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Political Information Last Updated: Oct 27, 2021 - 8:11:11 PM


China's Real Estate Crisis Explained
By Chris Kanthan with comments by Ron
Oct 27, 2021 - 2:29:00 AM

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https://www.sott.net/article/459922-Chinas-real-estate-crisis-explained

Chris Kanthan
Medium
Mon, 25 Oct 2021 17:26 UTC

china construction demoliton

The financial struggles of China's real estate developers have been making the headlines for the last few months. There are two lines of thoughts on this crisis. First, China's real estate bubble is bursting like what the U.S. experienced in 2008. Second, this is no big deal or even this is a good thing for China's economy, since it will make housing more affordable. Both these narratives are wrong. Let's see why.

Outsized Role of Real Estate

China's real estate is a critical pillar of China's economy, unlike any other country. Consider these four stats on how much China's real estate accounts for:

  • 30% of China's GDP
  • 40% of bank loans
  • 50% of fiscal revenues of local governments
  • 75% of household wealth


Why Real Estate Cannot be Easily Deflated

Those are incredible numbers. For example, even during the height of America's housing bubble, real estate accounted for only 18% of U.S. GDP.
china gdp graphIf China's real estate stalls for a year, China's GDP growth will be, for example, 4.2% rather than 6%. Bank of America analysts calculate that if home prices fall 10%, China's GDP growth rate could be as low as 2.2% next year.

Chinese real estate developers depend on pre-sales of new apartments to finish the construction of older apartments. This is like a Ponzi scheme but has become popular in China. People often pay upfront the full cost of a home and then wait for 2-3 years for the home to be built.

Property behemoth Evergrande is a poster-child of this problem. It has 800+ properties and 1.4 million apartments under development in 200+ cities in China. Now, Evergrande is running out of cash and funding (from banks, trusts, and bond markets). The property giant is facing $300 billion of debt and liabilities, making it the most-indebted developer in the world.
evergrande properties developmentEvergrande is not an exception. Combined, real estate developers in China have whopping $5.2 TRILLION of debt. If home prices plunge and property developers go bankrupt, Chinese banks will be left with bad loans worth trillions of dollars.

As for local governments, they won't have enough money for infrastructure, schools, healthcare, pensions etc. without revenue from land sales to developers. Some are starting to implement property tax but there is a lot of opposition from existing homeowners.

[Ron: Housing and most sustenance and physical living arrangements should be handled locally. Local communities DO NOT need money to build and maintain infrastructure, schools, healthcare and provision of sustenance to pensioners etc. ALL that is needed is a healthy working population; locally available physical resources and land on which to erect shelter and grow food. Money is irrelevant. Money is merely a lubricant used to assist people to exchange their labour for goods and sevices. A spiritually healthy community properly cares for everyone in the community in the same way that a spiritually healthy family cares for everyone in the family without family members invoicing each other for services rendered. Any community that demands that money must be provided for services rendered creates an enormous additional counter productive labour component to living.].

And considering that 75% of Chinese families' wealth is tied up in real estate (i.e., homes), the government cannot afford to let home prices go down too much. Also, the top 10% in China have most of this wealth - they own three or more homes - and they are the upper middle class that even Xi Jinping cannot alienate.
san franciscoThere is also another important consideration: jobs. 50 million people work in construction alone. Add in the upstream and downstream jobs like in cement, steel, appliances (refrigerators, ovens, washing machines and so on), furniture, lighting, real estate agents etc., more than 100 million jobs are dependent on the real estate market.

So, everyone is too reliant on the health of the real estate market - the central government, local governments, developers, homeowners, manufacturers and more. Thus, Xi Jinping and his bureaucrats will do whatever it takes to ensure that the bubble doesn't burst spectacularly. And the Chinese government has tools like price controls, money-printing, rolling over loans etc. to avoid an immediate collapse.

However, maintaining the bubble, of course, means housing will remain unaffordable for most urban young people and all migrants (Chinese people who moved from rural provinces to cities). For example, apartments in Shanghai cost about $700 per square foot - that's the same as New York City or San Francisco. However, the average after-tax income in Shanghai is only $1000 a month.

