Is China crashing?

[Naam]

The Shanghai Composite Index (SHCOMP), which doubled in 10 months through August 2009 as the government poured $652 billion of stimulus into building roads, railways and housing, has tumbled 43 percent from its high, destroying $748 billion in market value.

Bloomberg journàsslists at their best! not mentioning (or not knowing?) that the SSE "bubbled" from 1000 to 5800 (2005-2008) gaining 480%, then diving to 1800 and is now double at ~2000 (base year 2005).

summary: half truths are most of the time worse than blatant lies.

only a long term view gives a correct impression and basis for an interpretation:

[midas]

The Shanghai Composite Index (SHCOMP), which doubled in 10 months through August 2009 as the government poured $652 billion of stimulus into building roads, railways and housing, has tumbled 43 percent from its high, destroying $748 billion in market value.

Bloomberg journàsslists at their best! not mentioning (or not knowing?) that the SSE "bubbled" from 1000 to 5800 (2005-2008) gaining 480%, then diving to 1800 and is now double at ~2000 (base year 2005).

summary: half truths are most of the time worse than blatant lies.

only a long term view gives a correct impression and basis for an interpretation:

SSE.jpg

Okay, here's a problem with a long-term view

China’s People Problem

On January 18th, the National Bureau of Statistics (NBS) announced that China’s working age population (ages 15-59) had declined in 2012 by 3.45 million, or 0.6 percent, marking the first decline in working population “in a considerable period of time.”

The head of NBS, Ma Jiantang, admitted: "I can't deny that I'm worried about this problem.” Indeed, the problem is perhaps more serious than originally thought.

China's population will reach 1.557 billion in 2043 and after that the country will approach a zero population growth rate, and the problems of newborn sex disproportion and population aging should also be handled seriously, officials and experts have said.

http://thediplomat.com/china-power/chinas-people-problem/

Edited July 31, 2013 by midas

[NeverSure]

The Shanghai Composite Index (SHCOMP), which doubled in 10 months through August 2009 as the government poured $652 billion of stimulus into building roads, railways and housing, has tumbled 43 percent from its high, destroying $748 billion in market value.

Bloomberg journàsslists at their best! not mentioning (or not knowing?) that the SSE "bubbled" from 1000 to 5800 (2005-2008) gaining 480%, then diving to 1800 and is now double at ~2000 (base year 2005).

summary: half truths are most of the time worse than blatant lies.

only a long term view gives a correct impression and basis for an interpretation:

SSE.jpg

Using that methodology, I could make the US housing market look great. Just go back before the bubble burst and look at price run-ups before that, and take the prices before the bubble run up and compare them to today's prices and in that long term, you could have made a lot of money.

US houses are worth more today than they were a dozen years ago, but in the meantime there was a bubble and a burst.

China's overall debt including shadow banking debt, and its massive bubbles, and its increasing labor costs don't look good for the future either.

[Naam]

i have presented facts not a methology NeverSure and i did not insinuate what you are describing. what i did was proving that Bloomberg journàsslists were presenting half-àssed irrelevant bullshite always usually swallowed by ignorants.

[Naam]

Okay, here's a problem with a long-term view ermm.gif

never trust forecasts which pertain 30 years into the future. amongst many other reasons "why not" because these forecast are irrelevant for today's and tomorrow's business.

[LawrenceChee]

I agree this forecast is for 30 years later and 3 Chinese presidents and many world events irrelevant to china can also influence the events of things

The questions pertains to now and I put my money in saying the current president who is against debts with his upbringing and parentage will do everything in his powers to ensure china does not crash in his tenure .

Read up on him and you get a better idea on his policy makings and decision making style

[LawrenceChee]

I agree this forecast is for 30 years later and 3 Chinese presidents and many world events irrelevant to china can also influence the events of things

The questions pertains to now and I put my money in saying the current president who is against debts with his upbringing and parentage will do everything in his powers to ensure china does not crash in his tenure .

