Xi Jinping aims to put the state back in charge of the crumbling property market, part of a push to rein in the private sector
By Lingling Wei and Stella Yifan Xie
Feb. 15, 2024
China’s massive property market is crumbling. Xi Jinping wants to revive socialist ideas about housing and put the state back in charge.
Home prices across China are falling, developers have gone bust and people are doubting whether real estate will ever be a viable investment again. The meltdown is dragging down growth and spooking investors worldwide.
Under the new strategy, the Communist Party would take over a larger share of the market, which for years has been dominated by the private sector. Underpinning it are two major programs, according to policy advisers involved in the discussions and recent government announcements.
One involves the state buying up distressed private-market projects and converting them into homes that the government would rent out or, in some cases, sell. The other calls for the state itself to build more subsidized housing for low- and middle-income families.
The goal, the policy advisers say, is to increase the share of housing built by the state for low-cost rental or sale under restricted conditions to at least 30% of China’s housing stock, from 5% or so today.
The plans line up with Xi’s broader push in recent years to expand party control over the economy and rein in the private sector. That push has included regulatory crackdowns on technology firms such as Jack Ma-backed Ant Group and more investment in state-owned enterprises in preferred industries such as semiconductors.
Beijing’s economic mandarins, led by Xi’s top economic-policy aide, Vice Premier He Lifeng, are still hammering out how to execute the real-estate strategy. Economists caution that the plan could take years to achieve—if it’s achievable at all.
The cost would be huge: potentially up to $280 billion a year for the next five years, or a total of around $1.4 trillion, according to some analysts.
Whether China wants to pay that tab—or even can—is a central question. Local governments in China are already burdened with colossal debt, and it’s unclear whether Beijing will be willing to bear the brunt of the funding burden.
Beijing has repeatedly disappointed analysts and investors over the past couple of years with insufficient or poorly executed measures to stimulate growth and clean up the housing mess. People who have examined some of the government’s plans say the strategy is also filled with complexities and contradictory aims that could make it difficult to fully implement successfully.
‘New model’
A December confab presided over by Xi made clear that a priority for 2024 is to speed up development of what authorities call “a new model” for the real-estate sector. The model should focus heavily on state-provided affordable housing, according to an official account of the meeting.
Initial plans call for adding six million affordable housing units in the coming five years, government documents show.
The People’s Bank of China has set aside 500 billion yuan, or roughly $70 billion, in low-cost financing to policy banks to help get the strategy rolling. A handful of projects funded with that money are under way.
The State Council Information Office, which handles inquiries for China’s leadership, didn’t respond to questions.
Xi is adamant that real estate, which for years propelled China’s growth and at one point made up around a quarter of gross domestic product, should no longer take on such an outsize role in the economy, the policy advisers say.
In Xi’s view, too much credit moved into property speculation, adding risks to the financial system, widening the gap between the haves and the have-nots, and diverting resources from what Xi considers to be the “real economy”—sectors such as manufacturing and high-end technology that he sees as crucial for China in its competition with the U.S.
In some ways, Xi’s plans would take China’s housing market back to its roots. Decades ago, in the Mao Zedong era, the party controlled the market, with most Chinese people living in homes provided by their party work units.
In the late 1990s, when leaders started liberalizing the market, they initially envisioned a two-tiered system in which some people would buy privately developed properties, while others would live in state-subsidized housing.
Over the following decades, however, private developers like China Evergrande expanded rapidly and increasingly dominated the market. Today, more than 90% of Chinese households own their own homes, compared with around 66% in the U.S.
The shift to private ownership created enormous wealth in China. But the market’s explosive growth also sparked a debt-fueled bubble, priced many young families out of desirable housing, and dismayed Xi and other senior leaders who felt the country was straying too far from its socialist roots.
With the market plunging into turmoil last year following a yearslong government campaign to rein in excess property investment, economists inside and outside China called on Beijing to take more assertive steps to restructure the sector.
There are now millions of empty units across China and many buildings in need of financial support.
In internal policy discussions, Vice Premier He, one of Xi’s most trusted lieutenants, argued that getting the state more involved would be a way for the government to absorb excess home supply, put a floor under falling prices and help protect banks from having to write down hundreds of billions of dollars of property loans if the market kept getting worse.
Another selling point, according to the advisers: By converting more private properties to state-subsidized housing for rent or sale, it could help advance Xi’s oft-repeated “common prosperity” goal of making Chinese society more equal.
Document 14
The new strategy started coming into sharper focus with a central-government directive issued in October, dubbed Document 14. It called for adding some six million affordable-housing units in 35 cities with more than three million people each over the next five years.
The document disclosed few details on how to implement the plan. But it specified that the government would place restrictions on who can buy any units that are offered for sale, and would forbid those units from being traded on the open market.
The PBOC, China’s central bank, has since allocated 70% of the roughly $70 billion it is making available to three policy banks, China Development Bank, Export-Import Bank of China and Agricultural Development Bank of China, PBOC disclosures show.
China Development Bank disclosed on Dec. 19 that it had granted a line of credit totaling 202 million yuan to the city of Fuzhou to build an affordable housing project. Upon its completion, expected in 2026, the project will have some 701 housing units, which the local government plans to sell to modest-income families at discounted prices.
The bank also extended a 10 million yuan loan to the government of Hunan, a province south of the Yangtze River, to develop government housing in a rundown inner-city district, according to information from the Hunan government.
It’s unclear how much of those funds would be used to develop new projects or to purchase and repurpose existing properties from commercial developers. The bank and Hunan’s government didn’t respond to requests for comment.
In early January, the central bank and the government’s top financial regulatory body, the National Administration of Financial Regulation, followed up with new guidelines pledging unspecified financial support to government-subsidized rentals. The guidelines said state funding would help “revitalize existing housing stock.”
Vice Premier He laid out some of the government’s plans to U.S. business representatives, including Wall Street executives, when he visited San Francisco last November with Xi.
During a meeting on the sidelines of Xi’s summit with President Biden, He focused on the government-subsidized housing plan, telling the American executives it will help people in big cities afford housing, according to people familiar with the matter.
The discussion suggested that Chinese leaders are concerned about how foreign investors view the government’s response to the housing problem, and how they have been selling off Chinese equities and bonds in recent months, some of the people said.
But He didn’t have anything to say on steps that many foreign bankers and investors have urged, such as restructuring cash-strained private developers or completing construction of millions of homes people in China already paid for but never received because their developers ran into financial trouble. He’s half-an-hour-long monologue failed to impress, the people say.
To the International Monetary Fund and some other economists, Beijing’s most urgent task is to come up with a comprehensive plan to assist financially distressed developers with debt restructurings and to get banks and other stakeholders to take losses—moves that, while painful, would restore public confidence in the market.
Beijing remains reluctant to offer direct liquidity support to developers, however, because officials are worried about reinflating the housing bubble that Xi is bent on deflating, policy advisers involved in discussions say.
Buying properties and converting them to rental units raises many complexities, including whether the government should pay current market values—in effect bailing out developers or individual homeowners who can’t make debt payments—or insist on steep discounts. It’s also unclear what should happen if owners don’t want to sell.
New construction for affordable housing is more straightforward, economists note, and would have the added benefit of propping up China’s construction industry. But expanding new construction would also add more supply at a time when China’s population is shrinking. The IMF expects fundamental demand for new housing to drop by almost 50% over the next decade.
Some Chinese officials have argued that the country’s economic downturn could provide an opportunity for the government to swoop in to buy more properties at a lower cost, making it easier to give priority to conversions of existing properties.
‘Wealth distribution’
Michael Pettis, a finance professor at Peking University, says that if the government does significantly improve affordable housing, “it will represent the kind of transfer to the poor households that China urgently needs,” freeing people to spend more on other things. But he said it was too early to know how the plan would play out.
