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China’s property giant Evergrande files for bankruptcy protection in Manhattan

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Re: China’s property giant Evergrande files for bankruptcy protection in Manhattan

#91

Post by rasz »

irjustin wrote: post #12
csomar wrote: post #8

Earlier quoted context omitted.

The chinese stock market (Shanghai index) has been through lots of boom and busts. It didn't affect western market in the slightest. I'd not expect otherwise. The only difference is that if the Chinese economy tanks hard (great depression style), this might be contagious to the rest of Asia and eventually to the rest of the world. But any guess is good if that happens.

Agreed a crash in China would have fallout but not 08/09. The Chinese housing market was fueled by the familial need to own a house. Which led people to lead no matter what people would buy property, basically "stocks always go up"... "housing always goes up"... We can never run out of buyers!

1 You cant buy buy property in China.

2 Most of the building boom was tofu dreg. We are talking from stuffing literal garbage from landfills into walls/foundations to using rebar that crumbles in your hand ending up with brand new buildings collapsing. Classic https://www.reuters.com/article/us-china-building-idUSTRE55Q...

Re: China’s property giant Evergrande files for bankruptcy protection in Manhattan

#92

Post by blackoil »

tjpnz wrote: post #33
jamesaurichs wrote: post #18

Some real estate related news from China: - Country garden, China's second biggest property company after Evergrande, missed a mere 22.5M payments for dollar denominated bonds. It is trying to restructure a $340B debt owned. https://abcnews.go.com/Business/wireStory/chinas-government-... - Li Ka Shing, richest man in Hong Kong, just offered an immediate 30% off on his newest buildings for sale - One of China's bigges…

Government control over reproduction leads to unintended consequences? Who would've seen that coming?

China still has ~20% people in agriculture with automation that can be bought down to 5%. That should free enough resources.

Re: China’s property giant Evergrande files for bankruptcy protection in Manhattan

#93

Post by blackoil »

jskrablin wrote: post #81
jeswin wrote: post #65

Earlier quoted context omitted.

It's not automatically a bad thing. China has done fantastically well economically, and in terms of health care, education etc. There are other countries which have had strict population control and have done well economically - such as Singapore, South Korea. I see nothing wrong with poorer countries keeping restrictions on population growth - so that they can increase the standard of living and make sure everyone g…

It may work in short term but then you run out of population in long term. And suddenly any gains from short term improvement is under a big question mark.

Why does China need 1.5 billion people?

Re: China’s property giant Evergrande files for bankruptcy protection in Manhattan

#94

Post by bakuninsbart »

throwaway2037 wrote: post #85
ipnon wrote: post #5

There are many real estate giants and so-called "trust" companies who are incapable of repaying debt right now. Some of these companies have trillions in RMB on their balance sheets. The central bank can bail them out but at the expense of the assets of the middle and lower class. This would only further incentivize cash hoarding, and tighten the middle income trap. It is not an enviable situation.

Some of these companies have trillions in RMB on their balance sheets. I don't understand this sentence. It is nonsensical to use balance in this way. You wrote "trillions in RMB". Let's assume (your hand-wavy use of the term) balance sheet means: outstanding debt. Further, each 1T RMB is 137B USD. How many companies in the whole world carry more than this much debt? Let alone Chine property developers? Wildly overst…

From a quick google Evergrande (officially) has 2.4 trillion Yuan in debt, and 1.7 trillion Yuan in assets. Assets seem to have lost more than 20% of their value since 2019.

It is the largest one of the Chinese real estate developers, but there are a couple others that might break through the 1T Yuan mark.

Re: China’s property giant Evergrande files for bankruptcy protection in Manhattan

#95

Post by hurril »

throwaway2037 wrote: post #85
ipnon wrote: post #5

There are many real estate giants and so-called "trust" companies who are incapable of repaying debt right now. Some of these companies have trillions in RMB on their balance sheets. The central bank can bail them out but at the expense of the assets of the middle and lower class. This would only further incentivize cash hoarding, and tighten the middle income trap. It is not an enviable situation.

Some of these companies have trillions in RMB on their balance sheets. I don't understand this sentence. It is nonsensical to use balance in this way. You wrote "trillions in RMB". Let's assume (your hand-wavy use of the term) balance sheet means: outstanding debt. Further, each 1T RMB is 137B USD. How many companies in the whole world carry more than this much debt? Let alone Chine property developers? Wildly overst…

Moral hazard and inflation. If I know that I will be bailed out with a certain probability, then my actual cost of capital is much lower (since I am not expected to pay the entire volume of interest.)

For instance: why not make the investors whole again instead by giving them the "printed money" instead of going through the middle-man of propping up these failed giants?

Re: China’s property giant Evergrande files for bankruptcy protection in Manhattan

#96

Post by meowtimemania »

somenameforme wrote: post #87
tjpnz wrote: post #33

Earlier quoted context omitted.