Read up on him and you get a better idea on his policy makings and decision making style

[LawrenceChee]

I agree this forecast is for 30 years later and 3 Chinese presidents and many world events irrelevant to china can also influence the events of things

The questions pertains to now and I put my money in saying the current president who is against debts with his upbringing and parentage will do everything in his powers to ensure china does not crash in his tenure .

Read up on him and you get a better idea on his policy makings and decision making style

[LawrenceChee]

I agree this forecast is for 30 years later and 3 Chinese presidents and many world events irrelevant to china can also influence the events of things

The questions pertains to now and I put my money in saying the current president who is against debts with his upbringing and parentage will do everything in his powers to ensure china does not crash in his tenure .

Read up on him and you get a better idea on his policy makings and decision making style

[lovetotravel]

Very interesting article. Beware a woman scorned! 5555

http://www.nytimes.com/2013/07/31/opinion/friedman-revenge-of-the-mistresses.html?nl=todaysheadlines&emc=edit_ae_20130731&_r=0

When I visited China in September, I wrote that I heard a new meme from Chinese businesspeople whom I met: “Make your money and get out.” More than ever, I heard a lack of confidence in the Chinese economic model.

[midas]

China’s Housing: Living in a Bubble

Despite government measures, housing is increasingly out of reach for ordinary Chinese.

http://thediplomat.com/2013/07/31/chinas-housing-living-in-a-bubble/?all=true

[midas]

Very interesting article. Beware a woman scorned! 5555

http://www.nytimes.com/2013/07/31/opinion/friedman-revenge-of-the-mistresses.html?nl=todaysheadlines&emc=edit_ae_20130731&_r=0

When I visited China in September, I wrote that I heard a new meme from Chinese businesspeople whom I met: “Make your money and get out.” More than ever, I heard a lack of confidence in the Chinese economic model.

She sounds more dangerous than Edward Snowden

[trogers]

The beginning of the end, or the end of the beginning?

Headlines in Western media, like Inventory Management and Demand Planning’s article “Outsourcing to China—a thing of the past?” and The Economist’s “The end of cheap China” clearly signal that foreign investors believe that there is a trend toward considering divesting from or moving out of China.

http://www.theepochtimes.com/n3/224201-foreign-investment-flees-china-despite-denials/

[danmarnj]

I've been reading all these posts and the links. Im not the smartest bulb in the pack, but the Chinese workers are demanding and getting a higher wage. The US is now bringing back some of their products to be made back home as it is now more cost effective. The Chinese people have little confidence in buying their own products (ex: the milk catastrophe that killed many of its children) and will buy foreign products if they can afford it. I think the Chinese have the capacity to be an economic super power, but corruption linked with poor business practices and little confidence in their own products, will result in many years of growing pains before it can rival the US and Europe.

[midas]

I've been reading all these posts and the links. Im not the smartest bulb in the pack, but the Chinese workers are demanding and getting a higher wage. The US is now bringing back some of their products to be made back home as it is now more cost effective. The Chinese people have little confidence in buying their own products (ex: the milk catastrophe that killed many of its children) and will buy foreign products if they can afford it. I think the Chinese have the capacity to be an economic super power, but corruption linked with poor business practices and little confidence in their own products, will result in many years of growing pains before it can rival the US and Europe.

I think you grossly underestimate your smartness dan because you have succinctly covered the salient points which those who prefer to believe in unicorns conveniently gloss over

[yoshiwara]

I've been reading all these posts and the links. Im not the smartest bulb in the pack, but the Chinese workers are demanding and getting a higher wage. The US is now bringing back some of their products to be made back home as it is now more cost effective. The Chinese people have little confidence in buying their own products (ex: the milk catastrophe that killed many of its children) and will buy foreign products if they can afford it. I think the Chinese have the capacity to be an economic super power, but corruption linked with poor business practices and little confidence in their own products, will result in many years of growing pains before it can rival the US and Europe.