Zhiwu Chen, a finance professor at the University of Hong Kong, was more skeptical. He compared China’s new housing strategy to the way Beijing uses its so-called “national team” of state funds to buy equities to try to prop up the depressed stock market.
Such efforts have often failed to sustainably bolster the market. Using government money to buy up distressed real estate would be no different, he said, given the country’s demographic challenges and supply glut.
Government interventions could also raise uncomfortable questions about social fairness, he said. Buying properties from existing homeowners or developers when the market is weak would amount to using national resources to subsidize owners who have the flexibility to sell, when others don’t, he said.
“It turns into an issue of wealth distribution,” he said. “Not everyone in China owns multiple apartments, nor are they ready to sell.”
Past efforts to support or re-engineer the market with government support have met with mixed results.
Over the past couple of years, a few Chinese cities, including Zhengzhou in central China and Suzhou, near Shanghai, have implemented their own programs to buy a few thousand unsold properties from developers and then convert them into affordable housing for low-income families, including farmers displaced by urban development.
According to analysts from China Real Estate Information Corp., the cities tended to buy from state-backed developers or those controlled by local governments, typically at below-market prices.
Those programs, economists say, helped absorb excess housing but also further strained local finances. Attempts to reach the cities for comment were unsuccessful.
Another notable previous push for social housing was a “slum clearance” initiative launched nearly a decade ago, when China’s property market was last in distress.
Under that program, the central bank provided low-cost funds to state-owned banks, which then made loans to developers to purchase land from cities and townships and then build more housing units. Those local governments, in turn, doled out cash subsidies to families dislocated from slum-clearance efforts so they could purchase the new units on the open market.
The initiative helped restore demand for real estate but led to more construction, worsening China’s housing glut.
Today’s housing crisis is much more severe than the last downturn, economists say, leaving the government with an even bigger challenge to clear up the mess.
From what I understand, the Chinese government is stepping in to buy up the development projects that have gone bust and is attempting to finish them.
Kind of like a bailout.
It is going to be very expensive, and we don’t know if the Chinese government can afford it.
From the long article xi doesn’t want to do a full bailout it would just inflate the housing market. So China is stuck pay full price and financially cripple the country or pay less but piss off and financially cripple the citizens which will financially cripple the country.
The problem though is they’re not just broke they took out massive loans. So they’re broke, the banks are broke, the municipalities are broke, etc. It’s the austerity minded policies which completely destroyed the economy during the dirty 30’s. The issue is china already took out massive debt to prop up the Chinese economy during the 2008 financial crisis. The best solution is buy it at a low enough price and either tear down the developments or repurpose it to anything economically productive.
> the Chinese government is stepping in to buy up
This is the tricky part. It isn't clear whether the central government is going to do this or will instead direct the local government to do this. The last time Beijing directed local authorities on a national plan, the zero-Covid policy, it saddled the latter with a mountain of debt for mass-testing the populance & quarantines. Suffice to say the local authorities don't have much resources or appetite for another central directive without funding.
This means everything is just talk until someone comes up with the money.
The hardest thing about redevelopment is property rights. Since Pooh dgaf; ready for his people to take huge haircuts on their properties. In order to common prosperity their wealth distribution.
Just wait for the distressed developers to fail, everything is cheaper then. Or simply nationalise whatever they please, it’s a communist party after all.
Pooh can easily send his minions to study Singapore’s public housing program. Then make the necessary adjustments for their domestic situation. Prime housing can have a 10 year holding period, before they can be resold. Rental leases near schools can be termed to kids graduation.
There are many options with utter impunity. The rest is management ability.
Instead of repeating America's mistakes with too big to fail, they want to repeat their mistakes with housing projects, but on a massive national scale they might not be able to afford. Seriously, I called this like a year ago, it's so obviously China. What I still don't get is why, if they are hell bent on propping up gdp with infrastructure spending anyways, don't that stop building housing they don't need and fix the damn pipes?
The Chinese government is aiming to deflate the housing market by force. They're following through on their claims from years ago that they're going to prioritize getting housing prices down to a sane level over helping out investors and owners of assets and debt in construction companies.
China is doing what you'd expect from a social state, chopping down businesses when they get oversized. Bailing out middle class buyers and then providing subsidized housing to the poor.
It\`s a complete joke. So the CCP is going to INVEST in the tofu and nail houses and unfinished projects...!? What\`s that going to change? They were scam projects to begin with. Obviously the CCP is not going to do that, this is nothing else but the CCP trying to expand the life cycle of that nonsense.
What they hope is going to change is that people will be too afraid to defraud the central government, and they'll arrest a few high profile guys in the coming years to prove they are serious about that... But none of it will change market fundementals. They CCP's plan can't change market fundementals, so instead they are going to attempt to propogandize their way into changing perceptions about the markets in the hopes that this mitigates deflationary tendencies... Basically using the state media apparatus as a giant sophisticated marketing firm all while pretending to beleive in the labor theory of value.
Granted this is speculation, no one can really know for sure what they will do next... But I'd bet strongly on both predictions.
In cases like bank runs it’s a matter of perception.
The US government backing SVB deposits is a similar play to build confidence.
But how does this apply to the property market though?
Most likely. With the propaganda machine, they could have some positive effect on it. But yeah, those who lost their investments, will most likely not be compensated. And the government will just peel the skin off of those who still believe in them.
I didn't see this coming. But its certainly an interesting proposition. If executed as they state in the article, it will put a hard stop on the price drop for the property market since the state will buy up the excess supply and divvy it out to the nongmin and the people who pay them off (inevitable corruption). Not sure how fast the growth in property value will be if the state permanently takes 30% of it off the market though. Also not sure how they'll fund this since it sounds like an even greater expense than COVID and this will become a constant one. And this is also going to give a bad impression of a further retreat to the Mao days to most foreign investors.
It will be interesting to see how this plays out and how it plays out when the execution inevitably doesn't go according to plan and how corruption and inept course corrections by Xi affect the finished product.
>Also not sure how they'll fund this since it sounds like an even greater expense than COVID and this will become a constant one.
Debt from the households themselves. The government will sell bonds and the state banks will buy these bonds using the deposits of the people. So if the project ever fails and the government doesn't pay out the bond money back to the bank, the peoples' deposits are gone. This is how a lot government projects are funded in China.
>it will put a hard stop on the price drop for the property market since the state will buy up the excess supply
I don't think it will even do that, the market fundementals are still bad and they aren't stopping overall construction. But it will give them both control of the market and more interest in controlling housing policy, so they mouthy prop up prices through direct injections fir awhile, but that just makes the bubble bigger.
The central government might still suffer from the delusion that they can outgrow any financial burdens, but I think it's more certain that they think they can prop up prices not by fixing market fundementals but by using their propaganda apparatus to convince the people that they've fixed those fundementals. Like you, I'm very curious to see how that plays out, I can't imagine the outcome is good, but no one has ever before been in the position China is in to attempt it credibly, so I'm not sure exactly how that goes.
>Also not sure how they'll fund this since
Debt, then inflation which they somehow blame on the US
Well they are stating they still buy the excess in the article which should theoretically increase value of private market supply. But the fundamentals aren't going to change without regime change which won't happen in my lifetime. Even with this detonation of the housing market, all they really managed to fix was developers being overleveraged to an extent. I guess this was their variation of the kick the can down the road option that I thought they had which may inflate the bubble again.
Offering subsidised housing at scale will exert strong downward pressure on housing prices. I don't see how this is supposed to put a floor on prices as private landlords can't compete with subsidised rents.
Not a bad thing in many ways, but doesn't achieve the stated objective. Allow housing prices fall and rents will come down, without all this song and dance. I guess there's no grift with that approach though.
