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.

The difference being that these societies didn't start experiencing this phenomenon until they were prosperous, and it's happening more slowly. And even then they stand to experience problems because of it. China's position is unique and that's directly attributable to state interventions in fertility.

Nah, it is far too late for the China property bubble and the Western/Global property bubble, they are just going to burst now, and it will be messy, if you borrowed a lot of money to join in there is going to be pain.

I read an interesting article on Japan & how they have been preparing for the ageing population. Apparently the gov here had started looking into things but were sidetracked by Brexit.

China introduced the 3 child policy last year I believe but it's far too late.

In terms of impacting us, one issue impacting inflation here is the impact of covid/lockdown in china.

Much of the West has an ageing population. The U.K. already has more over 65s than under 15s which has happened quicker than predicted I believe.

Didn't say China property bubble wouldn't pop, just that it might be a rational, deliberate act to preclude something worse later that might destabilise their party rule.

Regarding population, the last time I looked, South Korea's reproduction rate was half that of China and without the hang over of a previously state enforced one child policy. Haven't looked when South Korea's population will crest.

Japan is interesting as I think their government made the decision it would be better to avoid the immigration that some Western governments use to maintain population and rather maintain a somewhat homogenous population. China is probably too big to import labour even if it wanted to. Think it has made massive investments in overseas resources and is investing in automation to try and maintain economic growth and tax revenues when populations retire. Geo politics and environmental concerns will make the next 50? years interesting. Perhaps better not to be massively indebted and with a low growth low productivity economy. The one truly massive economic risk arguably doesn't relate to China's real estate market.

Some estimates has South Korea's working age population decreasing by c1/3 by 2050, different to total population but still.

Look at singapore. it is 1.14, lower than China. The average apartment in Singapore is 1000 square feet (same size as an average uk house). I calculated that even as a singaporean living in London, I would receive the equivalent of £10k for having a baby (and the singaporeans who actually live in singapore would get even more in the form of childcare subsidy, domestic helper subsidy). I am still childless at 30 and not planning to have more than one child.

The birth rate is still very low. One big factor is the long working hours; people don't have time for bigger families . Another factor is the competitive environment- people want to invest more in their children. However, its still common to have 2 children in singapore; what brings down the stats is the many people who stay unmarried due to being unable to find suitable partners. Another thing about East Asian societies is that it is virtually unheard of to live with an unmarried partner and even start a family with an unmarried partner. So if you don't get married, you don't have children. End of story. In the west, a lot of women choose to have children with and without marriage and I think that does increase the birth rate. While many of these women do end up getting married/end up staying in a long term relationship that is like a de facto marriage, i think that the woman's willingness to have kids pre marriage does probably mean she has more children overall as she 'starts earlier'.

Yes, , I’ve read about it, and there was recently a programme on either R4 or the World Service, can’t remember which.

Presumably this will just be another reason why Chinese people who haven’t lost all their money buying flats that are never finished, will be putting their cash into new build flats in the U.K., Canada, Australia, etc. - and often leaving them empty. Just (relatively) safe places to park their money.

Peter Zeihans book The End of the World Is Just the Beginning: Mapping the Collapse of Globalization

And a simple, clear discussion on population collapse, on the Modern Wisdom Podcast

open.spotify.com/episode/2StuDwNDeU9JPMcmIe6Hbm?si=n0unNc07QwaH6l72XqyN_Q&utm_source=copy-link

Meanwhile in the Uk massive swathes of housing and apartment blocks are being bought by Chinese consortiums. Far more lucrative than anything they can buy and sell in China.

What do you call mainstream!? There's plenty about in a number of newspapers and weekly news magazines.

Chinese investors have bought up masses of UK properties, often off plan, which is why there are apartment blocks with almost no residents in some UK cities. I remember reading somewhere that a lot of rental property in some parts of the UK is also Chinese-owned. I am not an economist, but someone who has seen property prices affected by market forces and old enough to remember negative equity in the 90s. If foreign investors offload all that property en masse it would flood some markets here and drop prices.

Thank you for starting this thread. I had no idea about this problem 😳 but will be keeping an eye on this.

This is from Reddit

It's a complex financial nightmare but I'll try to TL;DR it:

1. China has a rapidly growing middle class. There isn't a lot of investment opportunities for them because of Chinese laws, but they can buy real estate.
2. China is rapidly urbanizing. Lots of people are moving to cities for jobs and better quality of life.
3. Property in cities started getting pretty hot due to #2, and people started investing in it due to #1.
4. Chinese upper class and biog companies saw this, and started building like crazy to sell property to all these new buyers.
5. The Chinese financial market is a crazy byzantine mess (even moreso than US/Euro markets), and a lot of loans are very "unofficial" and off the books.
6. HUGE BUILDING BOOM AND HOUSING BUBBLE GOES HERE
7. The market starts to cool off as the government cracks down and some new investment opportunities open up.
8. Bubble starts lookin' not so sustainable
9. Financial panic, insane web of off-the-books loans starts dragging companies under, total fuckin' shitstorm.
10. Government steps in to help stabilize, starts bringing the hammer down on some billionaires to make examples, things mellow out a bit.
11. WE ARE HERE - Everybody is waiting to see what happens next.

