 years to make up the initial investment of $275k. I know it's not exactly accurate to calculate that way, but I use it as a rough guide to understand if buying or renting makes more sense in a city. Over 20x and I'm probably renting. This is 72x... I've heard of worse in Shanghai. Try it in your city and see what you get.
I don't super blame Chinese citizens for doing this. There just aren't a lot of ways to actually invest, in China. This guy was doing far better than most as well: living in Beijing, having an income property, car, travels. Tough times for all.
Cautionary tale that won't be heeded by our governments. When real estate prices are up, the politicians get pats on their backs, homeowners (eg voters) are happy with them, everyone* wins. No politician wants to do anything like risk cooling down the market. It's not just democracies of course, but we're even more exposed to this kind of "rah rah party now by creating more cans, kick increasing number of cans down the road" attitude than a permanent central ruling party.
This reminds me of the second recession of my career: our boss wants us to work harder to push through, but he was also upset that we weren't being team players because we were still clocking in 40 hours a week. He wasn't crazy though, from his perspective he really did need us to do both: we needed to work super hard to complete the existing projects as fast as possible so he gets money from the customers. BUT the payroll was also killing him.
And that's what China needs people to do: they need to spend like crazy, but they also need people to just hold on and not panic about running out of money to spend. They need to let a lot of excess capacity'd industries and businesses die and destroy a TON of empty apartments, but they also need those newly unemployed and bankrupted to keep spending money like there's no tomorrow.
Also happening in China: rising prices of basic necessities. "Rising prices for instant ramen, pickles hit low-income Chinese" --
Even street-food vendors are hiking prices, driven by the rising cost of raw ingredients like pork and coriander.
Edit: when "everyone wins" in a real estate propped up "economy", "everyone" does not include the working poor, the renters, the over in debt, the elderly, the fixed incomers, the disabled, the new comers, the students, the precariously housed and the un-housed. Each sold separately, batteries not included, ask your priest if late stage capitalism is right for you.
And at the same time, contrary to what I see mentioned elsewhere, the current geopolitical earthquake is at this juncture not good for China. In fact, I'd argue it's a disaster. America and Russia aligning isolates them in Central-Asia and the Middle East. Meanwhile, the EU and India are more and more likely to cooperate as both of them want to be less reliant on the US and China. With the tariffs, unpaid loans to Africa, and many nations in the ASEAN framework already viewing China with skepticism at best, their trade network too is endangered.
And I'm not cheering for a recession in China, that would also hurt everyone in the process - especially ordinary Chinese people. But pair your comment with what I said above along with issues around water distribution/quality, corruption, demographics etc. and the picture for China's future is pretty bleak...
I seem to have missed the unpaid loans in Africa news. What is that about?
Reading back, I think it was pretty poorly phrased - the loans in Africa that China handed out. It may seem like a solid move to build allies but it's questionable whether most of them will be paid back, which is not nice when you're struggling economically yourself. That said, Chinese defense spending is also increasing so 😬
I kind of thought not having them paid back was part of the plan though, no? The point was to be onerous so that they could take ownership of the assets instead. I guess if your finances are tight, maybe you'd rather have the money than the assets.
To reply to both you and @Z009 , that's uncertain but could be a part of it. An alternative perspective I've heard is that it's due to supply and demand. Having so many construction workers and companies, while Africa lacks such development (to an extend, Africa is a huge continent), supply and demand may have created this too.
The bigger question is though, will the countries give said assets if China does not have the international presence for it. We're moving away from a rule-based world order. But moving aggressively and militarily would still cost them lots of international influence.
We'll have to see in either case. If the upcoming American recession hurts them a lot, they may make bold moves anyway. This world is so unstable that predicting anything is even more difficult than before. All that said, loans is one thing, whether the assets can actually benefit them if they get it due to loan defaults is another. It would be even more infrastructure for them to maintain when their economy is already addicted on it.
Interesting times. Unfortunately.
I was under the impression that was, in part, China's goal. They knew those counties would default on their Belt and Road loans and have established collateral (such as ports, road ownership) that they can seize as payment. Their goal is/was to expand influence, not secure a reasonable rate of return.
...just an aside but, based upon the ridiculously-oversized bundles marketed here, i never expected to see 'rising cost' and cilantro in the same sentence...
:) where's "here" ? in the western world we tend to use cilantro as a sort of garnish. When I see Northern aunties making dumplings, cilantro is a major component of the fillings, esp if meat is expensive and you're using things like, say, eggs and noodles and such to "pad" the filling.
...south texas; it's a seasoning herb here and the main issue is just using the whole bundle before it turns, rather than cost...
Just some quick math says that was a dumb investment without the recent deflation issues. That ROI is not worth it. At $316/month, it would take 72 years to make up the initial investment of $275k. I know it's not exactly accurate to calculate that way, but I use it as a rough guide to understand if buying or renting makes more sense in a city. Over 20x and I'm probably renting. This is 72x... I've heard of worse in Shanghai. Try it in your city and see what you get.