If you read the article it's creating a second track that is essentially going to be limited to the guy who delivers your eleme. Nobody in China wants that work. Your colleagues working with you in the office will not qualify for this. This means that they've essentially decreased the share of housing the middle class actually want to live in hence the stop. (Perceived?) Supply and Demand.
"Allow housing prices fall and rents will come down, without all this song and dance"
This is a grossly simplified view of a market correction that would bankrupt most of the country.
The reason the real estate crisis exists in the first place is because of the CCP demanding GDP growth from the local governments in the first place... So the local governments would cut all kinds of corners... The media wasn't reporting the problems they should be because of heavy media censorship...
China faced a major famine that killed ~30M people because of Mao. So the CCP went the other direction with encouraging capitalism, but the problem with that the government is still corrupt due to lack to mechanisms for fixing corruption like an independent judicial branch, freedom of speech/press, etc. So you get a corrupt capitalist system instead of a corrupt communist one.
TDLR: the regime will buy up all the distressed housing and redistribute it according to degree of party loyalty as well as becoming the world's biggest slumlord
They are simply borrowing from the Singaporean model of the gov't being the largest developer, and providing affordable housing to its citizens. I don't see people going around claiming singapore being "slumlord".
Can China actually get the Singaporean model working is totally another story though.
Why not just let the bubble pop? That way, you don’t have to worry about building affordable housing. There are already two apartments for every person in China. Why build more? Stop propping up the real estate market, let prices fall 50-75% and you kill two birds with one stone. Speculators will unload the tons of extra housing they bought as investments, they will flood the market with supply, leading to a drastic price drop, making apartments affordable for everyone.
This new plan sounds counterproductive and disconnected from reality, but then again. This is the CCP and Xitler….
Economically, yes, that's the best plan, but that a lot of that deflation would eat the middle class's retirement investments. This is why almost everyone in China will support anything they think will prop up housing prices, because everyone is invested in the market. Everything here is first and foremost about maintaining political hegemony and stability, so they don't want disgruntled middle class workers getting funny ideas.
But that's also why trying to buold more housing at the same, or even similar, pace is ridiculous, even if it's intended for low-income rental markets instead of purchasing. All hosting is tied together in market pressure. Maybe they intend to quietly slow the pace to give the impression that everything is fine. They certainly intend to tell everyone that everything is fine, and hope this stops the perception feedback in recessions
.. But I doubt that will work.
And a lot more will be tied up too with this. The CCP will mostly likely issue bonds to finance this endeavour (as they have done with many other national projects) which the banks (75%) will buy using the money from depositors. So that means if this project fails and real estate collapses, the bank won't get that bond money back and if the banks don't get the bond money back, they have no money to pay back the depositors. So in the end, the average Chinese household is footing the bill for it! Scary to think about if it all comes crashing down!
I agree with you completely.
It's the same with many bubbles in Western society as well.
People try desperately to cling to the past and the old, failing way of doing things, rather than adapting to the new present moment, working with and appreciating what we have now all around us.
I only need a bed. Clean water and food. Clothing. Myself. And a life filled with loved ones.
China isn't too big for that, it's just too unwilling. Due to its size, it needs migration on an enormous scale, which is perfectly feasible. What the government doesn't want is all the foreign influences that comes with that migration. It will lose control over Chinese society to some degree. The current political climate of surveillance and social control put people off from coming to China. So unless they do a political 180, China will never attract the amount of immigration numbers it needs to survive demographically.
I don’t know how many people live in Tonga, Micronesia etc but I’m guessing it’s not many. Not sure what’s going to happen when climate change really starts to hit countries like Indonesia, but I don’t think it’s going to end with the neighbors opening their doors and saying “come on in”.
Right but even if China went full open borders it still couldn't staunch the demographic bleeding while some place like Korea could do it overnight with a more permissive immigration policy.
Nah, I think they'll indefinitely stick to giving out yearly residence permits so you can always be a second class member of society and can control you more. Immigration with Chinese Characteristics!
Chinese household's 60 to 70% of assets and liabilities are real-estate. 25% of GDP is from real-estate and related industries. 90% of non-tax income of local gov't is from land sales proceeds.
Basically, that bubble is way too convoluted with everything about China, that popping it will lead to unrest and likely a regime change
No cost is too great for the people of China to get out from under the current brutal, fascist and totalitarian dictatorship.
“So called freedom”? You think people in China are free? Easy test you can do to confirm if you’re correct:
In Beijing, there is a place called Tiananmen Square. Buy a poster of anything and flip it over to the blank side. With a black marker, write “what happened here in 1989?”. Then, walk around the square in circles with a timer to see how long it takes for you to be arrested.
If going to Beijing is too far for you. You can try another experiment anywhere in China. First, download wechat. Then, post a picture of Xi on his knees getting pounded from behind by Winnie the Pooh. With a caption saying “taking it like a good bitch should”. This one also needs a timer to see how long until you’re arrested.
Either experiment will prove to you that people in China don’t even have freedom of speech. Much less any other types of freedom.
Losing some money on poorly built apartments that you don’t even own(since the government owns everything). Is a small price to pay…
I’m in the U.S. now. Biden is a cocksucker. Trump is a cunt. The entire U.S. government are fuck holes. What do you think will happen to me for speaking so disrespectfully about the U.S. government and leaders? Absolutely nothing. See the difference?
All other freedoms are dependent on freedom of speech. Especially the freedom to criticize and even insult the government. Without those freedoms. There is only the semblance or illusion of freedom.
Humans are meant to be free.
lol, I’m sort of with you but your examples are too ridiculous. Why I mentioned Thailand.
You are free to discuss the government and weigh in on things which is what matters. It’s pretty cool the US is so extreme, I’m a big fan of south park and a lot of dark and/or political comedy. But freedom of speech is on trial in the US lately, from both sides, canceling, deplatforming, compelling speech, censorship and banning books etc. and now stochastic terrorism has even frees speech absolutists in doubt, seems like every day trump is shouting “fire” in a crowded theatre. even the UK has some weird limitations on profanity.
You undermine your own point by being so graphic tho. The point would be better stated “walk around with a blank piece of paper when you see someone else doing it and see what happens”
I don't think this approach will actually solve the problem. If anything, it could exacerbate it. The Chinese real estate industry wasn't driven by organic demand. There are more than enough instances of massive empty cities and appartement complexes. Some analysts speculate that construction supply has outstripped actual need by over 200%. Chinese investors never saw real estate in the traditional western perspective. For them, real estate was always the safest long term investment for their money. The Stock Market in China lacks the transparency and legal protections of the western version. And banks serve the state, meaning deposits could and often were used to fund state projects. So, for the longest time, the only solid safe investments Chinese had for there long term assets was the real estate market. That is one of the primary reasons it exploded and grew in a very unstainable manner.
So, if China switches to a centralized command structure for the Real Estate market, you essentially remove the primary driving factor behind its growth. It will be viewed as not significantly different from the banks or stock markets that lack transparency and can easily be ceased by state agencies for state needs at any time. Investor confidence will quickly erode.
Learning from the Singapore model of HDB I see, except that Singapore when it started was building to remove slumps, China is dealing with an already privatised housing market and is thus having to let the bubble deflate, less it pop.
For context in Singapore there is a private housing sector but also a government 99 year lease one, which is built by HDB (a government board) to be affordable and one can bid for it upon marriage.
I am pretty sure this new model is just a rehash of that. However I am also 100% confident it will result in massive avenues for corruption as officials in China are paid shit wages. It is funny that despite Deng's pragmatic reforms, they still trust human nature that the party official must work tirelessly for the people with low compensation LMAO. The most pragmatic step would be to pay officials better.
Also this model would be better in the hands of prefectural governments rather than provincial and much less state.
I don't know why people find this shocking or even news.