I think you grossly underestimate your smartness dan because you have succinctly covered the salient points which those who prefer to believe in unicorns conveniently gloss over

as opposed to those grossly over-baking their limited understanding riding on the back of crashing golden unicorns and a diploma from the University of Copying and Pasting.

[midas]

I've been reading all these posts and the links. Im not the smartest bulb in the pack, but the Chinese workers are demanding and getting a higher wage. The US is now bringing back some of their products to be made back home as it is now more cost effective. The Chinese people have little confidence in buying their own products (ex: the milk catastrophe that killed many of its children) and will buy foreign products if they can afford it. I think the Chinese have the capacity to be an economic super power, but corruption linked with poor business practices and little confidence in their own products, will result in many years of growing pains before it can rival the US and Europe.

I think you grossly underestimate your smartness dan because you have succinctly covered the salient points which those who prefer to believe in unicorns conveniently gloss over

as opposed to those grossly over-baking their limited understanding riding on the back of crashing golden unicorns and a diploma from the University of Copying and Pasting.

And, as opposed to those who have never written an intelligent post since they have been in this forum

Edited August 4, 2013 by midas

[trogers]

A Glut of Houses Hits Beijing Real Estate Market, Says Analyst

http://www.theepochtimes.com/n3/238354-a-glut-of-houses-hits-beijing-real-estate-market-says-analyst/

Analysts are drawing comparisons between the possible trajectory of China’s housing market now to what Japan went through in the 1990s. In 1992 Japan saw the evaporation of 80 percent of the wealth in its real estate market, and the following year 21 banks declared $110 billion in bad debts, a third of it related to property. Housing prices were cut in half.

[yoshiwara]

A Glut of Houses Hits Beijing Real Estate Market, Says Analyst

http://www.theepochtimes.com/n3/238354-a-glut-of-houses-hits-beijing-real-estate-market-says-analyst/

Analysts are drawing comparisons between the possible trajectory of China’s housing market now to what Japan went through in the 1990s. In 1992 Japan saw the evaporation of 80 percent of the wealth in its real estate market, and the following year 21 banks declared $110 billion in bad debts, a third of it related to property. Housing prices were cut in half.

Some analysts.

Also no price figures given. Note also that government measures have been introduced in HK and Singapore. Net effect? Number of transactions down but prices significantly not.

Be careful what you copy and paste if you don't have some decent knowledge of the markets concerned.

[midas]

A Glut of Houses Hits Beijing Real Estate Market, Says Analyst

http://www.theepochtimes.com/n3/238354-a-glut-of-houses-hits-beijing-real-estate-market-says-analyst/

Analysts are drawing comparisons between the possible trajectory of China’s housing market now to what Japan went through in the 1990s. In 1992 Japan saw the evaporation of 80 percent of the wealth in its real estate market, and the following year 21 banks declared $110 billion in bad debts, a third of it related to property. Housing prices were cut in half.

Some analysts.

Also no price figures given. Note also that government measures have been introduced in HK and Singapore. Net effect? Number of transactions down but prices significantly not.

Be careful what you copy and paste if you don't have some decent knowledge of the markets concerned.

So are you inferring your knowledge of the Chinese market is better than that of a Chinese analyst?

[yoshiwara]

A Glut of Houses Hits Beijing Real Estate Market, Says Analyst

http://www.theepochtimes.com/n3/238354-a-glut-of-houses-hits-beijing-real-estate-market-says-analyst/

Analysts are drawing comparisons between the possible trajectory of China’s housing market now to what Japan went through in the 1990s. In 1992 Japan saw the evaporation of 80 percent of the wealth in its real estate market, and the following year 21 banks declared $110 billion in bad debts, a third of it related to property. Housing prices were cut in half.

Some analysts.

Also no price figures given. Note also that government measures have been introduced in HK and Singapore. Net effect? Number of transactions down but prices significantly not.

Be careful what you copy and paste if you don't have some decent knowledge of the markets concerned.

So are you inferring your knowledge of the Chinese market is better than that of a Chinese analyst?

