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Patrick Chovanec details the "unraveling" of Chinese real estate: April housing starts -14.4%...

Patrick Chovanec details the "unraveling" of Chinese real estate: April housing starts -14.4% Y/Y, Office starts -21%, Retail starts -18.7%, Land sales -54.7%. Foreign funding of property development -80.8% Y/Y. The only thing holding up real estate investment is a flurry of completions by desperate developers. Once this ends, the hit to GDP may be enough to push the economy into a hard landing.
Comments (12)
  • Rummeljordan
    , contributor
    Comments (477) | Send Message
     
    Those are all pretty large numbers... How is this not being talked about more, or is there more than that then the headline states?
    16 May 2012, 10:41 AM Reply Like
  • 15%
    , contributor
    Comments (2) | Send Message
     
    How big is the share of real estate in country capital investment! It seems to be lost and the country number of people growing out of poverty(as defined by this country standard) is going to come to an halt; GDP is going down while China tries to assert his political and military power on the world scene! This may quell their imperial share of their legitimate ambitions on the world scene ! Does it provide a better windows for Japan rebirth, or other Asian countries?
    16 May 2012, 11:47 AM Reply Like
  • JC51
    , contributor
    Comments (343) | Send Message
     
    "Does it provide a better windows for Japan rebirth"

     

    I think it's only a matter of time before Japan wakes up. Eventually, they will become more assertive in the region to protect their interests. In terms of quality, they possess a stronger military than China. I think what's going on in the South China Sea should set off some alarm bells. The Chinese government could try to stir up trouble with its weak SE Asian neighbors to deflect attention away from its political and economic instability.
    16 May 2012, 05:00 PM Reply Like
  • Moon Kil Woong
    , contributor
    Comments (11015) | Send Message
     
    China has been trying to slow down the real estate speculation. Clearly this is having an effect. In actuality this is good. It's best to prick it than let it grow too large and pop like the US did.

     

    You should be applauding their efforts not calling it doom. If they can keep growing GDP even while housing retreats that is a very good thing indeed.
    16 May 2012, 12:08 PM Reply Like
  • The Last Boomer
    , contributor
    Comments (881) | Send Message
     
    This time the slowdown is not engineered. Just last week they cut bank reserves to encourage lending by banks and even before that there was plenty of money to go around but new medium and long-term business loans are down 46%.
    16 May 2012, 01:41 PM Reply Like
  • winningtrader
    , contributor
    Comments (2476) | Send Message
     
    China has its own bubbles, no question about that. Who on earth really knows what is going on there. I bet you that they will end up printing a ton of money.
    16 May 2012, 12:21 PM Reply Like
  • BlueCollarBlueDog
    , contributor
    Comments (94) | Send Message
     
    Their "soft landing" hopes are based on their helicopter, along with Bernanke's, being certified in autorotation when they stall.
    16 May 2012, 01:54 PM Reply Like
  • Teutonic Knight
    , contributor
    Comments (2000) | Send Message
     
    To me at this stage the China today is reminiscent of the United States in the 1929 triggering a worldwide depression.
    16 May 2012, 02:45 PM Reply Like
  • JC51
    , contributor
    Comments (343) | Send Message
     
    Not necessarily. When Japan's economy hit a brick wall back in 1989-90, the US kept churning along. Countries that rely on exports to China, particularly commodity exporters, will get hit the worst. Australia, Brazil, Canada, Russia, Saudi Arabia, and Iran should be worried. I would argue that a decline in commodity prices would actually be beneficial to the US economy. Europe is a more dire concern for the US than China.
    16 May 2012, 05:15 PM Reply Like
  • Teutonic Knight
    , contributor
    Comments (2000) | Send Message
     
    Borrowing your 'not necessarily', U.S. debt in 1990 was a paltry ~$7T unlike the $15.6T now and growing at an 7% annual rate unabated.

     

    Concur that the 'unusual' prosperity of Australia, Brazil, Canada, Russia, and Saudi Arabia may well be a rainbow before that storm.

     

    China's so-called economic ascendancy may also not be ready for prime time after all.
    16 May 2012, 06:20 PM Reply Like
  • JC51
    , contributor
    Comments (343) | Send Message
     
    "Borrowing your 'not necessarily', U.S. debt in 1990 was a paltry ~$7T unlike the $15.6T now and growing at an 7% annual rate unabated."

     

    Just as US debt has more than doubled 1990, so has the economy ($6 trillion to $14 trillion). I believe that a Chinese economic collapse would have little effect on this. When Japan's economy hit a brick wall in 1990, they didn't dump their treasury holdings. China will likely follow suit. It would do more harm than good, particularly to their manufacturing sector (the lifeblood of their economy). US treasuries are the only market that can handle such a large amount of liquidity. If the Chinese cut back and started buying other currencies, it would actually be an expansionary policy for the US. It would have the same effect as a QE. Europe's economic woes and uncertainties only make treasuries more attractive. The US economy is really the best looking pig in the pen. What a scary thought!
    16 May 2012, 08:06 PM Reply Like
  • JC51
    , contributor
    Comments (343) | Send Message
     
    They could pass another stimulus and engage in another building spree, but what good is that going to do when there are already millions of apartments sitting vacant across the country. I guess that's the risk you take when you rely so heavily on fixed asset investment for growth. The house price to income ratios across the country dwarf anything we saw in the US. There's no comparison! The demand isn't there and won't be for a long time. Political infighting is only making matters worse. China is caught between a rock and a hard place. The reforms that need to be undertaken will lead to much slower growth over the next decade or longer.
    16 May 2012, 05:02 PM Reply Like
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