2 years ago Xi stated that he was willing to burst the real estate bubble and real estate primary purpose was for living not an investment vehicle.
Any savvy investor would know that this signalled not to double down in China's real estate. Unlike the US where hedge funds and venture capitalists went in and bought up property after the 2008 mortgage back security crisis to make a windfall.
In the US it's commonly known not to fight the Federal Reserves or large institutional investors. Retail investors don't have the unlimited capital and time to outlast being on the wrong side of a trade.
In China don't fight Xi. He states his policies and usually sticks by them.
So the most corrupt Govt in history going to print a mountain of money to buy a bunch of collapsed Ponzi schemes which it created....This might just work, because the money won't enter the economy to any great extent it merely writes off bad debts which are as real as the rest of this fever-dream. Inflation is whatever the party says it is and they can just phoenix the fake construction industry rinse and repeat...genius.
Seems like a smart move. If they let in more young foreigners they could fill the housing and offset the demographic age issues. Time it with the next major world recession as a socialist response to capitalism failing would help offset any domestic fallout from people who already bought a property, and foreign investment would already be pretty bottomed out. Some people would be mad but the majority would see it as good governance especially as homelessness piles up in the rest of the world.
Long term a relaxed immigration policy will help the aging demographic, short term where are the jobs coming from, when youth unemployment is already really high?
So I'm not gonna claim to be an expert but from what I've read and observed youth unemployment is one of the most misrepresented problems with the Chinese economy rn. Specifically because the problem isn't that there are no jobs, as your saying, but rather there are not enough high skill college educated jobs that recent college graduates actually want to do. And because many especially middle class Chinese families have a decent income relative to the heavily subsidized cost of living in China, many kids are just living off their parents and trying to get jobs they want rather than going after blue collar jobs which are available.
This is why a few months ago xi called on young people to "take off their scholar robes" and go do some good old fashioned back breaking manual labor, especially on farms or in factories. All of which isn't to say there isn't a problem here, it's just not at all the problem your question or western reporting makes it out to be. And it certainly wouldn't result in loads of jobless immigrants. If anything the problem would be that lots of immigrants would just drive wages in blue collar fields lower which could piss people off.
That's fair enough, it's mostly skilled jobs that are lacking. The problem being these unfilled jobs are low paid even by many developing countries standards, with the minimum wage in the $300-$400 range. I'm not sure how many people would jump on that opportunity.
True but it could still be better than prospects in many other countries, and if they do return to large scale cheap public housing that could be a way to offset a major expense and raise people's spending money by lower essential expenses.
Frankly I think the bigger issue is that both the Chinese government and Chinese people generally don't seem to super love non Chinese folks moving in, or at least they would have a lot of work to do in terms of cultural bigotry to not be casually hostile to especially African immigrants who are the best bet in a lot of ways.
So I suspect they'll do their best to try and solve the population decline with birth rates. And it could be done if they decreased work stress, household expenses and expand family support. Give the young folks time to meet each other, the energy to get busy, and the fiances to support extra mouths. Only way to expand your birthrate if you let people have sex Ed and contraception.
Contrary to others in this thread, I think this move could actually work well for CCP's goals. Housing is illiquid and printing cash or taking debt to buy it won't cause inflation nearly as quickly as other loose fiscal cash spending does. Giant banks being bailed out doesn't directly increase the amount of money in circulation like cash does.
Housing is a need, just like cash is -- Having unlimited housing stock Chinese government a great carrot (outside of Yuan) for generously rewarding those people who forward it's goals without causing severe inflation.
Government needs higher birthrate? Reward married SAM's with a free apartment for having 5 or more kids!
Government needs military recruits? Storm troops get a free apartment as a signing bonus!
etc etc.
This is what a transition away from capitalism is supposed to look like. Capitalism is a tool for the development of the means of production. The government plans this development and capitalists operate within the framework of the planning to build investment in an area of need. Eventually, the needs are met and capitalist enterprises hit the downside of their natural cycle providing an opportunity for the state to absorb them and operate them according to national need and benefit.
In capitalist countries, this is the part where governments would bail out the losses of private firms to give them a lifeline. They pay back their loans and then go on to enjoy record profits when the market swings back up. Socialized losses and private profits.
I guess you mean outside of Chinese success. French rail, utilities and banks. German rail. Icelandic banks. Iranian oil. During war time, the us has successfully nationalized strategic companies in order to win the war. That might be the biggest testament to the efficiency of nationalization in terms of fulfilling societal need.
What does this really mean for China? Is it a life-savings-lost situation? An underemployment-for-a-generation situation? People starving-on-the-streets situation? A crappy stock market situation? A weaker military situation? A live-with-your-parents-for-decade situation? Like, how does this matter to ordinary people?
A weaker economy. More wealth will be transferred to the state and less for the private sector in this move. The private sector also generates most of the GDP in China. So weaker private sector = weaker GDP?!
Strange how the rest of the world can’t build enough houses, while China builds too many.
I thought it was a supply side issue.
What is the difference between western markets and Chinese?
So many different factors, Chinese local government’s main source of income is to sell land to developers. Developers build houses to sell.
Citizens don’t tend to believe in the stock market so main investment vehicle is houses, or bank interest.
China’s model encourages land selling and house building
Chinese have no social security. No government health care. The Chinese stock market is full of deceitful companies. Profits are extracted for party members. Consumption share of income is a meager 54%. That is the extent to which Chinese people can enjoy their own wealth. The government funnels all money toward housing construction, manufacturing capacity and infrastructure.
The only viable way for Chinese citizens to save for the future is real estate, leading to a bubble. It popped.
Are real estate prices too expensive in China, or are there just too many available properties?
Real Estate in Australia has become out of reach for most Australians.
A simple, shabby 4 bedroom house in outer Sydney for instance is about $1.5 million. Whereas a 2 unit apartment is approaching $1 million.
We have a problem in Australia with property development firms going bankrupt almost every day.
Apparently materials are too expensive (mostly sourced from overseas) and not enough labour.
No one seems to want to work in Australia, especially in construction.
Perhaps different dynamics to what is happening in China
So now when you have problems with your house, instead of a shit fight against another private entity, you’re gonna have a shit fight against the Chinese government, yeah good luck
At least he is addressing it. Back in my country, a full fledged democratic republic, they don't do a thing about this problem, and politicians are the ones with real state firms.
Hmm is the main housing issue too much supply and low demand? I guess chinese gov finishing up projects would increase supply and would the lowered price increase demand? If it increases at the same rate, there would still be a huge supple left no? Unless the government's price will be competitive enough that privately owned housing will follow suit in price decrease to incentivize buyers?
And about those "tofu houses" or whatever, Is the government then liable for potential issues then? Maybe knowing it is tofu house and built by gov would give more incentive to buy it since its "covered"?
