I struggle to get my head around the size of the Chinese property collapse & it's global consequences.

[StrawberryMarble]

Is anyone else following this? Because it will affect us for sure down the line. 65 MILLION properties in China are in a limbo of being half built & the developers have run out of funds. This is way way bigger than the sub-prime crisis in the US. Blocks of flats are being demolished in their thousands. The Chinese government is pumping trillions in to keep the economy afloat. I think we're in for an unprecidented global recession that will bite longer & harder than ever before when you add in the cost of covid and the energy crisis.

I suspect it was a combination of primarily thinking in the shorter term, ideology and not realising how successful the policy would actually be. Ie, large swathes of society essentially choosing to observe a one child policy, if that, even after they were able to have more.

The greater burden of elder care when you're the only child and sometimes grandchild seems to be a vicious circle too, ie there are people who feel they can't practically or financially have a child or a second child because of the responsibilities of work and providing for older parents.

It's essentially the consequence of short-termism in a command economy. The Chinese government realised, in the 1970s, that they needed to bring the population under control, so they instituted a one-child policy. This was massively beneficial in the short-term, allowing relative family wealth to rise as families had to look after fewer children, but ends up producing a population decline that comes on rapidly, as you end up with two problems. The first is that, in a patriarchal country, families want sons, and you end up with significant sex imbalances. The second is that, as children are expected (and in some cases legally required) to look after their parents, you end up with people choosing not to have children themselves, as they can no longer afford it.

And, of course, China is now discovering that it is easier to stop people from having children, than to make them have bigger families. Moreover, there was an expectation that economic growth would allow the state to offset the consequences of the population shift, where it is now becoming apparent that much of the wealth generated in China is being sucked into a massive real-estate bubble.

A few years ago, the expectation was that the population of China would decrease after 2050. Then it was revised to 2030. Right now, it looks like the Chinese National Bureau of Statistics will report a decline this year, and that they may be lying, and that the population has already started to take effect.

In UK there are areas looking at start of this:

BBC Pregnancy: Wales' record low birth rate has 'consequences'

Falling pupil numbers making some schools unviable

Increased demand on the NHS and care services from the elderly coming at a time when the working-age population is not growing

A likely increase in the cost-per-person of maternity units, childcare and youth services, meaning families may have to travel further to access them

Japan one of the further along population decrease countries facing shrinkage - as immigration not a big thing there as in west.

The consequences of Japan’s shrinking

The population of Japan peaked in 2008 at 128 million. With the fertility rate — or births per woman — falling below 1.5 at the beginning of the 1990s and falling as low as 1.29 in 2004, the population is shrinking rapidly. Already Japan has one million people fewer than in 2008. The government aims to keep the population above 100 million by 2060.

Perhaps an even bigger problem is that the proportion of elderly Japanese is increasing rapidly. One-third of the population is above 60 years old and 12.5 per cent are above 75. The working age population peaked in 1997 and by one measure is already 9.7 million people fewer than it was then. These facts are well established but the consequences are yet to be fully digested. They are profound.
^^
Rapid and sustained immigration might delay the population decline and could eventually arrest it, but it is extremely unlikely that Japan will open up to high levels of immigration. Japan has a lot of work to do culturally and institutionally before it can welcome immigrants of any significant number.

Unlike China they got rich first so they are in much better position.

The other key difference between, say, Britain and China is that the spread of age demographics in Britain are leading to a gradual natural population decline, whilst family sizes are sensitive to financial support, and the availability of relatively good jobs means that it can easily attract immigrants to fill in any gaps left by declining population. This means that, whilst there are challenges, Britain is far more able to handle demographic shift than China.

Yes, the UK is a bit different because of being wealthier and also because people want and are able to immigrate here. That's not to say the UK doesn't face any issues either, it's just China have a turbo version of it.

Britain is far more able to handle demographic shift than China.

Absolutely but we do still face problems around decreasing population as do most of the western world it's just many Asia countries are facing them sooner and China is in a particularly poor position.

This. Very sensible.

I did read a theory that the declining birth rate in China and resultant impending issues around that might cause conflict as China try to coerce other nations they feel they have some kind of "rights" over in order to alleviate it. Not sure how likely that is.

