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this post was submitted on 12 Mar 2024
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Ah well my cynicism was unwarranted and I should have more than skimmed the article. Thanks for the clarification.
Well it's also important to note that western media is intentionally not reporting on this properly and putting what I said as remarks at the end of articles. There's two reasons for this.
This has never happened before. Countries usually just bail out their property developers and hope they'll build cheaper housing. IE USA Circa 2008. So we really don't know what the outcome of this is. Wall St of course hates this and is terrified of this. I mean if it works and other countries follow suit in the future, what would that mean for all the Wall St. billionaires.
Obviously the usual China bad narrative. The west really really doesn't want any Chinese actions to be viewed in a positive light.
So here's a Korean article that explains it better and isn't as influenced by western media.
https://www.msn.com/en-us/money/companies/xi-jinping-s-socialist-solution-china-s-response-to-the-real-estate-crisis/ar-BB1iDuXM
The key take away point is, stop believing US media, it's absolutely shit propaganda. I'm not saying China is good, hell I agree with the Koreans that this might not work, but for the love of god don't believe USA.
You are also having people with a wrong understanding of the Chinese property crisis by trying to map it to the American Great Recession, when the two problems are very different.
For instance, Evergrande is a real estate developer, not a bank. Evergrande going broke is like if Toll Brothers went broke in the USA. It would be bad, but it isn't the end of the financial world.
Second, China doesn't have the mortgage industry that the USA does. China has mortgages, but a large part of the market is owned as investments. You also have to pay a lot more as a down payment compared to the USA. So, the exposure that the Chinese banking industry has to this is a lot less than what happened in the USA in 2007/8. However, this means that people are more at risk in losing money on their real estate.
Third, while housing in the USA is an investment that some people take, there are generally other ways Americans invest their money to save for retirement. In China, a greater percentage of the population saves for retirement by buying property. Given China's demographic issues, this can be a problem if a lot of retirees lose a significant part of their nest eggs.
Fourth, municipalities and provinces can't set their own taxes and the national government hasn't been giving them enough money to pay for services. Local revenue generation has been handled through real estate development. There has not been a plan released yet to handle the loss of revenue or dealing with municipal debt. National plans for real estate development are removing the profit incentive, so how does that impact local budgets?
Some of these points are covered in your article. However, even in this thread, the discussions seem to be trying to view China's property crisis through an American lens when the mechanics behind both are very different.
Sure, I completely agree with everything you have said. And the sad reality of news right now in the English speaking world has a US bias for obvious reasons. My link to a S.Korean paper is still a link to a US ally. They're not as biased as USA itself, but won't escape all influences. It's unfortunate at best.
Yeah, but I feel like you would get biases from Chinese sources as well. This property crisis seems to be the worst economic crisis that China has dealt with for a generation and the party has seemed to lean more on the mandate of heaven justification for them to stay in power.
And a government dealing with a loss of legitimacy during a financial crisis isn't just a Chinese issue, but it appears to be something that current Chinese leadership has no experience in handling given their decades of economic growth.
So I would expect Chinese sources to paint a rosier picture of the crisis, focusing on punishing the greedy developers while trying to stifle discussions on reforming the municipal tax bases or the role of local officials being a key part in property overdevelopment.
Absolutely, it's incredibly annoying everyone has a bias. But that's what we are going to see as the world splits into 2. In many ways it's inevitable. I'm just appreciative that at least for now, both sides seem to be opposed to war, with distressingly USA seemingly more likely to start it. Since historically when you have 2 superpowers, war is the first thing that they used to do.