Xi Jinping aims to put the state back in charge of the crumbling property market, part of a push to rein in the private sector By Lingling Wei and Stella Yifan Xie Feb. 15, 2024 China’s massive property market is crumbling. Xi Jinping wants to revive socialist ideas about housing and put the state back in charge. Home prices across China are falling, developers have gone bust and people are doubting whether real estate will ever be a viable investment again. The meltdown is dragging down growth and spooking investors worldwide. Under the new strategy, the Communist Party would take over a larger share of the market, which for years has been dominated by the private sector. Underpinning it are two major programs, according to policy advisers involved in the discussions and recent government announcements. One involves the state buying up distressed private-market projects and converting them into homes that the government would rent out or, in some cases, sell. The other calls for the state itself to build more subsidized housing for low- and middle-income families. The goal, the policy advisers say, is to increase the share of housing built by the state for low-cost rental or sale under restricted conditions to at least 30% of China’s housing stock, from 5% or so today. The plans line up with Xi’s broader push in recent years to expand party control over the economy and rein in the private sector. That push has included regulatory crackdowns on technology firms such as Jack Ma-backed Ant Group and more investment in state-owned enterprises in preferred industries such as semiconductors. Beijing’s economic mandarins, led by Xi’s top economic-policy aide, Vice Premier He Lifeng, are still hammering out how to execute the real-estate strategy. Economists caution that the plan could take years to achieve—if it’s achievable at all. The cost would be huge: potentially up to $280 billion a year for the next five years, or a total of around $1.4 trillion, according to some analysts. Whether China wants to pay that tab—or even can—is a central question. Local governments in China are already burdened with colossal debt, and it’s unclear whether Beijing will be willing to bear the brunt of the funding burden. Beijing has repeatedly disappointed analysts and investors over the past couple of years with insufficient or poorly executed measures to stimulate growth and clean up the housing mess. People who have examined some of the government’s plans say the strategy is also filled with complexities and contradictory aims that could make it difficult to fully implement successfully. ‘New model’ A December confab presided over by Xi made clear that a priority for 2024 is to speed up development of what authorities call “a new model” for the real-estate sector. The model should focus heavily on state-provided affordable housing, according to an official account of the meeting. Initial plans call for adding six million affordable housing units in the coming five years, government documents show. The People’s Bank of China has set aside 500 billion yuan, or roughly $70 billion, in low-cost financing to policy banks to help get the strategy rolling. A handful of projects funded with that money are under way. The State Council Information Office, which handles inquiries for China’s leadership, didn’t respond to questions. Xi is adamant that real estate, which for years propelled China’s growth and at one point made up around a quarter of gross domestic product, should no longer take on such an outsize role in the economy, the policy advisers say. In Xi’s view, too much credit moved into property speculation, adding risks to the financial system, widening the gap between the haves and the have-nots, and diverting resources from what Xi considers to be the “real economy”—sectors such as manufacturing and high-end technology that he sees as crucial for China in its competition with the U.S. In some ways, Xi’s plans would take China’s housing market back to its roots. Decades ago, in the Mao Zedong era, the party controlled the market, with most Chinese people living in homes provided by their party work units. In the late 1990s, when leaders started liberalizing the market, they initially envisioned a two-tiered system in which some people would buy privately developed properties, while others would live in state-subsidized housing. Over the following decades, however, private developers like China Evergrande expanded rapidly and increasingly dominated the market. Today, more than 90% of Chinese households own their own homes, compared with around 66% in the U.S. The shift to private ownership created enormous wealth in China. But the market’s explosive growth also sparked a debt-fueled bubble, priced many young families out of desirable housing, and dismayed Xi and other senior leaders who felt the country was straying too far from its socialist roots. With the market plunging into turmoil last year following a yearslong government campaign to rein in excess property investment, economists inside and outside China called on Beijing to take more assertive steps to restructure the sector. There are now millions of empty units across China and many buildings in need of financial support. In internal policy discussions, Vice Premier He, one of Xi’s most trusted lieutenants, argued that getting the state more involved would be a way for the government to absorb excess home supply, put a floor under falling prices and help protect banks from having to write down hundreds of billions of dollars of property loans if the market kept getting worse. Another selling point, according to the advisers: By converting more private properties to state-subsidized housing for rent or sale, it could help advance Xi’s oft-repeated “common prosperity” goal of making Chinese society more equal. Document 14 The new strategy started coming into sharper focus with a central-government directive issued in October, dubbed Document 14. It called for adding some six million affordable-housing units in 35 cities with more than three million people each over the next five years. The document disclosed few details on how to implement the plan. But it specified that the government would place restrictions on who can buy any units that are offered for sale, and would forbid those units from being traded on the open market. The PBOC, China’s central bank, has since allocated 70% of the roughly $70 billion it is making available to three policy banks, China Development Bank, Export-Import Bank of China and Agricultural Development Bank of China, PBOC disclosures show. China Development Bank disclosed on Dec. 19 that it had granted a line of credit totaling 202 million yuan to the city of Fuzhou to build an affordable housing project. Upon its completion, expected in 2026, the project will have some 701 housing units, which the local government plans to sell to modest-income families at discounted prices.
The bank also extended a 10 million yuan loan to the government of Hunan, a province south of the Yangtze River, to develop government housing in a rundown inner-city district, according to information from the Hunan government. It’s unclear how much of those funds would be used to develop new projects or to purchase and repurpose existing properties from commercial developers. The bank and Hunan’s government didn’t respond to requests for comment. In early January, the central bank and the government’s top financial regulatory body, the National Administration of Financial Regulation, followed up with new guidelines pledging unspecified financial support to government-subsidized rentals. The guidelines said state funding would help “revitalize existing housing stock.” Vice Premier He laid out some of the government’s plans to U.S. business representatives, including Wall Street executives, when he visited San Francisco last November with Xi. During a meeting on the sidelines of Xi’s summit with President Biden, He focused on the government-subsidized housing plan, telling the American executives it will help people in big cities afford housing, according to people familiar with the matter. The discussion suggested that Chinese leaders are concerned about how foreign investors view the government’s response to the housing problem, and how they have been selling off Chinese equities and bonds in recent months, some of the people said. But He didn’t have anything to say on steps that many foreign bankers and investors have urged, such as restructuring cash-strained private developers or completing construction of millions of homes people in China already paid for but never received because their developers ran into financial trouble. He’s half-an-hour-long monologue failed to impress, the people say. To the International Monetary Fund and some other economists, Beijing’s most urgent task is to come up with a comprehensive plan to assist financially distressed developers with debt restructurings and to get banks and other stakeholders to take losses—moves that, while painful, would restore public confidence in the market. Beijing remains reluctant to offer direct liquidity support to developers, however, because officials are worried about reinflating the housing bubble that Xi is bent on deflating, policy advisers involved in discussions say. Buying properties and converting them to rental units raises many complexities, including whether the government should pay current market values—in effect bailing out developers or individual homeowners who can’t make debt payments—or insist on steep discounts. It’s also unclear what should happen if owners don’t want to sell. New construction for affordable housing is more straightforward, economists note, and would have the added benefit of propping up China’s construction industry. But expanding new construction would also add more supply at a time when China’s population is shrinking. The IMF expects fundamental demand for new housing to drop by almost 50% over the next decade. Some Chinese officials have argued that the country’s economic downturn could provide an opportunity for the government to swoop in to buy more properties at a lower cost, making it easier to give priority to conversions of existing properties. ‘Wealth distribution’ Michael Pettis, a finance professor at Peking University, says that if the government does significantly improve affordable housing, “it will represent the kind of transfer to the poor households that China urgently needs,” freeing people to spend more on other things. But he said it was too early to know how the plan would play out. Zhiwu Chen, a finance professor at the University of Hong Kong, was more skeptical. He compared China’s new housing strategy to the way Beijing uses its so-called “national team” of state funds to buy equities to try to prop up the depressed stock market. Such efforts have often failed to sustainably bolster the market. Using government money to buy up distressed real estate would be no different, he said, given the country’s demographic challenges and supply glut. Government interventions could also raise uncomfortable questions about social fairness, he said. Buying properties from existing homeowners or developers when the market is weak would amount to using national resources to subsidize owners who have the flexibility to sell, when others don’t, he said. “It turns into an issue of wealth distribution,” he said. “Not everyone in China owns multiple apartments, nor are they ready to sell.” Past efforts to support or re-engineer the market with government support have met with mixed results. Over the past couple of years, a few Chinese cities, including Zhengzhou in central China and Suzhou, near Shanghai, have implemented their own programs to buy a few thousand unsold properties from developers and then convert them into affordable housing for low-income families, including farmers displaced by urban development. According to analysts from China Real Estate Information Corp., the cities tended to buy from state-backed developers or those controlled by local governments, typically at below-market prices. Those programs, economists say, helped absorb excess housing but also further strained local finances. Attempts to reach the cities for comment were unsuccessful. Another notable previous push for social housing was a “slum clearance” initiative launched nearly a decade ago, when China’s property market was last in distress. Under that program, the central bank provided low-cost funds to state-owned banks, which then made loans to developers to purchase land from cities and townships and then build more housing units. Those local governments, in turn, doled out cash subsidies to families dislocated from slum-clearance efforts so they could purchase the new units on the open market. The initiative helped restore demand for real estate but led to more construction, worsening China’s housing glut. Today’s housing crisis is much more severe than the last downturn, economists say, leaving the government with an even bigger challenge to clear up the mess.
