Inside the collapse of China property giants and its far-reaching economic impact
www.cnbctv18.com

... From abandoned malls to sparsely occupied buildings and desolate construction sites, the scene paints a poignant picture of the challenges gripping China's economic landscape.

What's wrong with China's real estate sector?

Vanke, China's largest property developer, has managed to survive the property downturn till now, but escaping the long-term real estate crisis seems questionable. While the stock has slumped over 35% so far this year, global credit rating agency S&P Global Ratings slashed the company's rating by three notches in April. This was followed by Moody's Ratings downgrading the stock. Vanke responded to this move by stating that it could 'mislead the market and exacerbate unnecessary panic'.

"The next step for the company is repaying a $600 million bond that comes due in June," the Wall Street Journal wrote in its Even a State-Linked Giant Can't Escape China's Real-Estate Crisis'. It added that the company has another $5 billion of dollar-bond debt to repay before the end of 2029.

Similar to many other companies, Vanke heavily relies on pre-sales, a practice where apartments are purchased before construction is completed. As of September, it reported approximately 408 billion yuan in contract liabilities, primarily consisting of deposits paid by consumers for homes still under construction. Considering this, Vanke's financial liquidity may be less robust than it appears.

Vanke's shake-up could be the curveball that throws China's plans off balance!

"For real estate companies that are seriously insolvent and have lost the ability to operate, those that must go bankrupt should go bankrupt, or be restructured, in accordance with the law and market principles," Ni Hong, China's Minister of Housing and Urban-Rural Development, said at a press conference recently.

According to CNBC, he added, "Those who commit acts that harm the interests of the masses will be resolutely investigated and punished in accordance with the law." ...

China's Economic Slump Is Here to Stay (March 2024)
time.com

... hina is in the midst of a profound economic crisis. Growth rates are flagging as an unsustainable mountain of debt piles up; China's debt-to-GDP ratio reached a record 288% in 2023. But even that eye-popping figure does not capture the uncomfortable fact that much of it was borrowed to buy assets that no longer yield enough income to repay the debt. This is especially true in the housing sector, where sales have fallen by a third since the pre-pandemic peak, and new construction is down 60%. This is one of the worst housing crashes in the world over the last three decades.

Many Western pundits and politicians view this crisis as a sign of the bankruptcy of China's leadership and economic system. But it is more akin to the cyclical debt crises that have plagued capitalist countries throughout history. An apt comparison is Japan's crisis of 1989, which ended decades of high growth and rising asset prices, fueled by a ballooning debt bubble. Japan's Nikkei stock index peaked in late 1989 and fell almost 80% over the next 13 years. Real estate prices fell for two decades starting in 1991. Neither of these major asset classes has exceeded the pre-crisis price peak ever since. Japan transitioned from being the fastest growing major economy during 1954-73, typically growing over 10% per year, to the slowest, with growth averaging only 1.75% per year from 1981 to 2023. China may be facing similarly prolonged difficulties. ...

How will Pres X fare as this crisis works itself out?

The US"China Trade War: Vietnam Emerges as the Greatest Winner (2022)
www.airuniversity.af.edu

... During the Trump administration, the United States employed a series of unilateral tariffs on various Chinese imports, inducing some unprecedented changes in US trade policy vis--vis China. As an anti-establishment outsider to America's traditional politics, Donald Trump, throughout his presidency, frequently obscured the boundary between foreign and trade policy, equating sanctions with tariffs, and effectively weaponizing trade. Trump administration's tariffs had one major goal, which he promised countless times to the American public: Lowering the US trade deficit with China. His tariffs, however, were hardly successful. According to the US Census data in nominal US dollars, the US trade deficit in goods with China during his term kept increasing from 2016 ($346 billion) to 2018 ($418 billion, an all-time high); it was not until 2019 that it decreased to a level ($342 billion) comparable to 2016's $346 billion.1 The meager $4 billion decrease in the US trade deficit with China from 2016 to 2019 is extremely underwhelming, since the US trade deficit with the world"including China"in 2019 was a towering $845 billion, which expanded substantially from 2016's $735 billion.2

