China Property Sector Crisis

[2952-0-0]

China's largest property developer, Evergrande Group, is virtually bankrupt. It had been facing trouble for about a year, but things have taken an ugly turn. Its bonds and stocks have crashed, while those of other major Chinese property developers have also dived.

In a very serious escalation for the Party, investors who had been sold its wealth management products have staged protests after the company missed a payment.

https://www.bnnbloomberg.ca/evergrande-crisis-escalates-as-protests-break-out-across-china-1.1651362

https://www.reuters.com/world/china/disgruntled-china-evergrande-investors-crowd-headquarters-protest-2021-09-13/

With more than $300 billion in liabilities, the developer has become one of the most systemically important companies in China. On top of its obligations to WMP investors and bondholders, it owes about $147 billion in trade and other payables to suppliers and received down payments on yet-to-be-completed properties from more than 1.5 million home buyers as of December.

[PSOL]

An excellent piece on this current crisis

In other words, China’s private property sector are now composed of ‘zombie’ companies just like 15-20% of companies in the major capitalist economies.  The question now is whether the Chinese authorities are going to allow these firms to go bust.  Shares in Huarong, China’s biggest bad debt manager, were suspended for months earlier this year after the company delayed its financial reports before finally unveiling a record loss in August. The delays sparked a debate over the extent to which Beijing will step in to help distressed companies.

…

The real problem is that in the last ten years (and even before) the Chinese leaders have allowed a massive expansion of unproductive and speculative investment by the capitalist sector of the economy.  In the drive to build enough houses and infrastructure for the sharply rising urban population, the central and local governments left the job to private developers.  Instead of building houses for rent, they opted for the ‘free market’ solution of private developers building for sale.  Evergrande-like development in China wasn’t just capitalism doing its thing. It was capitalism facilitated by government officials for their own purposes. Beijing wanted houses and local officials wanted revenue. The housing projects helped deliver both. The result was a huge rise in house prices in the major cities and a massive expansion of debt.  Indeed, the real estate sector has now reached over 20% of China’s GDP.

…

The profitability of the capitalist sector has been falling for some time, just as it has the major capitalist economies.  So Chinese capitalists have looked for higher profits in unproductive sectors like real estate, consumer finance and media – that’s where the billionaires are found.  These sectors are now blowing up in the faces of the Chinese leaders.

The graph shows three major events; a markedly obvious decline in rate of return from the state dismantling of the collectives of the cultural revolution and the burning of relations with the Soviet Union in 1971, the growth attributed to external trade in exchange for throwing the movement under the bus in the late 1970s/1980s, and the fact that in a China seeing privatization of SOEs and austerity as a good thing—a whole bottoming up of the economy in the face of adopting an archaic, inneffective mode of production.

[StateBoiler]

The profitability of the capitalist sector has been falling for some time, just as it has the major capitalist economies.

The profit margin I read Chinese export companies operate at is 2%. Rule of thumb for a typical business is about 10%. This lower margin helps them undercut everyone (throw in probable state subsidies on top of it), but also means if there's any shocks to the system (rising fuel prices, Covid), they can't weather it without raising wholesale prices.

[Senator-elect Spark]

So much for having a command economy.

[Continential]

So much for having a command economy.

China hasn't had a command economy since 1978.

[Senator-elect Spark]

So much for having a command economy.

China hasn't had a command economy since 1978.

Even still, state owned enterprise is a sizeable portion of the Chinese economy.

[Continential]

So much for having a command economy.

China hasn't had a command economy since 1978.

Even still, state owned enterprise is a sizeable portion of the Chinese economy.

That doesn't mean that China is a command economy.

[PSOL]

So much for having a command economy.

China hasn't had a command economy since 1978.

Even still, state owned enterprise is a sizeable portion of the Chinese economy.