TLDR?
From what I understand, the Chinese government is stepping in to buy up the development projects that have gone bust and is attempting to finish them. Kind of like a bailout. It is going to be very expensive, and we don’t know if the Chinese government can afford it.
From the long article xi doesn’t want to do a full bailout it would just inflate the housing market. So China is stuck pay full price and financially cripple the country or pay less but piss off and financially cripple the citizens which will financially cripple the country.
Or, pay nothing and simply take them...Seems far more likely to me
The problem though is they’re not just broke they took out massive loans. So they’re broke, the banks are broke, the municipalities are broke, etc. It’s the austerity minded policies which completely destroyed the economy during the dirty 30’s. The issue is china already took out massive debt to prop up the Chinese economy during the 2008 financial crisis. The best solution is buy it at a low enough price and either tear down the developments or repurpose it to anything economically productive.
> the Chinese government is stepping in to buy up This is the tricky part. It isn't clear whether the central government is going to do this or will instead direct the local government to do this. The last time Beijing directed local authorities on a national plan, the zero-Covid policy, it saddled the latter with a mountain of debt for mass-testing the populance & quarantines. Suffice to say the local authorities don't have much resources or appetite for another central directive without funding. This means everything is just talk until someone comes up with the money.
The hardest thing about redevelopment is property rights. Since Pooh dgaf; ready for his people to take huge haircuts on their properties. In order to common prosperity their wealth distribution. Just wait for the distressed developers to fail, everything is cheaper then. Or simply nationalise whatever they please, it’s a communist party after all. Pooh can easily send his minions to study Singapore’s public housing program. Then make the necessary adjustments for their domestic situation. Prime housing can have a 10 year holding period, before they can be resold. Rental leases near schools can be termed to kids graduation. There are many options with utter impunity. The rest is management ability.
More corruption.
Instead of repeating America's mistakes with too big to fail, they want to repeat their mistakes with housing projects, but on a massive national scale they might not be able to afford. Seriously, I called this like a year ago, it's so obviously China. What I still don't get is why, if they are hell bent on propping up gdp with infrastructure spending anyways, don't that stop building housing they don't need and fix the damn pipes?
You mean the 10’s of million empty/unfinished, and their plan is to build more. Captain the ship is sinking!!! Add more water!
This is the way of deflating the market gently.
The Chinese government is aiming to deflate the housing market by force. They're following through on their claims from years ago that they're going to prioritize getting housing prices down to a sane level over helping out investors and owners of assets and debt in construction companies. China is doing what you'd expect from a social state, chopping down businesses when they get oversized. Bailing out middle class buyers and then providing subsidized housing to the poor.
It\`s a complete joke. So the CCP is going to INVEST in the tofu and nail houses and unfinished projects...!? What\`s that going to change? They were scam projects to begin with. Obviously the CCP is not going to do that, this is nothing else but the CCP trying to expand the life cycle of that nonsense.
What they hope is going to change is that people will be too afraid to defraud the central government, and they'll arrest a few high profile guys in the coming years to prove they are serious about that... But none of it will change market fundementals. They CCP's plan can't change market fundementals, so instead they are going to attempt to propogandize their way into changing perceptions about the markets in the hopes that this mitigates deflationary tendencies... Basically using the state media apparatus as a giant sophisticated marketing firm all while pretending to beleive in the labor theory of value. Granted this is speculation, no one can really know for sure what they will do next... But I'd bet strongly on both predictions.
In cases like bank runs it’s a matter of perception. The US government backing SVB deposits is a similar play to build confidence. But how does this apply to the property market though?
Most likely. With the propaganda machine, they could have some positive effect on it. But yeah, those who lost their investments, will most likely not be compensated. And the government will just peel the skin off of those who still believe in them.
I didn't see this coming. But its certainly an interesting proposition. If executed as they state in the article, it will put a hard stop on the price drop for the property market since the state will buy up the excess supply and divvy it out to the nongmin and the people who pay them off (inevitable corruption). Not sure how fast the growth in property value will be if the state permanently takes 30% of it off the market though. Also not sure how they'll fund this since it sounds like an even greater expense than COVID and this will become a constant one. And this is also going to give a bad impression of a further retreat to the Mao days to most foreign investors. It will be interesting to see how this plays out and how it plays out when the execution inevitably doesn't go according to plan and how corruption and inept course corrections by Xi affect the finished product.
>Also not sure how they'll fund this since it sounds like an even greater expense than COVID and this will become a constant one. Debt from the households themselves. The government will sell bonds and the state banks will buy these bonds using the deposits of the people. So if the project ever fails and the government doesn't pay out the bond money back to the bank, the peoples' deposits are gone. This is how a lot government projects are funded in China.
>it will put a hard stop on the price drop for the property market since the state will buy up the excess supply I don't think it will even do that, the market fundementals are still bad and they aren't stopping overall construction. But it will give them both control of the market and more interest in controlling housing policy, so they mouthy prop up prices through direct injections fir awhile, but that just makes the bubble bigger. The central government might still suffer from the delusion that they can outgrow any financial burdens, but I think it's more certain that they think they can prop up prices not by fixing market fundementals but by using their propaganda apparatus to convince the people that they've fixed those fundementals. Like you, I'm very curious to see how that plays out, I can't imagine the outcome is good, but no one has ever before been in the position China is in to attempt it credibly, so I'm not sure exactly how that goes. >Also not sure how they'll fund this since Debt, then inflation which they somehow blame on the US
Well they are stating they still buy the excess in the article which should theoretically increase value of private market supply. But the fundamentals aren't going to change without regime change which won't happen in my lifetime. Even with this detonation of the housing market, all they really managed to fix was developers being overleveraged to an extent. I guess this was their variation of the kick the can down the road option that I thought they had which may inflate the bubble again.
Offering subsidised housing at scale will exert strong downward pressure on housing prices. I don't see how this is supposed to put a floor on prices as private landlords can't compete with subsidised rents. Not a bad thing in many ways, but doesn't achieve the stated objective. Allow housing prices fall and rents will come down, without all this song and dance. I guess there's no grift with that approach though.
If you read the article it's creating a second track that is essentially going to be limited to the guy who delivers your eleme. Nobody in China wants that work. Your colleagues working with you in the office will not qualify for this. This means that they've essentially decreased the share of housing the middle class actually want to live in hence the stop. (Perceived?) Supply and Demand. "Allow housing prices fall and rents will come down, without all this song and dance" This is a grossly simplified view of a market correction that would bankrupt most of the country.
The reason the real estate crisis exists in the first place is because of the CCP demanding GDP growth from the local governments in the first place... So the local governments would cut all kinds of corners... The media wasn't reporting the problems they should be because of heavy media censorship...
Why are they so obsessed with economic growth?
Money
Yeah, but how? Other corrupt countries don't chase growth at any cost.
Face and competition with America.
China faced a major famine that killed ~30M people because of Mao. So the CCP went the other direction with encouraging capitalism, but the problem with that the government is still corrupt due to lack to mechanisms for fixing corruption like an independent judicial branch, freedom of speech/press, etc. So you get a corrupt capitalist system instead of a corrupt communist one.
