China Post Pandemic Economy - Not Good
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Another concern
"China's colossal hidden-debt problem.
This mainly refers to a mountain of liabilities accumulated by the country's local governments, mostly to fund regional infrastructure projects such as building roads and bridges. An analysis by the Chinese media outlet Caixin Global estimated the outstanding obligations of the so-called local government financing vehicles, or LGFVs, at close to a staggering $10 trillion."
"For months, China's local administrations have struggled to turn their financing vehicles profitable – increasing pressure on the national government to prop up the ailing sector via costly interventions.
As risks tied to the sector mount, banks are unwilling to lend more, investors are turning their backs on bonds, and viable projects are harder to come by, according to several anonymous employees interviewed by Bloomberg.
As a result, the local governments have been struggling to generate enough income or raise funding to meet the costs of servicing their debt."
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https://explainingfinance.com/news/plunging-pork-prices-tip-china-back-into-deflation/
Consumer prices in China fell more than expected last month, sliding the country back into deflation and renewing concerns about the strength of the world’s second largest economy.
The country’s National Bureau of Statistics (NBS) said Thursday that the consumer price index (CPI) edged down 0.2% in October compared to the same month a year ago. The decline exceeded the 0.1% fall forecast by a Reuters poll of analysts.
The drop was mainly attributed to falling food prices, particularly pork, which has been sliding for months and is down 30% compared to a year ago, according to Goldman Sachs analysts.
Maybe we should sell them some US beef. LOL
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@Jolly LOL
The interesting thing is that the data came from internal Chinese statistics, so in real, it is probably worse!!
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https://www.cnn.com/2023/08/18/investing/china-evergrande-bankruptcy-explained/index.html
Evergrande, one of China's largest real estate developers, filed for Chapter 15 bankruptcy.
@Axtremus said in China Post Pandemic Economy - Not Good:
https://www.cnn.com/2023/08/18/investing/china-evergrande-bankruptcy-explained/index.html
Evergrande, one of China's largest real estate developers, filed for Chapter 15 bankruptcy.
https://www.nytimes.com/2024/01/28/business/china-evergrande.html
Court decision:
Evergrande Will Be Dismantled, a ‘Big Bang’ End to Years of Stumbles
After multiple delays and even a few faint glimmers of hope, a Hong Kong court has sounded the death knell for what was once China’s biggest real estate firm. -
@Axtremus said in China Post Pandemic Economy - Not Good:
https://www.cnn.com/2023/08/18/investing/china-evergrande-bankruptcy-explained/index.html
Evergrande, one of China's largest real estate developers, filed for Chapter 15 bankruptcy.
https://www.nytimes.com/2024/01/28/business/china-evergrande.html
Court decision:
Evergrande Will Be Dismantled, a ‘Big Bang’ End to Years of Stumbles
After multiple delays and even a few faint glimmers of hope, a Hong Kong court has sounded the death knell for what was once China’s biggest real estate firm.@Axtremus said in China Post Pandemic Economy - Not Good:
Court decision:
Evergrande Will Be Dismantled, a ‘Big Bang’ End to Years of Stumbles
After multiple delays and even a few faint glimmers of hope, a Hong Kong court has sounded the death knell for what was once China’s biggest real estate firm.Saw that earlier. What are the global ramifications?
"Now look here, you Baltic gas passer... " - Mik, 6/14/08
The saying, "Lite is just one damn thing after another," is a gross understatement. The damn things overlap.
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@Axtremus said in China Post Pandemic Economy - Not Good:
Court decision:
Evergrande Will Be Dismantled, a ‘Big Bang’ End to Years of Stumbles
After multiple delays and even a few faint glimmers of hope, a Hong Kong court has sounded the death knell for what was once China’s biggest real estate firm.Saw that earlier. What are the global ramifications?
@George-K Just from my opinion, not super major issue. Evergrande was pretty much a domestic only company in China.
But, it may make foreign companies reduce their investment in China if they see concern about the continuing domestic economic problems there.
So, it may "spiral" domestically.
