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Beijing struggles to defuse anger over China's P2P lending crisis

reuters.com

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Re: Beijing struggles to defuse anger over China's P2P lending crisis

#91

Post by reaperducer »

ummonk wrote: post #71
varsitywork wrote: post #48

Earlier quoted context omitted.

> in a country with a bias towards savings that's a myth that keeps being persisted, much like their consistent 6-7% gdp growth every year. if you read the article, it mentions that 'He and his family had invested 7 million yuan - their life savings'. "The Myth Of China's 'Excess Savings' Is Weighed Down By Excessive Debt. Bank balances offset against enormous, rapidly rising, bad debts, a property bubble out of all…

How does anything you said indicate that Chinese having a bias towards savings is a myth? Investing money in bitcoin, stocks, real estate bubbles, etc. is still saving (not consumption). Might be bad savings, but it's still savings.

Perhaps he sees a distinction between "saving" and "investing."

Before the bank deregulation in the 90's this was a more vividly defined line.

To my parents generation, saying, "I keep my retirement savings in a 401(k)" is an oxymoron.

Re: Beijing struggles to defuse anger over China's P2P lending crisis

#92

Post by baybal2 »

seanmcdirmid wrote: post #87
baybal2 wrote: post #79

Earlier quoted context omitted.

>or at least the landing must be soft. The state, has valid legal pretext and a joker in the sleeve: the special interpretation of article 149 of property law. Not a single municipality in China ever honoured the textualist interpretation of the law, in all and every case ever going to court over article 149, the outcome was that the state can't deny the automatic lease extensions, but it leaves municipality the priv…

I thought that was Wenzhou, not Shenzhen. I didn’t hear of any lease issues happening there, not that I don’t believe you, but got a source where I can read more?

Both Wenzhou and Shenzhen had 20 year leases, and I think only SZ or Shantou had 15 year ones. These days, I think, only far inland cities still do 20 year leases, and BJ experimenting with shorter term 3 to 5 year ones.

I found these:

>Most of this happened before the property boom began at a national level. So it is those cities that set the early pace in residential property development that have been first to encounter the issue. Wenzhou is one of them. Shenzhen, China’s oldest special economic zone, is another. A few property owners there started experiencing problems about 15 years ago. In that case most were given an option to renew their expired titles by paying 35% of a ‘baseline land value’, calculated on a historic rate far lower than the prevailing market price, Guangzhou Daily has reported.

>https://www.weekinchina.com/2016/04/a-nation-of-homeowners/

I the end, Wenzhou's leaseholders got free extension, but most likely just to shut them up. The govt did not yield to demands on relinquishing the right to set lease extension conditions. More on that in Chinese "ministry of land and resources decision, 23rd december"

I myself think that government's blessing on short term leases, (edit) plus hefty property tax on regular real estate seem to be the most logical way out of China's housing bubble.

Re: Beijing struggles to defuse anger over China's P2P lending crisis

#93

Post by seanmcdirmid »

baybal2 wrote: post #92
seanmcdirmid wrote: post #87

Earlier quoted context omitted.

I thought that was Wenzhou, not Shenzhen. I didn’t hear of any lease issues happening there, not that I don’t believe you, but got a source where I can read more?

Both Wenzhou and Shenzhen had 20 year leases, and I think only SZ or Shantou had 15 year ones. These days, I think, only far inland cities still do 20 year leases, and BJ experimenting with shorter term 3 to 5 year ones. I found these: >Most of this happened before the property boom began at a national level. So it is those cities that set the early pace in residential property development that have been first to enc…

My understanding was that WZ leaseholders got a free pass because their case was high profile during the property boom: if they were going to be charged market rates for extending the lease, then people would begin to doubt that their 70 year leases would eventually be turned over easily as well. The government wants everyone to think that the leases are just like buying.

I think China will abandon the entire leasing system once they get a national property tax in place. The current system is unsustainable at the local level, and localities need the continuous income a property tax can provide, rather than the windfall of leases every 70 years (if that).

Re: Beijing struggles to defuse anger over China's P2P lending crisis

#94

Post by seanmcdirmid »

ahakki wrote: post #89
21 wrote: post #81

Earlier quoted context omitted.

> heavily debased the Yen What debasing? USD/JPY has moved around 110 for 20 years now.

That‘s the point. The US had growth in the past 20 years, Japan did not. So the Yen shoukdn‘t have been at a steady 110.

The value of a currency is not directly, or even indirectly, related to growth of the economy. They simply have decided that a loose inflationary currency works best for them, as did the US, which is why they haven't changed that much wrt each other.

Re: Beijing struggles to defuse anger over China's P2P lending crisis

#95

Post by maxxxxx »

cm2187 wrote: post #75
maxxxxx wrote: post #23

Earlier quoted context omitted.

"bailout or the catastrophic collapse of the world " In 2008 this is what the bankers told us but are these really the only options? I have my doubts.

I worked for one of the large banks that got out of this crisis pretty much unscattered. The Friday before TARP was introduced, which ended the succession of large banks collapses in the aftermath of Lehman, we were told internally that we didn’t think we could last more than a couple of weeks in the current market. And if we only had a couple of weeks left, most of the other (weaker) institutions had much less. Like…

Nobody wants a banking collapse. The question is whether the people who caused the collapse and profited greatly should get bailouts and keep their money.