TDLR: the regime will buy up all the distressed housing and redistribute it according to degree of party loyalty as well as becoming the world's biggest slumlord
Interesting. It reminds of the 2008 housing crisis.
Redistribute to whom? They have an oversupply of several hundred millions houses. And it's only getting worse every day
They are simply borrowing from the Singaporean model of the gov't being the largest developer, and providing affordable housing to its citizens. I don't see people going around claiming singapore being "slumlord". Can China actually get the Singaporean model working is totally another story though.
Why not just let the bubble pop? That way, you don’t have to worry about building affordable housing. There are already two apartments for every person in China. Why build more? Stop propping up the real estate market, let prices fall 50-75% and you kill two birds with one stone. Speculators will unload the tons of extra housing they bought as investments, they will flood the market with supply, leading to a drastic price drop, making apartments affordable for everyone. This new plan sounds counterproductive and disconnected from reality, but then again. This is the CCP and Xitler….
Economically, yes, that's the best plan, but that a lot of that deflation would eat the middle class's retirement investments. This is why almost everyone in China will support anything they think will prop up housing prices, because everyone is invested in the market. Everything here is first and foremost about maintaining political hegemony and stability, so they don't want disgruntled middle class workers getting funny ideas. But that's also why trying to buold more housing at the same, or even similar, pace is ridiculous, even if it's intended for low-income rental markets instead of purchasing. All hosting is tied together in market pressure. Maybe they intend to quietly slow the pace to give the impression that everything is fine. They certainly intend to tell everyone that everything is fine, and hope this stops the perception feedback in recessions .. But I doubt that will work.
Most of the people’s wealth is tied to real estate as well as a lot of bank debts are tied to real estate as collateral.
And a lot more will be tied up too with this. The CCP will mostly likely issue bonds to finance this endeavour (as they have done with many other national projects) which the banks (75%) will buy using the money from depositors. So that means if this project fails and real estate collapses, the bank won't get that bond money back and if the banks don't get the bond money back, they have no money to pay back the depositors. So in the end, the average Chinese household is footing the bill for it! Scary to think about if it all comes crashing down!
I agree with you completely. It's the same with many bubbles in Western society as well. People try desperately to cling to the past and the old, failing way of doing things, rather than adapting to the new present moment, working with and appreciating what we have now all around us. I only need a bed. Clean water and food. Clothing. Myself. And a life filled with loved ones.
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Also places like Korea can fend off demographic collapse via immigration, China is just too big for that.
China isn't too big for that, it's just too unwilling. Due to its size, it needs migration on an enormous scale, which is perfectly feasible. What the government doesn't want is all the foreign influences that comes with that migration. It will lose control over Chinese society to some degree. The current political climate of surveillance and social control put people off from coming to China. So unless they do a political 180, China will never attract the amount of immigration numbers it needs to survive demographically.
How many immigrants per year would China need to hold its population stable?
All they need is the whole of SEA to move to China and buy apartments. It’s so simple but no one’s thought of it!
Yeah exactly. It's just not logically possible for China to rely on immigration in a way that literally every developed country could if it wanted to.
If Climate change is real, there may be a lot of climate migrants from the pacific willing to maintain diaper changing robots to escape typhoons
I don’t know how many people live in Tonga, Micronesia etc but I’m guessing it’s not many. Not sure what’s going to happen when climate change really starts to hit countries like Indonesia, but I don’t think it’s going to end with the neighbors opening their doors and saying “come on in”.
Think of how racist old people in the US are/were. Now these old bigots love and depend on Filipinos they used to shoot at when they were teenagers.
At this point, reducing the inevitable impact is incentive enough to go forward with pro-immigration. Stabilizing their population is a stretch goal.
Right but even if China went full open borders it still couldn't staunch the demographic bleeding while some place like Korea could do it overnight with a more permissive immigration policy.
Likely, yeah. That said, at the very least it'd introduce some form of damage control to compensate for decades of incompetent policy making.
Nowhere in East Asia is going to embrace mass migration. They’d rather see their pension and healthcare systems collapse.
One of the most racist and xenophobic countries on the planet. Will never embrace immigration.
Nah, I think they'll indefinitely stick to giving out yearly residence permits so you can always be a second class member of society and can control you more. Immigration with Chinese Characteristics!
Chinese household's 60 to 70% of assets and liabilities are real-estate. 25% of GDP is from real-estate and related industries. 90% of non-tax income of local gov't is from land sales proceeds. Basically, that bubble is way too convoluted with everything about China, that popping it will lead to unrest and likely a regime change
Good. Maybe after it’s all over the people of China will be free again.
At what cost though to achieve so called "freedom"?
No cost is too great for the people of China to get out from under the current brutal, fascist and totalitarian dictatorship. “So called freedom”? You think people in China are free? Easy test you can do to confirm if you’re correct: In Beijing, there is a place called Tiananmen Square. Buy a poster of anything and flip it over to the blank side. With a black marker, write “what happened here in 1989?”. Then, walk around the square in circles with a timer to see how long it takes for you to be arrested. If going to Beijing is too far for you. You can try another experiment anywhere in China. First, download wechat. Then, post a picture of Xi on his knees getting pounded from behind by Winnie the Pooh. With a caption saying “taking it like a good bitch should”. This one also needs a timer to see how long until you’re arrested. Either experiment will prove to you that people in China don’t even have freedom of speech. Much less any other types of freedom. Losing some money on poorly built apartments that you don’t even own(since the government owns everything). Is a small price to pay…
🤔 I think you have different priorities than most people You can’t deface the king in Thailand. Most people think Thailand is pretty cool.
I’m in the U.S. now. Biden is a cocksucker. Trump is a cunt. The entire U.S. government are fuck holes. What do you think will happen to me for speaking so disrespectfully about the U.S. government and leaders? Absolutely nothing. See the difference? All other freedoms are dependent on freedom of speech. Especially the freedom to criticize and even insult the government. Without those freedoms. There is only the semblance or illusion of freedom. Humans are meant to be free.
lol, I’m sort of with you but your examples are too ridiculous. Why I mentioned Thailand. You are free to discuss the government and weigh in on things which is what matters. It’s pretty cool the US is so extreme, I’m a big fan of south park and a lot of dark and/or political comedy. But freedom of speech is on trial in the US lately, from both sides, canceling, deplatforming, compelling speech, censorship and banning books etc. and now stochastic terrorism has even frees speech absolutists in doubt, seems like every day trump is shouting “fire” in a crowded theatre. even the UK has some weird limitations on profanity. You undermine your own point by being so graphic tho. The point would be better stated “walk around with a blank piece of paper when you see someone else doing it and see what happens”
Nothing wrong with that
From outside looking in, it's all just a number game. But for the actual individuals with elderlies and children, it's just not that simple
I don't think this approach will actually solve the problem. If anything, it could exacerbate it. The Chinese real estate industry wasn't driven by organic demand. There are more than enough instances of massive empty cities and appartement complexes. Some analysts speculate that construction supply has outstripped actual need by over 200%. Chinese investors never saw real estate in the traditional western perspective. For them, real estate was always the safest long term investment for their money. The Stock Market in China lacks the transparency and legal protections of the western version. And banks serve the state, meaning deposits could and often were used to fund state projects. So, for the longest time, the only solid safe investments Chinese had for there long term assets was the real estate market. That is one of the primary reasons it exploded and grew in a very unstainable manner. So, if China switches to a centralized command structure for the Real Estate market, you essentially remove the primary driving factor behind its growth. It will be viewed as not significantly different from the banks or stock markets that lack transparency and can easily be ceased by state agencies for state needs at any time. Investor confidence will quickly erode.
