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How China's “debt traps” work

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Re: How China's “debt traps” work

#101

Post by seanmcdirmid »

wheelerof4te wrote: post #75
Animats wrote: post #23

It's not just internationally. China has done that to its own people. Or worse. Look at Evergrand and Sunac. The government of China let developers sell un-built apartments to future residents. The residents not only paid down payments, but took on a mortgage obligation for an un-built building . "The majority of new properties in China — about 90% — are sold before being completed." - CNN. This produced a terrible i…

"The majority of new properties in China — about 90% — are sold before being completed." - CNN" Not sure if this is some kind of joke. Many countries have laws that permit selling appartments when they are about 80% complete. Some have lower, some higher percentages. Just your average low-tier negative CNN propaganda, I guess.

Nothing you stated in your comment contradicts the statement from CNN that you are quoting. I'm guessing this is about CNN describing to its American readers what you take as a natural harmonious fact?

Re: How China's “debt traps” work

#102

Post by vondur »

26fingies wrote: post #82
wheelerof4te wrote: post #75

Earlier quoted context omitted.

"The majority of new properties in China — about 90% — are sold before being completed." - CNN" Not sure if this is some kind of joke. Many countries have laws that permit selling appartments when they are about 80% complete. Some have lower, some higher percentages. Just your average low-tier negative CNN propaganda, I guess.

i was gonna say - a lot of places you can put a bunch of cash down for an apartment that only exists as a picture on a sign somewhere.

Other countries have the rule of law and you can sue a developer. That’s not possible in China. I did read where disgruntled Chinese are withholding payments on these unfinished buildings. Not sure what the repercussions could be for those who do it.

Re: How China's “debt traps” work

#103

Post by yorwba »

NicoJuicy wrote: post #90
Symmetry wrote: post #61

Earlier quoted context omitted.

Clearly the Chinese construction companies that got the contracts won, but to the extent that the loans aren't paid back its money from Chinese taxpayers going to the people who own those companies. Japan had a big problem with this sort of corruption when they organized their foreign aid this way, which is why they no longer do.

The mostly state owned companies? :) And getting back the money from loans is also a win.

If this was such a win, why did they stop?

A lot of that money didn't "get back" but ended up in various officials' offshore bank accounts. ( Many executives at China Development Bank got busted for corruption https://www.caixinglobal.com/2021-11-08/chart-of-the-day-cor... ) And then there's the opportunity cost of not having those companies build something useful instead.

Re: How China's “debt traps” work

#104

Post by wheelerof4te »

throwawaymaths wrote: post #95
wheelerof4te wrote: post #67

Earlier quoted context omitted.

"the long history of the US." You mean, the long history of overthrowing governments, imperialistic wars and debt-trapping entire nations into selling their state-owned assets to US interest groups and funds? Your memory may be short lived, but there are many of us who know and remember. And, by the way, China hasn't started invading random countries all over the world...yet.

> And, by the way, China hasn't started invading random countries all over the world...yet. Bhutan, India, and Vietnam would have a word.

Vietnam, Korea, Afghanistan, Iraq, Yugoslavia, Libiya, Syria and about 70% of Latin America.

I spent just 2 minutes for this. I could go on, but you get the picture.

Re: How China's “debt traps” work

#105

Post by throwaway29812 »

26fingies wrote: post #82
wheelerof4te wrote: post #75

Earlier quoted context omitted.

"The majority of new properties in China — about 90% — are sold before being completed." - CNN" Not sure if this is some kind of joke. Many countries have laws that permit selling appartments when they are about 80% complete. Some have lower, some higher percentages. Just your average low-tier negative CNN propaganda, I guess.

i was gonna say - a lot of places you can put a bunch of cash down for an apartment that only exists as a picture on a sign somewhere.

Most countries haven't made it the corner stone of their economy.

Re: How China's “debt traps” work

#106

Post by wheelerof4te »

seanmcdirmid wrote: post #101
wheelerof4te wrote: post #75

Earlier quoted context omitted.

"The majority of new properties in China — about 90% — are sold before being completed." - CNN" Not sure if this is some kind of joke. Many countries have laws that permit selling appartments when they are about 80% complete. Some have lower, some higher percentages. Just your average low-tier negative CNN propaganda, I guess.

Nothing you stated in your comment contradicts the statement from CNN that you are quoting. I'm guessing this is about CNN describing to its American readers what you take as a natural harmonious fact?

I am commenting because CNN portraits this as something negative when it comes to China.

When in fact, it's fairly normal situation almost anywhere in the world.

Re: How China's “debt traps” work

#107

Post by throwaway29812 »

wheelerof4te wrote: post #75
Animats wrote: post #23

It's not just internationally. China has done that to its own people. Or worse. Look at Evergrand and Sunac. The government of China let developers sell un-built apartments to future residents. The residents not only paid down payments, but took on a mortgage obligation for an un-built building . "The majority of new properties in China — about 90% — are sold before being completed." - CNN. This produced a terrible i…

"The majority of new properties in China — about 90% — are sold before being completed." - CNN" Not sure if this is some kind of joke. Many countries have laws that permit selling appartments when they are about 80% complete. Some have lower, some higher percentages. Just your average low-tier negative CNN propaganda, I guess.

When you do it at the scale described, and make real estate market with large bubbles the corner stone of your economy, you get a unique situation than cannot just be explained away with "other countries do this too"

Re: How China's “debt traps” work

#108

Post by ceejayoz »

stickfigure wrote: post #62
reisse wrote: post #34

Earlier quoted context omitted.

> The residents not only paid down payments, but took on a mortgage obligation for an un-built building. So what? They had a choice between paying more money for already built house now or paying less money but accepting the risks of developer's failure. > This produced a terrible incentive for developers to do huge numbers of housing starts and then not finish the building. Ugh, it's not like venture investing when…

> So what? A very large number of Chinese citizens will lose their savings to these ponzi-esque construction schemes. Vast waves of defaults may take the banks with them. In Albania something similar caused mass civil unrest.

In case anyone wants a cite on the Albania bit:

https://en.wikipedia.org/wiki/1997_Albanian_civil_unrest

Ponzi/pyramid schemes captured two thirds of Albania's population.

Re: How China's “debt traps” work

#109

Post by [deleted] »

callalex wrote: post #100
bpolverini wrote: post #33

Earlier quoted context omitted.

The Government already has a monopoly on force and steals our money under the threat of imprisonment in the form of taxation: Now that money is supposed to be allocated into risky investments for abstract, unmeasureable benefits like "soft power," for the benefit of people somewhere else? That creates resentment here. It also infantilizes the Global South. How much better would it be if we eliminated the IMF, shrank…

If taxation is theft, why don’t you move to Somalia or start a cartel in a remote region of Mexico and live there? Or perhaps there are benefits you are receiving from living with a functioning government?

[deleted]

Re: How China's “debt traps” work

#110

Post by HeyLaughingBoy »

26fingies wrote: post #82
wheelerof4te wrote: post #75

Earlier quoted context omitted.

"The majority of new properties in China — about 90% — are sold before being completed." - CNN" Not sure if this is some kind of joke. Many countries have laws that permit selling appartments when they are about 80% complete. Some have lower, some higher percentages. Just your average low-tier negative CNN propaganda, I guess.

i was gonna say - a lot of places you can put a bunch of cash down for an apartment that only exists as a picture on a sign somewhere.

Often at a significant discount over waiting for construction to complete.
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