Unsurprisingly, the decline in China’s economy can be explained by the privatization of state-owned enterprises and Chinese government support of private firms over the SOEs


Note the rise in SOE investments after the Great recession and the cutting down of SOE’s after 2013, the beginning of Xi’s tenure as leader of China. For those not in the know, 2011-13 were the years where the “Chinese Domination” hysteria first took root.

Capitalism, whether left to the market or controlled by the state, is an utter failure and an archaic mode of production that must be dismantled to make way for a more efficient MoP.

[John Dule]

The graph shows three major events; a markedly obvious decline in rate of return from the state dismantling of the collectives of the cultural revolution and the burning of relations with the Soviet Union in 1971, the growth attributed to external trade in exchange for throwing the movement under the bus in the late 1970s/1980s, and the fact that in a China seeing privatization of SOEs and austerity as a good thing—a whole bottoming up of the economy in the face of adopting an archaic, inneffective mode of production.

Wow. Who knew you could make so much money from enslaving millions of people and moving them by force from subsistence agriculture into more productive sectors of the economy?

[PSOL]

The graph shows three major events; a markedly obvious decline in rate of return from the state dismantling of the collectives of the cultural revolution and the burning of relations with the Soviet Union in 1971, the growth attributed to external trade in exchange for throwing the movement under the bus in the late 1970s/1980s, and the fact that in a China seeing privatization of SOEs and austerity as a good thing—a whole bottoming up of the economy in the face of adopting an archaic, inneffective mode of production.

Wow. Who knew you could make so much money from enslaving millions of people and moving them by force from subsistence agriculture into more productive sectors of the economy?

lol, the peasantry greatly benefited from a centralized government that cared to invest in them and gave them a voice in government.

[John Dule]

The graph shows three major events; a markedly obvious decline in rate of return from the state dismantling of the collectives of the cultural revolution and the burning of relations with the Soviet Union in 1971, the growth attributed to external trade in exchange for throwing the movement under the bus in the late 1970s/1980s, and the fact that in a China seeing privatization of SOEs and austerity as a good thing—a whole bottoming up of the economy in the face of adopting an archaic, inneffective mode of production.

Wow. Who knew you could make so much money from enslaving millions of people and moving them by force from subsistence agriculture into more productive sectors of the economy?

lol, the peasantry greatly benefited from a centralized government that cared to invest in them and gave them a voice in government.

What "voice in government" are you referring to?

[PSOL]

The graph shows three major events; a markedly obvious decline in rate of return from the state dismantling of the collectives of the cultural revolution and the burning of relations with the Soviet Union in 1971, the growth attributed to external trade in exchange for throwing the movement under the bus in the late 1970s/1980s, and the fact that in a China seeing privatization of SOEs and austerity as a good thing—a whole bottoming up of the economy in the face of adopting an archaic, inneffective mode of production.

Wow. Who knew you could make so much money from enslaving millions of people and moving them by force from subsistence agriculture into more productive sectors of the economy?

lol, the peasantry greatly benefited from a centralized government that cared to invest in them and gave them a voice in government.

What "voice in government" are you referring to?

Peasants made up the bulk of Communist Party officials and were the most committed, alongside recent urban dwellers from the countryside, Communist Party members from the 1930s to the late 70s or so.

[John Dule]

The graph shows three major events; a markedly obvious decline in rate of return from the state dismantling of the collectives of the cultural revolution and the burning of relations with the Soviet Union in 1971, the growth attributed to external trade in exchange for throwing the movement under the bus in the late 1970s/1980s, and the fact that in a China seeing privatization of SOEs and austerity as a good thing—a whole bottoming up of the economy in the face of adopting an archaic, inneffective mode of production.

Wow. Who knew you could make so much money from enslaving millions of people and moving them by force from subsistence agriculture into more productive sectors of the economy?

lol, the peasantry greatly benefited from a centralized government that cared to invest in them and gave them a voice in government.

What "voice in government" are you referring to?