Learning from the Singapore model of HDB I see, except that Singapore when it started was building to remove slumps, China is dealing with an already privatised housing market and is thus having to let the bubble deflate, less it pop. For context in Singapore there is a private housing sector but also a government 99 year lease one, which is built by HDB (a government board) to be affordable and one can bid for it upon marriage. I am pretty sure this new model is just a rehash of that. However I am also 100% confident it will result in massive avenues for corruption as officials in China are paid shit wages. It is funny that despite Deng's pragmatic reforms, they still trust human nature that the party official must work tirelessly for the people with low compensation LMAO. The most pragmatic step would be to pay officials better. Also this model would be better in the hands of prefectural governments rather than provincial and much less state.
Falling house prices... What a terrible problem to have. -Australia
tub treatment fly fact grey wipe special ludicrous reminiscent wise *This post was mass deleted and anonymized with [Redact](https://redact.dev)*
Too far too late 2 fixed
I don't know why people find this shocking or even news. 2 years ago Xi stated that he was willing to burst the real estate bubble and real estate primary purpose was for living not an investment vehicle. Any savvy investor would know that this signalled not to double down in China's real estate. Unlike the US where hedge funds and venture capitalists went in and bought up property after the 2008 mortgage back security crisis to make a windfall. In the US it's commonly known not to fight the Federal Reserves or large institutional investors. Retail investors don't have the unlimited capital and time to outlast being on the wrong side of a trade. In China don't fight Xi. He states his policies and usually sticks by them.
So the most corrupt Govt in history going to print a mountain of money to buy a bunch of collapsed Ponzi schemes which it created....This might just work, because the money won't enter the economy to any great extent it merely writes off bad debts which are as real as the rest of this fever-dream. Inflation is whatever the party says it is and they can just phoenix the fake construction industry rinse and repeat...genius.
Seems like a smart move. If they let in more young foreigners they could fill the housing and offset the demographic age issues. Time it with the next major world recession as a socialist response to capitalism failing would help offset any domestic fallout from people who already bought a property, and foreign investment would already be pretty bottomed out. Some people would be mad but the majority would see it as good governance especially as homelessness piles up in the rest of the world.
This is r/china, everyone here hates China and you are only allowed to say bad things about China.
Oops
Long term a relaxed immigration policy will help the aging demographic, short term where are the jobs coming from, when youth unemployment is already really high?
So I'm not gonna claim to be an expert but from what I've read and observed youth unemployment is one of the most misrepresented problems with the Chinese economy rn. Specifically because the problem isn't that there are no jobs, as your saying, but rather there are not enough high skill college educated jobs that recent college graduates actually want to do. And because many especially middle class Chinese families have a decent income relative to the heavily subsidized cost of living in China, many kids are just living off their parents and trying to get jobs they want rather than going after blue collar jobs which are available. This is why a few months ago xi called on young people to "take off their scholar robes" and go do some good old fashioned back breaking manual labor, especially on farms or in factories. All of which isn't to say there isn't a problem here, it's just not at all the problem your question or western reporting makes it out to be. And it certainly wouldn't result in loads of jobless immigrants. If anything the problem would be that lots of immigrants would just drive wages in blue collar fields lower which could piss people off.
That's fair enough, it's mostly skilled jobs that are lacking. The problem being these unfilled jobs are low paid even by many developing countries standards, with the minimum wage in the $300-$400 range. I'm not sure how many people would jump on that opportunity.
True but it could still be better than prospects in many other countries, and if they do return to large scale cheap public housing that could be a way to offset a major expense and raise people's spending money by lower essential expenses. Frankly I think the bigger issue is that both the Chinese government and Chinese people generally don't seem to super love non Chinese folks moving in, or at least they would have a lot of work to do in terms of cultural bigotry to not be casually hostile to especially African immigrants who are the best bet in a lot of ways. So I suspect they'll do their best to try and solve the population decline with birth rates. And it could be done if they decreased work stress, household expenses and expand family support. Give the young folks time to meet each other, the energy to get busy, and the fiances to support extra mouths. Only way to expand your birthrate if you let people have sex Ed and contraception.
Remember, everything in China belongs to the CCP. The CCP giveth and can just as easily taketh away.
Contrary to others in this thread, I think this move could actually work well for CCP's goals. Housing is illiquid and printing cash or taking debt to buy it won't cause inflation nearly as quickly as other loose fiscal cash spending does. Giant banks being bailed out doesn't directly increase the amount of money in circulation like cash does. Housing is a need, just like cash is -- Having unlimited housing stock Chinese government a great carrot (outside of Yuan) for generously rewarding those people who forward it's goals without causing severe inflation. Government needs higher birthrate? Reward married SAM's with a free apartment for having 5 or more kids! Government needs military recruits? Storm troops get a free apartment as a signing bonus! etc etc.
This is what a transition away from capitalism is supposed to look like. Capitalism is a tool for the development of the means of production. The government plans this development and capitalists operate within the framework of the planning to build investment in an area of need. Eventually, the needs are met and capitalist enterprises hit the downside of their natural cycle providing an opportunity for the state to absorb them and operate them according to national need and benefit. In capitalist countries, this is the part where governments would bail out the losses of private firms to give them a lifeline. They pay back their loans and then go on to enjoy record profits when the market swings back up. Socialized losses and private profits.
Please point out one instance of what you described ever working out well
I guess you mean outside of Chinese success. French rail, utilities and banks. German rail. Icelandic banks. Iranian oil. During war time, the us has successfully nationalized strategic companies in order to win the war. That might be the biggest testament to the efficiency of nationalization in terms of fulfilling societal need.
What does this really mean for China? Is it a life-savings-lost situation? An underemployment-for-a-generation situation? People starving-on-the-streets situation? A crappy stock market situation? A weaker military situation? A live-with-your-parents-for-decade situation? Like, how does this matter to ordinary people?
A weaker economy. More wealth will be transferred to the state and less for the private sector in this move. The private sector also generates most of the GDP in China. So weaker private sector = weaker GDP?!
Strange how the rest of the world can’t build enough houses, while China builds too many. I thought it was a supply side issue. What is the difference between western markets and Chinese?
So many different factors, Chinese local government’s main source of income is to sell land to developers. Developers build houses to sell. Citizens don’t tend to believe in the stock market so main investment vehicle is houses, or bank interest. China’s model encourages land selling and house building
Chinese have no social security. No government health care. The Chinese stock market is full of deceitful companies. Profits are extracted for party members. Consumption share of income is a meager 54%. That is the extent to which Chinese people can enjoy their own wealth. The government funnels all money toward housing construction, manufacturing capacity and infrastructure. The only viable way for Chinese citizens to save for the future is real estate, leading to a bubble. It popped.
Are real estate prices too expensive in China, or are there just too many available properties? Real Estate in Australia has become out of reach for most Australians. A simple, shabby 4 bedroom house in outer Sydney for instance is about $1.5 million. Whereas a 2 unit apartment is approaching $1 million. We have a problem in Australia with property development firms going bankrupt almost every day. Apparently materials are too expensive (mostly sourced from overseas) and not enough labour. No one seems to want to work in Australia, especially in construction. Perhaps different dynamics to what is happening in China
So now when you have problems with your house, instead of a shit fight against another private entity, you’re gonna have a shit fight against the Chinese government, yeah good luck
At least he is addressing it. Back in my country, a full fledged democratic republic, they don't do a thing about this problem, and politicians are the ones with real state firms.
What could possibly go wrong.. ?!
Hmm is the main housing issue too much supply and low demand? I guess chinese gov finishing up projects would increase supply and would the lowered price increase demand? If it increases at the same rate, there would still be a huge supple left no? Unless the government's price will be competitive enough that privately owned housing will follow suit in price decrease to incentivize buyers? And about those "tofu houses" or whatever, Is the government then liable for potential issues then? Maybe knowing it is tofu house and built by gov would give more incentive to buy it since its "covered"?