Can't be too bad being locked in an ikea though

😳

Seriously though, what a terrifying place to live

Sounds eerily familiar...

Doesn’t it?!

Please consider heading over to the Prepper Topic. There are lots of non-panicky, sensible contributions on various threads there about building a bit of resilience into your household.

Good for the enviroment though....

Also at that time, there was a larger rural population and the rural dwellers were allowed 2 children. A lot of rural dwellers moved to the city (albeit unofficially) but then they had only one child as a result.

Also what made the real estate bubble worse was that due to the shortage of women, men were expected to buy property as a prerequisite for attracting a wife. No apartment, no wife. And the fact that the man was an only child, it meant that effectively three salaries and a lifetime of savings are invested in this one new build apartment ; 4 salaries if you count the salary of the new wife who would be expected to help pay off the mortgage. This isn't seen in more balanced, chinese majority countries like Taiwan or Singapore.

I was shocked when i realized that property in Beijing and Shanghai was more expensive than in zone 4 north london even though salaries are much lower...

Unless you've been to China, there is no understanding the sheer scale of things there. I remember driving through Beijing and seeing 40 storey towers going up in groups of 10 or 20 like we would build a housing estate. It's incredible.

And appears to be unsustainable.

Am still reading through the thread, but evergrande jumped put at me. Haven't they been in trouble before?

Off to read the rest of the thread now.

Pension investment will be linked to stuff in China
..rarely Russia but definitely most investment Will have exposure to China

This image has been posted on here before.

I don't believe we have any idea of the scale of what's going to happen in the very near future.

Agree with the OP, it is very concerning. It has been quietly rumbling for a while with barely any attention in general press. You wouldn't even know it was happening unless you are a bit of a news junkie and read more global current affairs stuff. We really need to pay closer attention to politics in these countries in the future (and Europe too to some extent!). If Covid, didn't teach us that, I don't know what would.

I'm interested someone brought this up on here, I don't know how far I would need to go before I bumped into someone in the street who even knew there is a potential problem brewing there.

Also agree on the depopulation thing. I get really frustrated with my parents (baby boomers) about a sense of entitlement that the state should support them in old age with social care, various entitlements etc. Their position is they've paid for it. They can't seem to grasp that they paid for THEIR parents therefore it is me and my children who will be paying for them and with population demographics the maths on the amounts needed for social care doesn't work out. This just cannot be explained to them. We need to change the narrative that you pay your pension and NI contributions and then get them back years later as that isn't how it works! Grrrrrrr.

Given China's history I do worry for the women over there. I know Roe be Wade has brought abortion headlines however, and I don't know if it's my imagination, but there seems to be an increase in articles about abortion rights and pro-life.

This is a very good podcast discussing these matters amongst other things.

open.spotify.com/episode/4qj8qgojNfyu6XASPAImkE?si=aGRb4l00ToiyDDGL7BXrAA

Before people get too hung up on command economy and pigeons coming home to roost, perhaps look at brith dates in South Korea, Japan, Italy and other economies that don't have command and control contexts. It would appear countries where it's difficult to balance work and child care and where men don't help with child care don't encourage educated women to have large families and patriotic exertion by governments who don't back up words with deeds doesn't make women decide to have more children. Some argue competitive environments encourage parents to choose to have at most one child and support their education in China, Taiwan, South Korea, Japan.

Because they want people to keep paying their big mortgage for a box on the outskirts of town next to a roundabout, not think about things like property bubbles and collapsing debt Ponzi schemes.

large swathes of society essentially choosing to observe a one child policy, if that, even after they were able to have more

Also, in China and S Korea, - I don’t know about elsewhere in the Far East - the urban apartments are small and even two children would be a squash.

The other dimension is that some long-term thinking about corporates is easier in a command economy. People might think Evergrande is a symptom or a disaster but it's possible their government has made aa rational decision to mitigate future trouble. They seem to have reined in Alibaba and lots of big tech to avoid a future where power is concentrated in a few powerful corporates who can exploit the public and challenge the state. Am not advocating it nor the other political decisions made but sometimes it is better to deflate bubbles sooner than later. Western economies in retrospect and given the choice might have preferred to have prevented 2008 even if the power and levers would have made this difficult/impossible?