Moreover, the tariffs' impact on the US economy was devastating, as "the trade war had cost the economy nearly 300,000 jobs and an estimated 0.3% of real GDP; the US companies lost at least $1.7 trillion in the price of their stocks as a result of US tariffs imposed on imports from China."3 Not only in stocks, but many US businesses also sustained real profit losses since many of them depended on imported intermediate inputs from China; with higher input costs than before, many US businesses raised their own prices to keep the profit margin intact, which eventually led them to "[lose] market share to competitors from other countries who did not have to pay" the additional tariffs.4 In essence, "the US companies primarily paid for the US tariffs, [and while] the US goods trade deficit with China had shrunk by 2019, its overall trade deficit did not," suggesting that the Trump administration's tariffs neither successfully lowered the US trade deficit with China nor benefited the US consumers and firms as President Trump would have wished.5 Taken together, the Trump administration's tariffs did little besides significantly increasing the US trade deficit with the world at the expense of the US economy. In this sense, the United States was unmistakably a loser from its own tariffs; the question becomes, then, who won from the Trump administration's tariffs? With more than half its exports subjected to these tariffs in 2019, China was obviously not a winner. This article, by using US import data from UN Comtrade and some of the conclusions made in United Nations Conference on Trade and Development (UNCTAD, 2019), aims to intuitively illustrate that Vietnam was the greatest beneficiary from the US"China tariff war in select product groups (HS 50-63, 84 & 90, and 85), with some assumptions. ...

... Moreover, the tariffs' impact on the US economy was devastating, as "the trade war had cost the economy nearly 300,000 jobs and an estimated 0.3% of real GDP; the US companies lost at least $1.7 trillion in the price of their stocks as a result of US tariffs imposed on imports from China." ...

Oh dear, a policy of fmr Pres Trump had a bad effect?

I Like 'Em Big and Stupid (1984)
www.youtube.com

Lyrics excerpt...

genius.com

...
When I need something to help me unwind
I find a six-foot baby with a one-track mind
Smart guys are nowhere, they make demands
Give me a moron with talented hands
I go bar-hopping and they say "last call"
I start shopping for a Neanderthal

[Pre-Chorus]
The bigger they come, the harder I fall
In love 'till we're done, then they're out in the hall

[Chorus]
I like 'em big and stupid
I like 'em big and real dumb
I like 'em big and stupid
...

Trump loves 'the poorly educated' ... and social media clamors (2016)
www.reuters.com

... U.S. presidential candidate Donald Trump's declaration of love for "the poorly educated" in his Nevada victory speech lit up social media on Wednesday, sparking a battle between those dumbfounded by the remark and those saying it had been taken out of context.

After winning the vote of the state's Republicans by a wide margin on Tuesday, the real estate billionaire rattled off a list of those groups who swept him to victory: "We won with young. We won with old. We won with highly educated. We won with poorly educated. I love the poorly educated." ...

Pogues - The Old Main Drag (1085)
www.youtube.com

Lyrics excerpt...

genius.com

...
[Verse 1]
When I first came to London, I was only sixteen
With a fiver in my pocket and my old dancing bag
I went down to the 'dilly to check out the scene
But I soon ended up upon the old main drag

[Verse 2]
There the he-males and the -------- paraded in style
And the old man with the money would flash you a smile
In the dark of an alley, you would work for a five
For a swift one off the wrist down on the old main drag

[Verse 3]
In the cold winter nights, the old town, it was chill
But there were boys in the cafs who'd give you cheap pills
If you didn't have the money, you'd cajole and you'd beg
There was always lots of Tuinal on the old main drag

[Verse 4]
One evening as I was lying down in Leicester Square
I was picked up by the coppers and kicked in the balls
Between the metal doors at Vine Street, I was beaten and mauled
And they ruined my good looks for the old main drag
...

Pogues are a fun group...