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Some more bad news for China economy. The below article looks at how small/medium size exporters are really hurting.
https://www.reuters.com/world/china/chinas-tumbling-prices-push-some-exporters-brink-2024-02-04/
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They're coming here through Mexico.
https://www.cbsnews.com/news/us-border-mexico-chinese-migrants-60-minutes/
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Some more bad news for China economy. The below article looks at how small/medium size exporters are really hurting.
https://www.reuters.com/world/china/chinas-tumbling-prices-push-some-exporters-brink-2024-02-04/
@taiwan_girl said in China Post Pandemic Economy - Not Good:
https://www.reuters.com/world/china/chinas-tumbling-prices-push-some-exporters-brink-2024-02-04/
From the article:
About 180 million people work in export-related jobs, commerce ministry data from 2022 shows.
That's more than half the size of the US population including children and retirees!
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https://www.cnn.com/2024/02/06/investing/china-stocks-rally-government-stimulus/index.html
Chinese stocks staged their biggest rally in years Tuesday, after the country’s sovereign wealth fund said it would step up buying shares as officials scramble to draw a line under a three-year market rout.
Not surprised that the CCP intervened, it's a matter of time and intensity.
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Deflation in China
China Deflation Alarms Raised by Falling Prices for Food and Cars
In addition to consumer price declines in January, wholesale prices fell last month, and have been down in every month since October 2022. -
Deflation in China
China Deflation Alarms Raised by Falling Prices for Food and Cars
In addition to consumer price declines in January, wholesale prices fell last month, and have been down in every month since October 2022.@Axtremus said in China Post Pandemic Economy - Not Good:
Deflation in China
China Deflation Alarms Raised by Falling Prices for Food and Cars
In addition to consumer price declines in January, wholesale prices fell last month, and have been down in every month since October 2022.Isn't that good? When talking about Bidenomics there have been constant complaints that lower inflation rates don't equate to lower prices (because apparently that isn't really obvious)
Maybe if we were Communist, we'd get lower prices, and we'd all be happy!
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https://www.barrons.com/articles/china-property-bubble-popped-these-cities-taking-the-brunt-906d51b2
But nowhere are things worse than the property market in lower-tier cities—places with relatively modest GDPs and no more than a few million people. Their biggest problem is glut—too many units with few prospective buyers.
Inventory clearing time is the most striking indicator of how much worse things have gotten for lower-tier cities. The metric is the area of already-built houses divided by the total area of units where a contract has been signed. In essence, how many units does a developer have versus how many buyers have agreed to purchase them.
In December 2020, clearing in all tiers was eight to nine months. Then unsold units in lower-tier cities skyrocketed, tripling by December 2023, nearly double that of higher-tier cities.
As of the most recent data, the time to clear housing inventories in lower-tier cities is now about 30 months, compared with eight months three years earlier, according to data provider Wind. The rate remains roughly half of that for higher-tier cities.
The southern city of Shaoguan—on the cusp of the third and fourth tier with 2.8 million residents—has an inventory clearing time of 131 months, or 10 years, according to a survey by think tank E-House China Research and Development Institute.
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https://www.cnn.com/2024/03/12/business/china-moodys-downgrade-vanke-junk-intl-hnk/index.html
Chinese banks are reportedly scrambling to bail out one of the country’s biggest property developers after its credit rating was downgraded to “junk” status by Moody’s on Monday.
Beijing has been struggling to restore confidence in the country’s ailing real estate industry and appears to be working flat out to prevent China Vanke going the way of Evergrande and Country Garden, which both defaulted on their debts and are at risk of being liquidated.
Chinese state media reported Tuesday that 12 major banks, including the six largest state-owned lenders, were in talks to provide a syndicated loan for Vanke worth as much as 80 billion yuan ($11.2 billion) to enable the company to meet upcoming repayment deadlines.
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China's securities watchdog has accused a core unit of China Evergrande Group of inflating revenue by nearly $80 billion over two years before the developer defaulted on its debt.
The China Securities Regulatory Commission has imposed a fine of 4.2 billion yuan ($580 million) on core Evergrande unit Hengda Real Estate for inflating revenue in 2019 and 2020 by a total of 564.1 billion yuan, Hengda said in an exchange filing late Monday.
Hengda cited the inflated revenue figure in its attempts to sell 20.8 billion yuan worth of bonds in 2020 and 2021, an act the regulator said constituted financial fraud. The inflated revenue made up over 60% of its stated profit in 2019 and over 86% in 2020.
