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This post was edited by TruismStrike at 2018-7-31 11:22|
UYA Post time: 2018-7-30 16:12
where did you get the figure of 300%?
where did you get the figure of 300%?
Google: Seekingalpha 42 trillion real estate debt. Their article on it is from this month. If I post the link/website it might not get through mods or take longer. Seekingalpha is a business data, stocks, and analytics website not unlike Bloomberg.
I read about this for the last 10 years....
It has just been growing for 10 years, and constantly gotten worse. That is why it is so bad now and history's largest bubble by a massive margin... it is insane... History's biggest Ponzi scheme.
Look up ADVchina on youtube. They just did a video this month where they drove through a chinese ghost city built in 2015. Built SO POORLY after 3 years they look like they were made of cardboard and are collapsing. They described how it was so strucutually unsound they didn't even feel safe walking near these entire cities China built only in 2015... Ghost city problem, poor construction quality, poor/over investment has continued and accumulated in Chinese real estate for years. Only a complete incompetent can't understand that the debt this is all built on becomes totally wasted money. Eventually the government can't keep up the Ponzi scheme. Trillions in over valued real estate assets will fall over night when the musical chairs game ends. Millions of people also employed in building also lose their jobs. This begins a chain reaction in the economy leading to recession since real estate is 30% of china's GDP.
How well equipped is China to deal with recession mounted/overleverged with debt as it is at a time of declining trade relations? At the very least it is something the chinese system has never had to deal with.
One day the game of musical chairs ends and China is going to find itself way over leveraged on all fronts. Shadow banking. Corporate lending. Real estate bad debts. Regular state borrowing. And lack of consumer expenditure. You can only fight something like financial gravity so long.
as the OP states, "most of the debt is in state industries".
Easy to absorb and control
Control doesn't appear be there; they haven't been able to stop the historic expansion of Chinese debt at multiple different levels or in the historic real estate bubble.
It being state mounted debt is a huge problem for China as well. If it has to shutter SoE because of debts millions could end up unemployed which begins a cycle towards recession. Because the Chinese government employs so many people and is so central to the Chinese economy as a whole China would suffer much much more from the central government having money problems compared to the west where the governments themselves are not major players in the economy to any similar degree.
If this was the case....
The US would be buying from them in the first place.
Clearly the world has changed since 1990. China is about 3 times more expensive to produce in compared to 1990. There is only ever more and more financial reasons for companies to begin moving their production out of china to another cheaper place.
This is already happening really. Factories have opened up in Vietnam, Indonesia, and India run by the same Hong Kong and Taiwanese people that hired the Chinese to make iphones. The trade war between the US and China has just accelerated that since it adds another reason to move production out of China.
Are you telling me, the 1.3 Trillion $ American debt, China owns is meaningless and insignificant?
That used to be 2 trillion. You might lost those 1 trillion forex reserves in a month like CHina did in 2015 if the yuan dips and china tries to prop it up to prevent capital flight. China needs those forex reserves quite literally to underwrite and proper up its own currency... they are not a bargaining tool for CHina.
Considering that is about 1/21 of the overall US debt that isn't enough to have any leverage anyway.
China can't decide when those debts are due or even how much they are in fact worth as the US effectively can.
Also taking in the fact China may easily have as much as 3 times the overall debt as the US when you add shadow banking, consumer debt, corporate lending, and bad real estate debts while being smaller economy... How do you intend to pay for that exactly? Your 1.13 trillion in US debts doesn't even come close to breaking the balance.....