In this case no figures produced by the particular analyst cited and 'er believe it or not, not all analysts hold the same outlook. As for my own knowledge of the market I am invested in HK and Mainland China

Edited August 10, 2013 by yoshiwara

[Naam]

A Glut of Houses Hits Beijing Real Estate Market, Says Analyst

http://www.theepochtimes.com/n3/238354-a-glut-of-houses-hits-beijing-real-estate-market-says-analyst/

Analysts are drawing comparisons between the possible trajectory of China’s housing market now to what Japan went through in the 1990s. In 1992 Japan saw the evaporation of 80 percent of the wealth in its real estate market, and the following year 21 banks declared $110 billion in bad debts, a third of it related to property. Housing prices were cut in half.

Some analysts.

Also no price figures given. Note also that government measures have been introduced in HK and Singapore. Net effect? Number of transactions down but prices significantly not.

Be careful what you copy and paste if you don't have some decent knowledge of the markets concerned.

So are you inferring your knowledge of the Chinese market is better than that of a Chinese analyst?

experienced investors use the spelling "anal-yst" or just "anal" which is self-explanatory. but that does of course not mean that all is "anal" what "anal-ysts" produce.

[midas]

A Glut of Houses Hits Beijing Real Estate Market, Says Analyst

http://www.theepochtimes.com/n3/238354-a-glut-of-houses-hits-beijing-real-estate-market-says-analyst/

Some analysts.

Also no price figures given. Note also that government measures have been introduced in HK and Singapore. Net effect? Number of transactions down but prices significantly not.

Be careful what you copy and paste if you don't have some decent knowledge of the markets concerned.

So are you inferring your knowledge of the Chinese market is better than that of a Chinese analyst?

experienced investors use the spelling "anal-yst" or just "anal" which is self-explanatory. but that does of course not mean that all is "anal" what "anal-ysts" produce.

Whatever.

Whether the results these “ anal-ysts “ produce impress you or not does little to address the problems emanating from a huge oversupply and vacant estate assets in China, coupled with the drying up of credit?

[midas]

A Glut of Houses Hits Beijing Real Estate Market, Says Analyst

http://www.theepochtimes.com/n3/238354-a-glut-of-houses-hits-beijing-real-estate-market-says-analyst/

Some analysts.

Also no price figures given. Note also that government measures have been introduced in HK and Singapore. Net effect? Number of transactions down but prices significantly not.

Be careful what you copy and paste if you don't have some decent knowledge of the markets concerned.

So are you inferring your knowledge of the Chinese market is better than that of a Chinese analyst?

In this case no figures produced by the particular analyst cited and 'er believe it or not, not all analysts hold the same outlook. As for my own knowledge of the market I am invested in HK and Mainland China

ok then how do you compare the Chinese real estate market in 2013 to the Japanese real estate market before the beginning of its gradual fall in the 1990s?

And surely you don't necessarily need to know about prices to appreciate the Chinese property market could be in trouble if you simply know the following factors :-

1. there are huge ghost cities dotted all around China ( which are now starting to show signs of lack of maintenance and disrepair )
2. in general properties have been priced well out of the reach of the average Chinese citizen
3. many developers genuinely believe that property values can only ever go up
4. we are told credit in China is drying up

[yoshiwara]

ok then how do you compare the Chinese real estate market in 2013 to the Japanese real estate market before the beginning of its gradual fall in the 1990s?

And surely you don't necessarily need to know about prices to appreciate the Chinese property market could be in trouble if you simply know the following factors :-

1. there are huge ghost cities dotted all around China ( which are now starting to show signs of lack of maintenance and disrepair )
2. in general properties have been priced well out of the reach of the average Chinese citizen
3. many developers genuinely believe that property values can only ever go up
4. we are told credit in China is drying up

China is not Japan. As for Mainland China property, I am only interested in Beijing and Shanghai. Just as I am only interested in Central London and couldn't give a hoot for the provinces. My investments, my concerns (as opposed to ambulance chasing everywhere hoping that each crisis this time will presage the end of the world; pathetic really)

[midas]

Some analysts.