Peasants made up the bulk of Communist Party officials and were the most committed, alongside recent urban dwellers from the countryside, Communist Party members from the 1930s to the late 70s or so.

The fact that members of an identity group are in positions of power does not guarantee that they will use that power to help fellow members of that identity group.

[PSOL]

The graph shows three major events; a markedly obvious decline in rate of return from the state dismantling of the collectives of the cultural revolution and the burning of relations with the Soviet Union in 1971, the growth attributed to external trade in exchange for throwing the movement under the bus in the late 1970s/1980s, and the fact that in a China seeing privatization of SOEs and austerity as a good thing—a whole bottoming up of the economy in the face of adopting an archaic, inneffective mode of production.

Wow. Who knew you could make so much money from enslaving millions of people and moving them by force from subsistence agriculture into more productive sectors of the economy?

lol, the peasantry greatly benefited from a centralized government that cared to invest in them and gave them a voice in government.

What "voice in government" are you referring to?

Peasants made up the bulk of Communist Party officials and were the most committed, alongside recent urban dwellers from the countryside, Communist Party members from the 1930s to the late 70s or so.

The fact that members of an identity group are in positions of power does not guarantee that they will use that power to help fellow members of that identity group.

Yet they did immensely through massive development schemes in the countryside instead of just the elite metropoles of Beijing and Shanghai, expanding universal education there, along with the abolishment of feudalism and warlordism in the countryside. Claiming the Peasantry didn’t benefit under Mao, or more laughably that it took till 1979, is historically false.

[John Dule]

The graph shows three major events; a markedly obvious decline in rate of return from the state dismantling of the collectives of the cultural revolution and the burning of relations with the Soviet Union in 1971, the growth attributed to external trade in exchange for throwing the movement under the bus in the late 1970s/1980s, and the fact that in a China seeing privatization of SOEs and austerity as a good thing—a whole bottoming up of the economy in the face of adopting an archaic, inneffective mode of production.

Wow. Who knew you could make so much money from enslaving millions of people and moving them by force from subsistence agriculture into more productive sectors of the economy?

lol, the peasantry greatly benefited from a centralized government that cared to invest in them and gave them a voice in government.

What "voice in government" are you referring to?

Peasants made up the bulk of Communist Party officials and were the most committed, alongside recent urban dwellers from the countryside, Communist Party members from the 1930s to the late 70s or so.

The fact that members of an identity group are in positions of power does not guarantee that they will use that power to help fellow members of that identity group.

Yet they did immensely through massive development schemes in the countryside instead of just the elite metropoles of Beijing and Shanghai, expanding universal education there, along with the abolishment of feudalism and warlordism in the countryside. Claiming the Peasantry didn’t benefit under Mao, or more laughably that it took till 1979, is historically false.

Surely, the fact that so many starved to death left more wealth behind for the survivors.

[PSOL]

The graph shows three major events; a markedly obvious decline in rate of return from the state dismantling of the collectives of the cultural revolution and the burning of relations with the Soviet Union in 1971, the growth attributed to external trade in exchange for throwing the movement under the bus in the late 1970s/1980s, and the fact that in a China seeing privatization of SOEs and austerity as a good thing—a whole bottoming up of the economy in the face of adopting an archaic, inneffective mode of production.

Wow. Who knew you could make so much money from enslaving millions of people and moving them by force from subsistence agriculture into more productive sectors of the economy?

lol, the peasantry greatly benefited from a centralized government that cared to invest in them and gave them a voice in government.

What "voice in government" are you referring to?

Peasants made up the bulk of Communist Party officials and were the most committed, alongside recent urban dwellers from the countryside, Communist Party members from the 1930s to the late 70s or so.

The fact that members of an identity group are in positions of power does not guarantee that they will use that power to help fellow members of that identity group.

Yet they did immensely through massive development schemes in the countryside instead of just the elite metropoles of Beijing and Shanghai, expanding universal education there, along with the abolishment of feudalism and warlordism in the countryside. Claiming the Peasantry didn’t benefit under Mao, or more laughably that it took till 1979, is historically false.