Looking at the ratio of median house price to median annual income, Chinese cities are fivefold more expensive than Western cities like New York City or San Francisco.
housing worldwide citiesIf China wants to make housing affordable, the prices of homes have to come down by 50% or so. But that would devastate the economy. Thus Xi Jinping's promise to reduce inequality and bring in "common prosperity" will remain a sham.

[Ron: Life on this planet is abundant. Every human being should have adequate affordable shelter. A 50% reduction in the price of Chinese housing would not make it humanly affordable. No one will need to worry about the price of housing in the new world coming on this planet.].

Long-term Stagnation is Unavoidable

The only real option for the Chinese government is to kick the can down the road. They should have pricked the housing bubble six years ago when there was a slump. Instead the CCP panicked and bailed out the real estate sector.

Now China's housing bubble has become the biggest asset class in the world, worth staggering $55 trillion.
housing market sizeWorse, there are 100 million or so vacant and unfinished apartments in China. The much-heralded technocrats in China are supposed to be visionaries who planned decades ahead, but they terribly mismanaged this crucial pillar of the economy.

The housing mania has also led to extraordinary and unsustainable debt for households, developers, local governments, and state-owned enterprises. Deleveraging all this debt will be mission impossible.

In addition to pure math and finance, the real estate sector faces another dreadful blow: China's demographic crisis. The prime-age, home-buyer population (25-40) has already been shrinking for the last few years. There is no reversing this trend. In fact, every stat for demographics is terrible for China: labor force is shrinking, marriage rate is down (40% in the last 8 years), birth rate and fertility rate are down, and the population of retired people is rising.

The future for China's real estate sector will be like what Japan experienced in the 1990s - prolonged stagnation and a slow, painful death.

The smart Chinese will realize that the real estate boom is over and will start selling their second and third homes discretely. A 3% return from government bonds will be better than losing 20% in real estate.

[Ron: This analysis is based on status quo thinking. It assumes that our existing global socio-economic and political systems based on money and universal debt slavery controlled by Talmudic banksters using fiat debt note currency fraudulently labelled as money, will continue. It won't.

The author also assumes that the previously dominant low energetic frequencies that determined life on this planet will continue; they won't.

Gaia and her inhabitants are on the cusp of radical change determined by incoming higher vibrating energies coming from the centre of the galaxy. Those energies are transforming the nature of the planet and her inhabitants. Anyone and anything not compatable with those energies will leave for other lower energetic environments. It is estimated that perhaps 20% of Gaia's existing human inhabitants will remain with her after Stasis and the changes. Apart from Star seeds who want to return home, the rest will go to lower frequency environments more suited to their needs.

This means that any assessment of the future physical, socio-economic and political situation on Gaia using current criteria is irrelevant. The creator of this planet and local universe, Christ Michael Aton (CM), declared the commencement of his Millennial Reign here on 5 February, 2019 and the planet will segue fully into that Reign after Stasis.

Gaia's future environment is beginning to manifest now and it will become increasingly obvious as the remnants of her demonic global controllers are removed. It will blossom after Stasis.

Currently, monumental changes are occurring in China including president Xi's elimination of the Rothschilds' controlled rogue elements in the CCP such that the apparent discord between the US and China is a mirage as both nations are in the process of instituting genuine republican governance arrangements designed to give their populations honest, truly representative governance.

Apart from eliminating US warmongering and bankster instigated global warfare, the changes will abolish the fraudulent monetary system that has controlled our world for centuries and remove all demonic bankster organised and controlled governments and institutions like the UN, the WHO, NATO and the EU et al.

A core change will be the global replacement of the private corporate creation and usurious distribution of currency, which has been fraudulently called money, and which has enabled private banks to control, impoverish and enslave the global population.

The existing global financial and banking systems are about to collapse. That will cause chaos and hardship for many BUT those collapsed systems will be quickly replaced by divinely ordained quantum governance and a quantum financial system (QFS) that will be unhackable and fraud-proof by anyone including governments. After a short period of disruption while the systems change, quantum governance and the QFS will ensure general continuity of pension and other legitimate and necessary investment and economic activities.