The Chinese property bubble was always going to come to a head, it was pushed for years on social media channels as a quick win.

The situation is that people where paying for properties that would be built in a years time, the banks still expected your monthly mortgage payment despite you not physically having a property, so people had to juggle this along with rent or general living costs. In a lot of cases families clubbed together to buy an off the book appartment that will be built in the next couple of years and struggle.

But as is the Chinese way, corruption and cutting corners to keep the higher up the political chain happy is a thing, there is entire ghost cities that people have invested in that is litterally falling apart with shoddy standards and not fit for living in, meanwhile all those 'investors' have been paying a mortgage on an apartment that is in some extreme cases worth less than what they have already paid in, add into the mix where Chinese culture was hiding your money under your bed recently speaking, to 'small rural' banks freezing access has added another layer onto multiple others that are there.

With XI in power and not wanting to lose face, those saying they don't want to stress or think about it will have an unfortunate slap in face.

China's population is expected to halve by 2100, not 2050, very different scenario.

China's population is expected to halve by 2100, not 2050, very different scenario.

You are correct, and in all situations China is in trouble, there is a reason why the CCP are allowing protests to break out to 'national' banks.

I’m actually speechless about it I didn’t realise it was steep
ots quite worrying actually

Funnily enough I always felt really scared and uneasy about the 1 child policy (aside from tne obvious unease that is!) I always thought girls would be very unsafe

do you think they will promote people moving to china or just cook tne books? 2030 is only 8 years away! What on earth do they propose to do?

pensions are like pyramid schemes I think. More in more out. Bit how the heck do you manage that with such a decline? Has that even happened outside of war/ natural disaster?

There was a good trigonometry or Corbett report about this. A guy saying that China will collapse wrt population. Also about peak population, which is apparently in the past.

People focusing on the one chold policy are not really understanding the current situation, the reason why CCP dropped the policy was because it has generally been ignored over the past decade.

China's one child policy have contributed to a 1.5Bn population, decrease is a thing because Apple etc can't rely on Chinese concetraion camps of the Uyghur.

China isn't messed up because of a one child policy, it's a contributing factor but anyone having a basic grasp of geopolitics will know that it can be summed up into a reductive argument of China being China, the issue is that what the old saying of scenario of when the US sneezed the world coughed, it now relates to China, but the issue is that China hasn't been truthful in having a sneeze

@onthefencesitter Thank you. Had forgotten about Singapore as a data point - another nation with some cultural/ethnic overlap but without a legal one child policy but with a low birth rate all the same.

Must admit the price of Singaporean real estate seemed expensive too though arguably backed by better fundamentals (occupancy and economy) than much of China.

Do you think you'll eventually raise your family in the UK or return to Singapore?

The only thing they've been controlling is the narrative.

www.singsaver.com.sg/blog/costs-of-bto-flat-resale-flat-ec-and-condo-in-singapore

If you buy government housing, it is cheaper than in london. You have to be a citizen or married/ a single who is at least 35 years of age to qualify but the income ceiling to buy government housing is around £100k so most people qualify (even professionals would because you generally don't start off on 6 figures!)

My cousin who is my age spent 50% of what I spend on a flat in london on a 2 bed new build 'starter flat'. she spent 350,000 SGD which is roughly £212k. My 2 bed flat in London cost me £400k. Of course the larger flats in nicer locations in singapore would be much more and certainly the private condos would be more. However, just like most londoners don't start out in a £1.5 million house, neither do singaporeans and even richer people would buy a government flat first and then upgrade in later life. But the fact that home ownership is so accessible means that the vast majority of people would have their own home to start a family. Also in singapore, your employer has to contribute an extra 16% to a compulsory savings fund that you have to use for housing in addition to your own 20%. so actually you don't need to save a deposit if you buy a cheaper flat as the money in the savings funds would probably be adequate.

I think I would raise my family in London. I would be working very long hours in singapore and it would be a domestic helper raising my child rather than me! also realistically in singapore, i would not be eligible to buy government housing until my british husband got permanent residency (and I would have to buy a private condo, which is of course much more expensive than any property I would purchase in London!). On the other hand I already have permanent residency in the uk. We made the decision to live in the UK when we married and I guess our lives are in the UK now.

On a global level, isn’t there an upside to a decline in population? Human population on planet earth has risen exponentially since the industrial revolution, and we are using up ever more irreplaceable resources, need ever more unsustainably farmed land to feed us all…