Surely, the fact that so many starved to death left more wealth behind for the survivors.

Not even responding to the essence of my post and going to whataboutery. The conversation is done.

[John Dule]

The graph shows three major events; a markedly obvious decline in rate of return from the state dismantling of the collectives of the cultural revolution and the burning of relations with the Soviet Union in 1971, the growth attributed to external trade in exchange for throwing the movement under the bus in the late 1970s/1980s, and the fact that in a China seeing privatization of SOEs and austerity as a good thing—a whole bottoming up of the economy in the face of adopting an archaic, inneffective mode of production.

Wow. Who knew you could make so much money from enslaving millions of people and moving them by force from subsistence agriculture into more productive sectors of the economy?

lol, the peasantry greatly benefited from a centralized government that cared to invest in them and gave them a voice in government.

What "voice in government" are you referring to?

Peasants made up the bulk of Communist Party officials and were the most committed, alongside recent urban dwellers from the countryside, Communist Party members from the 1930s to the late 70s or so.

The fact that members of an identity group are in positions of power does not guarantee that they will use that power to help fellow members of that identity group.

Yet they did immensely through massive development schemes in the countryside instead of just the elite metropoles of Beijing and Shanghai, expanding universal education there, along with the abolishment of feudalism and warlordism in the countryside. Claiming the Peasantry didn’t benefit under Mao, or more laughably that it took till 1979, is historically false.

Surely, the fact that so many starved to death left more wealth behind for the survivors.

Not even responding to the essence of my post and going to whataboutery. The conversation is done.

It's "whataboutery" to point out that the policies you're endorsing killed millions of the very people you're saying they helped?

[PSOL]

The graph shows three major events; a markedly obvious decline in rate of return from the state dismantling of the collectives of the cultural revolution and the burning of relations with the Soviet Union in 1971, the growth attributed to external trade in exchange for throwing the movement under the bus in the late 1970s/1980s, and the fact that in a China seeing privatization of SOEs and austerity as a good thing—a whole bottoming up of the economy in the face of adopting an archaic, inneffective mode of production.

Wow. Who knew you could make so much money from enslaving millions of people and moving them by force from subsistence agriculture into more productive sectors of the economy?

lol, the peasantry greatly benefited from a centralized government that cared to invest in them and gave them a voice in government.

What "voice in government" are you referring to?

Peasants made up the bulk of Communist Party officials and were the most committed, alongside recent urban dwellers from the countryside, Communist Party members from the 1930s to the late 70s or so.

The fact that members of an identity group are in positions of power does not guarantee that they will use that power to help fellow members of that identity group.

Yet they did immensely through massive development schemes in the countryside instead of just the elite metropoles of Beijing and Shanghai, expanding universal education there, along with the abolishment of feudalism and warlordism in the countryside. Claiming the Peasantry didn’t benefit under Mao, or more laughably that it took till 1979, is historically false.

Surely, the fact that so many starved to death left more wealth behind for the survivors.

Not even responding to the essence of my post and going to whataboutery. The conversation is done.

It's "whataboutery" to point out that the policies you're endorsing killed millions of the very people you're saying they helped?

I do not endorse the bungling of the pest campaign in relation to freak acts of god in a nation still then scarred from decades of war prior, but that’s not relevant to the former and current issues of Chinese governmental policy in relation to the State Owned Enterprises. Compared to the Qing dynasty and any hypothetical KMT-led China without the smaller population in an island flowing with European and American money, the policies of the CCP have been a great success in industrializing and raising the standard of living of all Chinese citizens. It further ignores that the SOE’s have been instrumental in doing so and that the societal decline China has been dealing with lately is due entirely due to the current leadership’s privatization agenda and moral degeneracy in adopting liberalism.

[2952-0-0]

It's official:

https://twitter.com/MorningBrew/status/1458505156576829442