Posted on 07/14/2022 1:26:49 PM PDT by Truthsearcher
China’s property crisis is leaping out of the frying pan and into the fire. Homebuyers in 22 cities are refusing to make mortgage payments on unfinished homes, Citigroup reports. The rare protest extends the risk of defaults from offshore developer bonds read more to banks with $6 trillion of mortgages. The fat tail risk of President Xi Jinping’s efforts to deleverage the sector is emerging, and it puts Beijing in a tight spot....
(Excerpt) Read more at reuters.com ...
Now many of the largest developers are going bankrupt and have left many of these building fully pre-sold unfinished, yet the buyers are required by the bank to continue to make mortgage payments (which they took when they pre-bought the apartment). They are revolting and are refusing to pay as a group and this is threatening the stability of the Chinese banks.
Good post - thanks.
The Chinese are revolting?
I thought they were just rude.
I have not kept up with all the changes and free market reforms in China in recent years.
I didn’t realize there was so much private ownership of housing allowed in China. Under communism theoretically there is no private ownership
This is an easy problem for the ChiComms to solve. Just shoot a couple of defaulters. The rest will pay up ASAP.
[shrug] That’s risk of committing to pay for something before it exists. Akin to our “cancel student loans!” protests.
_Goodfellas_ comes to mind: “F U - pay me!” segment https://www.youtube.com/watch?v=3XGAmPRxV48
Not to worry, the Biden Regime will send money to China.
Wanna bet?
After all, China has sent turdloads of money to the Bidens - and payback will be demanded.
That family makes Joe Kennedy’s brood of felons look like CNN amateurs.
They don’t really own it. They have a long term lease (typically 70 years)
The CCP started to put in more Free Market reforms in the late 70s, these reforms are what has pushed the country’s economic surge over the last 4 decades.
Problem is the current leader Xi had his formative years during Mao’s cultural revolution and seems hell bent on returning China to those days, his policies has caused China’s economy to be on the verge of imploding.
They all bought speculatively.
Nobody may have the money to pay up, no matter the penalty for failing to pay.
Does seem China has, like Russian Mensheviks, discovered that capitalism is required to generate enough surplus for communism to have something to redistribute.
Bad merging of the two results in China’s infamous “ghost cities”, entire urban areas built for reasons, which remain unoccupied. Sounds like they’re suffering the next stage of this, where builders get paid early for units - and having been paid, have little incentive to continue while someone else (mortgage lender) gets stuck with a loan for something which doesn’t exist and the borrower doesn’t want to pay for.
That won’t solve the problem. Their real estate market is close to collapsing already, if they did this who would ever sign another mortgage, knowing if you default they kill you?
That bursting of that real estate bubble would blow up their entire financial system.
Neah. The Chicoms will crash their Social Credit to the point that they can’t even buy food and starve them.
“Under communism theoretically there is no private ownership”
Well, the difference is, under Sino-Communism there is theoretical private ownership! (being that the state still controls everything in every sector of the economy, no matter whose name is on the title)
>They are revolting and are refusing to pay as a group and this is threatening the stability of the Chinese banks.
A great summary. Yeah, it’s a lot like Soviet Russia where apartments were the only investment Russians could make. If you had a nice place in Moscow, when you got old you could trade your place for somewhere in Sochi and make ‘money’ on the side. The Chinese are doing the same, but now no one wants the apartments.
State-run capital markets are going to crush us and the next generation will blame capitalism and not state controlled banks and capital.
The ones that do somehow get built are “tofu-dreg” quality. Falling apart even before they are finished.
...the risk of defaults from offshore developer bonds to banks with $6 trillion of mortgages.
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$6 trillion. That’s kind of a serious about of money. The U.S. economy is about $23 trillion, so this debt represents about 1/4 of the entire U.S. economic output for a year.
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