In my view the government should have supported the system but not single banks. Let them go down and make sure that executives end up with zero money. Their lifetime contribution to the economy was negative so their bank accounts should reflect that.

Re: Beijing struggles to defuse anger over China's P2P lending crisis

#96

Post by baybal2 »

seanmcdirmid wrote: post #93
baybal2 wrote: post #92

Earlier quoted context omitted.

Both Wenzhou and Shenzhen had 20 year leases, and I think only SZ or Shantou had 15 year ones. These days, I think, only far inland cities still do 20 year leases, and BJ experimenting with shorter term 3 to 5 year ones. I found these: >Most of this happened before the property boom began at a national level. So it is those cities that set the early pace in residential property development that have been first to enc…

My understanding was that WZ leaseholders got a free pass because their case was high profile during the property boom: if they were going to be charged market rates for extending the lease, then people would begin to doubt that their 70 year leases would eventually be turned over easily as well. The government wants everyone to think that the leases are just like buying. I think China will abandon the entire leasing…

>WZ leaseholders got a free pass because their case was high profile during the property boom

Yes, pretty much it.

Shenzhen been very happy reselling land from all those short term leases under the new sky high prices for at least a decade.

Excerpt: "land user could apply for an extension without usage change if they pay a renewal fee based on the benchmark land price – the initial auction price on the land set by the local government"

Interesting fact FIY: the 2007 property law was the most debated act ever in Chinese legislature, with it failing to pass a number of times. While Chinese legislators are handpicked yes men, they also are quite wealthy people in their majority. Understandably, art. 149 was not on the govt's draft, but was added under the unprecedented extreme pressure from the assembly members.

Will the govt resort to the "nuclear option?" The temptation to solve the money problem in one swoop is just too high.

My coworker was evicted 2 month ago by his landlord in Shenzhen when the landlord suddenly learned that his land lease has expired when the police came to hand him a note without any prior warning.

Re: Beijing struggles to defuse anger over China's P2P lending crisis

#97

Post by toomuchtodo »

varsitywork wrote: post #66
vkou wrote: post #61

Earlier quoted context omitted.

This may be an unpopular opinion, but in a low-growth first world - which we are probably living in, now, interest rates have to be low.

US will see high growth because the money that was loaned to emerging markets are coming back. US recorded 4% gdp growth in Q2.

A significant portion of Q2 GDP was China pulling forward commodities purchases prior to tariffs going into effect.

Re: Beijing struggles to defuse anger over China's P2P lending crisis

#98

Post by [deleted] »

maxxxxx wrote: post #95
cm2187 wrote: post #75

Earlier quoted context omitted.

I worked for one of the large banks that got out of this crisis pretty much unscattered. The Friday before TARP was introduced, which ended the succession of large banks collapses in the aftermath of Lehman, we were told internally that we didn’t think we could last more than a couple of weeks in the current market. And if we only had a couple of weeks left, most of the other (weaker) institutions had much less. Like…

Nobody wants a banking collapse. The question is whether the people who caused the collapse and profited greatly should get bailouts and keep their money. In my view the government should have supported the system but not single banks. Let them go down and make sure that executives end up with zero money. Their lifetime contribution to the economy was negative so their bank accounts should reflect that.

[deleted]

Re: Beijing struggles to defuse anger over China's P2P lending crisis

#99

Post by rasz »

seanmcdirmid wrote: post #18
21 wrote: post #14

In the last 5 years retail Chinese investors had massive losses in bitcoin, gold, the local stock market, bitcoin again, now P2P. Is it fair to say that they rush from one investment fad to the next, typically buying the top? This is how it looks from far away, can someone with local knowledge comment? http://static.atimes.com/uploads/2015/07/retail-investors.jp...

They’ve done well on real estate. The government would never let the real estate sector crash, the bubble must be maintained at all costs, or at least the landing must be soft. Well, thats the hope anyways. I think that sector will crash eventually, but they’ve kept it going for so long.

>They’ve done well on real estate.

sure https://www.youtube.com/watch?v=XopSDJq6w8E

Re: Beijing struggles to defuse anger over China's P2P lending crisis

#100

Post by _8j50 »

reaperducer wrote: post #90
_8j50 wrote: post #76

Earlier quoted context omitted.

Why do you think that perspective does not apply to americans? I don't eat at proper restaurants much but when I ate fast food,the busiest ones also had more people flocking to them(chick-fil-a for example). Not many people line up to eat at a no-name off brand chain that just opened,and I see those pop up and go out of business a lot. It's not a cultural thing but how one is brought up. Upper class or rural chinese…

Why do you think that perspective does not apply to americans? I can't speak to his logic, but I think the whole issue is a lot more complex than is presented in this discussion. Convenience plays a big role in American dining habits. So does price and habit. And some people react strongly to coupons and advertising. I think Chick-fil-a is far better quality than Raising Cane's. But the Chick-fil-a in my town is on t…

But if you want to take the kids out as a 'reward' meal,assuming you never been to either establishment,would you go to a busy chick-fil-a or a new not so busy raising canes closer to your house?

Convenience applies to fast food but restaurant dining is a bit different,I think what is more relevant to the thread is quality seeking customers as opposed to convenience. Investors want quality over convenience,how they decide on what is of good quality is the debate.

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