China’s Real Estate System Is Failing
Peter Zeihan
5 min
The Chinese government is now trying to get this money somewhere else. I've always found it very amusing of the people who want to get their money into China to make money when the people who are in China are desperate for any way to get the money out.
Chapters
-
0:00
The Evergrande Collapse
The Chinese government sentenced the former chairman of Evergrande to life imprisonment after the company failed despite following orders. Chinese citizens face poor investment returns at home due to subsidized loans and negative real interest rates.
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1:14
The Housing Bubble Burst
China built four to five times more housing than needed while birth rates dropped below American levels decades ago. The Chinese demographic bust started in the early 90s when the birth rate dropped below the American birth rate. New construction in China is down by 75% in just the last five years since the bubble popped. Homes today are worth less than they were at the start of the boom in 2005.
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3:31
The Stock Market Trap
Investing in Chinese equities is a fool's errand because companies access below market prices for loans. Chinese citizens hold 22 trillion U.S. equivalent in deposit accounts because they cannot get money out of the country. The only other possible way for the money to go would be out of the country and go somewhere else.
Key points
- 0:00
The Chinese government sentenced the former chairman of Evergrande to life imprisonment.
- 0:00
Everything in China is driven by throughput and employment rather than profitability.
- 1:14
China created more housing than needed by a factor of four or five.
- 1:14
The Chinese birth rate dropped below the American birth rate 35 years ago.
- 1:14
New construction in China is down by 75% in just the last five years.
- 1:14
Homes today are worth less than they were at the start of the boom in 2005.
- 3:31
Investing in the stock market in China is a fool's errand.
- 3:31
Chinese citizens hold 22 trillion U.S. equivalent in deposit accounts.
On the map
Who and where
Places · 2
- People's Republic of China 23
- United States 1
Organisations · 2
- Evergrande Group 3
- government of the People's Republic of China 2
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