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Q: Is China in much more trouble than we think?
I've been arguing with my wife about the story in Canada regarding Chinese miners. She thinks that companies in Canada should just be allowed to hire whoever they want. She didn't seem to understand such restrictions are far more rigid in China.
The point is though, it seems that as capitalism is a re-intrduced concept in China that some people don't understand the concept of limits and regulation...which of course is how you end up in MASSIVE messes.
I picture a situation 5 times worse than the US 2008 crash.
Yes
And as soon as we see the tip of the iceberg, then the society will collapse. The "me first" mentality means no one will want to give up anything. Try to wrestle an iPhone out of peoples hands, not easy. Then do the same with their savings, apartments Audi's etc. when the banks collapse.
The real question is: after the housing collapse and social instability it causes, how effective will the powers that be be in blaming capitalism and western powers for problems of their own making? And how capable with the people themselves be of seeing through the illusion? I'm thinking that the best option for the government would be to get the readjustment out of the way, since the younger generation is only becoming more apt at seeing through the red curtain.
That's for sure and the worst thing is Chinese people think they are prevented from any trouble. The question is: how long will it take until everything it will blow up?
chenhan:
I am sure most Chinese do know most of the problems this country faces,but it will be the government's business to cope with them.
Scandinavian:
what makes you think that, the fact that people keep hoarding apartments ? The entire society is overly confident in its own abilities, but everything is built on lies, false promises and selfishness
The entire country is like The Emperor's New Clothes. They are self-deluded into believing they look proud and glorious, while the rest of the world laughs at their nakedness.
I for one, don't foresee a crash, a small adjustment to house values in the tier one cities maybe, but I just don't see the huge crash that many here do. The only major cloud on the horizon as I see it is corruption, if they don't / won't / can't tackle that then there is real trouble ahead.
tbh, I genuinely think a lot of these doomladen forecasts by some members of the expat community are nothing more than wishful thinking, born of nervousness over what they think China will do when it becomes the No1 economy in the world.
Amonk:
I'm in a tier 4 city. There is a cluster of 4 30-storey apartment buildings that have been completed for the past 3 years. I can count on one hand the number of lights on on any given night at any time of year. This is true all over the city, and new construction is adding to that. The place's prices have already been reduced from 8 to 6 to 4k. I hope that everything is okay for my own personal sake, I would not want to be in a country during civil strife. But I will not disregard all evidence to the contrary.
Hugh.G.Rection:
I think the risk of civil strife is much greater than the risk of a banking / financial meltdown. Yes some areas have inflated house prices, but not all areas Nanning prices are still rising a little, we bought at 6500 m2 4 years ago and allegedly it's now valued at 8500 - 9500 m2. However, we didn't buy for an investment but for somewhere to live, so if the value goes down, we'll still be living there. There aren't many empty blocks in Nanning, most I see are filling up at a reasonable rate.
I can see a situation where civil unrest becomes a problem if corruption isn't sorted, once the people give up on the rule of law, they are much more likely to riot. I don't detect any murmurings yet, but as a foreigner, I wouldn't, however I do suspect they are not too far underground.
The rats are always the first to leave a sinking ship. The same can be said about China with officials and business man/woman moving the wealth/moving abroad.
The central government has been telling local governments to curb spending as these local governments are in debt far worse than anywhere else in the world. These cities where the debt is high will turn out to be ghetto towns in the near future unable to sustain what they built as the general population cannot afford such prices.
China as people have predicted might be the worlds largest economy in the world but I now think that this will never happen. China doesnt want to comply to international guidelines to trading, banking, and numerous other areas as this will reveal the the truth of false or doctored account books. We can see this now with companies now delisting from stock exchanges around the world where they have to comply to the rules.
No, you're not alone, and I'd argue that the idea that china is facing in imminent economic meltdown, and that such a melt down would be the cause of a great deal of social upheaval, is quickly becoming the prevailing opinion in the outside world. And there are several reasons for this.
1. Forcing people to invest in real estate has caused the housing market to balloon to a point where the banks are already over leveraged. Pretty soon, people are going to start missing their payments. Once that happens, China's NPL ratio is going to skyrocket to back where it was 10 years ago.
2. They've hit their high water mark in terms of attracting manufacturing concerns to China, and something like 75% of foreign companies that do business here are thinking about pulling some, if not all of their factories out of China. That's only going to get worse for them as Africa is going to start to become an increasingly attractive destination for foreign factories in the next 15 to 20 years.
3. An inability to deal with the problems corruption and pollution has already seriously undermined the faith people place in the government here because the government is actually the cause of the lion's share of those problems. Seriously, how much longer is it going to be before they realize that their air quality is going to continue to get worse until they cut coal subsidies?
4. An aging population and a growing number of pensioners is ticking time bomb for them. Right now, China's got a lot in cash reserves, but per capita they aren't enough to continue to support these people as their economic growth rate starts to level off at somewhere between 5% and 7% per year.