Government control over reproduction leads to unintended consequences? Who would've seen that coming?

This is a crisis happening everywhere in the developed world. A stable practical fertility rate is 2.1. South Korea has the lowest fertility rate in the world, below 0.8, and there was no government meddling there. The US fertility rate is also plummeting and now down to below 1.7 and heavily biased by income. The birth rate for households earning $200,000 [1] with a near perfect linear relationship for incomes in be…

Usa does have immigration to supplement the birth rate.

Re: China’s property giant Evergrande files for bankruptcy protection in Manhattan

#97

Post by throwaway2037 »

throwaway4good wrote: post #80
kristofferg wrote: post #20

Earlier quoted context omitted.

Some bold claims with little evidence. GDP capita flattened at 13k is hardly “escaped the middle income trap”. IPs can be harmful to growth but then again China has never shown any intent to enforce IPs of western origin. There are no evidence of the US wanting to “keep asians down” - many of USAs asian trading partners enjoy less trade regulation. The “trade war” might be counterproductive but was a, imo mild, respo…

1. 13K is technically the point where a country goes from middle to high income. 2. The Chinese economy is still growing more than most countries. 3. The US is clearly engaged in zero/negative sum economic warfare against China at the moment - for example read this article and the quoted views by admistration officials therein: https://www.nytimes.com/2023/07/12/magazine/semiconductor-ch... ‘An Act of War’: Inside Am…

    The US is clearly engaged in zero/negative sum economic warfare against China
I suggest that you read the history of post war trade relations between US and Japan. It was a bumpy ride! One big difference: General adherence to IP laws (China does whatever they want), plus both are democracies.

Related: Do you think China can catch-up to developed world in fab tech? I do not. They are hopelessly behind.

Re: China’s property giant Evergrande files for bankruptcy protection in Manhattan

#98

Post by blackoil »

bakuninsbart wrote: post #94
throwaway2037 wrote: post #85

Earlier quoted context omitted.

Some of these companies have trillions in RMB on their balance sheets. I don't understand this sentence. It is nonsensical to use balance in this way. You wrote "trillions in RMB". Let's assume (your hand-wavy use of the term) balance sheet means: outstanding debt. Further, each 1T RMB is 137B USD. How many companies in the whole world carry more than this much debt? Let alone Chine property developers? Wildly overst…

From a quick google Evergrande (officially) has 2.4 trillion Yuan in debt, and 1.7 trillion Yuan in assets. Assets seem to have lost more than 20% of their value since 2019. It is the largest one of the Chinese real estate developers, but there are a couple others that might break through the 1T Yuan mark.

That is 90 billion USD shortfall. Assuming lenders will have to take some haircut the no. is big but not something that will break the economy!! am I missing some nos.?

Re: China’s property giant Evergrande files for bankruptcy protection in Manhattan

#99

Post by perlgeek »

meowtimemania wrote: post #96
somenameforme wrote: post #87

Earlier quoted context omitted.

This is a crisis happening everywhere in the developed world. A stable practical fertility rate is 2.1. South Korea has the lowest fertility rate in the world, below 0.8, and there was no government meddling there. The US fertility rate is also plummeting and now down to below 1.7 and heavily biased by income. The birth rate for households earning $200,000 [1] with a near perfect linear relationship for incomes in be…

Usa does have immigration to supplement the birth rate.

It does, but on a global scale this only works as long as there are enough countries with high birth rates. And birth rates are going down basically everywhere.

Re: China’s property giant Evergrande files for bankruptcy protection in Manhattan

#100

Post by bakuninsbart »

kristofferg wrote: post #20
dragonelite wrote: post #11

Earlier quoted context omitted.

China will not be captured by the middle income trap because it has already escaped the middle income trap. The middle income in my opinion has a different reason countries get stuck there and its by design. Because the road to high income is protected by western IP protection. Patents are way for the west to forever license fees for their high end technology, China is beating the west in new IP generation and hence…

Some bold claims with little evidence. GDP capita flattened at 13k is hardly “escaped the middle income trap”. IPs can be harmful to growth but then again China has never shown any intent to enforce IPs of western origin. There are no evidence of the US wanting to “keep asians down” - many of USAs asian trading partners enjoy less trade regulation. The “trade war” might be counterproductive but was a, imo mild, respo…

There are enormous economic differences within China and given the scale of the country it is much harder to make these kinds of broad-stroke arguments. Looking at gdp per region [0], the main tier one cities are already clearly a cut above middle income countries, even a province like Jiansu with 23k$ in GDP per capita has a higher GDP/capita than Poland and a larger population than Germany or the UK.

[0] https://en.wikipedia.org/wiki/List_of_Chinese_administrative...

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