It seems there are a lot of bad stories about the Chinese economy lately. At first they claimed they could isolate the real estate crisis, and shield the rest of the economy, but there are so many stories, also the car industry is in a real bad downturn. Cars and real estate combined is a very strong indicator that consumer confidence right now is about at zero, and they are in a recession.
Evergrande is a staggeringly large company and basically China’s entire real estate market was driven by rabid speculation and borrowing. The government’s attempts to keep the bubble from popping by enforced price controls was an absolutely awful response. Market corrections are always painful but it’s always less disruptive to force prices to remain artificially low (you can do that through subsidization)… when you price fix a product to keep it from dropping sellers will try to offload it asap and everyone just tries to avoid being caught holding the bag whenever you release your mandate.
enforced price controls was an absolutely awful response.
I had no idea they did that. There were warnings for a long time, but I had doubts, because China had freaking 40 years of strong growth. So I guess I kind of believed the Chinese government could perform economic miracles.
There are rumors that this economic crisis has created demands in China to democratize the economy, so I hope it may help create some political progress in China. Xi seriously needs to go, he is a very dangerous person, not unlike Putin IMO.
It seems there are a lot of bad stories about the Chinese economy lately. At first they claimed they could isolate the real estate crisis, and shield the rest of the economy, but there are so many stories, also the car industry is in a real bad downturn. Cars and real estate combined is a very strong indicator that consumer confidence right now is about at zero, and they are in a recession.
Evergrande is a staggeringly large company and basically China’s entire real estate market was driven by rabid speculation and borrowing. The government’s attempts to keep the bubble from popping by enforced price controls was an absolutely awful response. Market corrections are always painful but it’s always less disruptive to force prices to remain artificially low (you can do that through subsidization)… when you price fix a product to keep it from dropping sellers will try to offload it asap and everyone just tries to avoid being caught holding the bag whenever you release your mandate.
I had no idea they did that. There were warnings for a long time, but I had doubts, because China had freaking 40 years of strong growth. So I guess I kind of believed the Chinese government could perform economic miracles.
There are rumors that this economic crisis has created demands in China to democratize the economy, so I hope it may help create some political progress in China. Xi seriously needs to go, he is a very dangerous person, not unlike Putin IMO.