When this happens the COVID-19 scamdemic will be exposed as the fraud and genocidal crime against humanity that it is; and the perpetrators of that deadly HOAX and its associated attempt to genocide humanity using lethal injections will be arrested and dealt with pursuant to law and the the Nuremberg Code. This process will necessarily involve removal of all existing governments and their replacement with proper locally based Republican forms of governance established on a national basis globally. The criminal cartels involved in real estate, construction, insurance, allopathic so-called healthcare and the pharmaceutical industries, will also cease to exist. Similarly, the military industrial complex and the national security apparatus that have been used to control our world will be dismantled everywhere.

These activities will be accompanied by public disclosure, on a global basis, of the evils and iniquities perpetrated on this planet and her inhabitants for millennia by her demonic globalist controllers.

When the truth of how our world has really been operating is publicly disclosed most Chinese people and the global population will be shocked and emotionally devastated. At that point it will be important for everyone to forgive themselves and each other for what they will feel has been their ignorance, gullibility and/or greed. Our mind controlled ignorance and ego-centric psychic condition has been programmed and inculcated into us from birth and the failure to realise the true toxic reality of life on this planet can be said to be understandable.

We need to move through our shock and anger at the demonic deception and incredible cruelty and criminality of our demonic globalist controllers and their minions and enablers in order to increase our energetic vibrations so that we can accomodate the higher energetic frequencies coming to this planet from the centre of the galaxy. If we do that we will be able to enjoy and enhance the divinely ordained freedom and abundance that is coming to our new world.

Apart from having food and water on hand to enable survival for a few days if (when) power and/or telecommunications facilities cease to operate in your locale, it is time to stop focussing on negative past occurances, COVID-19 lies and Vaxx machinations as well as the seeming continuing Globalist control of our world. Those appearances are deceptive, a mirage, a movie being allowed to be played out by those tasked by CM to take back Gaia, his beloved seed planet. This is happening in order to get the population to realise what the globalist controllers of governments and most everything else, INTENDED to do once they got complete control of this planet.

Those who do Wake Up and accept the reality of our situation will be saved the tedious repetition involved in continuing their journey on 3d planets while Gaia is fast tracked into 5d after the coming Magnetic Reversal and Stand Still.

Accordingly those who seek to hasten the coming new world of freedom and abundance should seek to increase their consciousness by turning their attention and positive focus to visualising the loving, peaceful, harmonious and abundant global environment they wish to see. Dwelling upon the misery and machinations of the past and fearing the future will merely create low personal energetic vibrations and the resultant lower energetic frequencies impede the manifestation of the higher vibrational world we all desire. Once enough people look forward to our impending, loving and abundant future, it will manifest. So be it.

As the population of the planet will be hugely reduced after Stasis, every nation and not just China, will have a surfeit of housing and infrastructure of every kind. Issues around deciding how best to rationalise, use and deal with that surplus will be one of the many matters needing detailed onsideration and determination by every community and nation.

Issues concerned with availability of money and finance will cease to be a major consideration after the coming changes. Communities and nations will be concerned with ordering priorities around availability of the human thinkers, organisers and workers needed to rationalise the allocation, use an development of physical resources and infrastructure rather than bioviating about the superficial, irrelevant and stultifying issues concerned with finance that currently dominate life on this planet.

After Stasis veryone will be able to have adequate debt free housing and where there is a serious excess of housing that problem will be met by demolition and recycling. The fact that this author mentions that there is a surplus of 100 million housing units in China; 10% of Chinese own three or more houses; and that houses are grossly over priced leaving a majority of Chinese ill housed or shackled by high housing costs, indicates that the elimination of the current fraudulent and usurious global money creation and banking system is very necessary and long overdue in China. That is why President Xi and the global Alliance have eliminated the demonic, Khazarian controlled CCP which was responsible for that situation.].

 

Chris Kanthan, author of China, China, Chyyna - Greatest Disruption to American Century


Comment: See also:

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