Also no price figures given. Note also that government measures have been introduced in HK and Singapore. Net effect? Number of transactions down but prices significantly not.

Be careful what you copy and paste if you don't have some decent knowledge of the markets concerned.

So are you inferring your knowledge of the Chinese market is better than that of a Chinese analyst?

experienced investors use the spelling "anal-yst" or just "anal" which is self-explanatory. but that does of course not mean that all is "anal" what "anal-ysts" produce.

Of course it is so easy to cynically dismiss the warnings of unknown “ anal-ysts “ -but it's not so easy to dismiss such warnings when they come from “ One of the country's leading commercial real estate moguls, Zhang Xin “

China's largest residential builder, Vanke Chairman Wang Shi Zhang Xin says residential property development has reached the end of the road. And with the prices of millions of existing housing units falling since last year, China's largest residential builder, Vanke Chairman Wang Shi, tells Stahl he is seeing protests from angry investors and fears an Arab Spring-like uprising if the bottom falls out of the market.

http://www.cbsnews.com/8301-18560_162-57571909/is-chinas-real-estate-bubble-about-to-burst/

[yoshiwara]

Zhang Xin has shifted investment from residential to commercial. There are always concerns. That's why it is called risk.

[midas]

A Glut of Houses Hits Beijing Real Estate Market, Says Analyst

http://www.theepochtimes.com/n3/238354-a-glut-of-houses-hits-beijing-real-estate-market-says-analyst/

Analysts are drawing comparisons between the possible trajectory of China’s housing market now to what Japan went through in the 1990s. In 1992 Japan saw the evaporation of 80 percent of the wealth in its real estate market, and the following year 21 banks declared $110 billion in bad debts, a third of it related to property. Housing prices were cut in half.

Some analysts.

Also no price figures given. Note also that government measures have been introduced in HK and Singapore. Net effect? Number of transactions down but prices significantly not.

Be careful what you copy and paste if you don't have some decent knowledge of the markets concerned.

Voilà !

China Vanke chair Wang Shi again warns of China housing bubble

" The average price of a home in China's 10 biggest cities, including Beijing and Shanghai, jumped 9.7 per cent from a year earlier to 17,202 yuan (HK$21,771) per square metre last month, up 1.1 per cent from April, SouFun said. The government called for higher down payments and interest rates for second-home mortgages in cities with "excessively fast" price gains and ordered stricter enforcement of taxes, in the latest measures announced at the beginning of March. "

http://www.scmp.com/business/china-business/article/1255011/china-vanke-chair-wang-shi-again-warns-china-housing-bubble

Edited August 10, 2013 by midas

[yoshiwara]

Property companies have their agendas. However neither Vanke or Soho China have liquidated their investments. They have diversified their markets and that means that if one is interested in making investment in these two companies one can do so as both are listed on the Hang Seng. Soho China probably has a more narrow focus. Recently Zhang Xin made a personal investment in the Empire State Building.

[trogers]

A Glut of Houses Hits Beijing Real Estate Market, Says Analyst

http://www.theepochtimes.com/n3/238354-a-glut-of-houses-hits-beijing-real-estate-market-says-analyst/

Analysts are drawing comparisons between the possible trajectory of China’s housing market now to what Japan went through in the 1990s. In 1992 Japan saw the evaporation of 80 percent of the wealth in its real estate market, and the following year 21 banks declared $110 billion in bad debts, a third of it related to property. Housing prices were cut in half.

Some analysts.

Also no price figures given. Note also that government measures have been introduced in HK and Singapore. Net effect? Number of transactions down but prices significantly not.

Be careful what you copy and paste if you don't have some decent knowledge of the markets concerned.

“The collapse of the real estate prices in China will surely start in Beijing – the bigger the housing bubble, the harder the fall,” he said.

How much prices will fall should depend on how much hot air was blown into the bubble? In China, speculators were acquiring 2nd, 3rd or more homes, no?

Edited August 10, 2013 by trogers