On the residential side, the benchmark price for housing in the Real Estate Board of Greater Vancouver sales area rose just 0.2% in May 2017 versus the
Why do so many people think the China economy will collapse?
– It is slowing not Collapsing. It will also change/transform so that it can grow again but again not collapse.
1) growth fueled by importing production technology will eventually come to an end,
2) there may be the need for the development of better institutions to support the right innovate business development and growth
3) China had a brilliant policy of fiscal spending on infrastructure construction that avoided many of the ill effects of the great recession but may have over anticipated the current rate of urbanization (rural to urban migration) ahead of job creation that is affected by#4
4) there is currently economic uncertainty in the rest of the world that may be part of a recovery slowdown, result is a reduction in the previously insatiable appetite for products made in China.
… see my slowing post above for further discussion of 4 issues.
To respond to sale of the underlying asset used as the collateral, after the sale of the asset the remainder of the loan will need to be written off. Various different institutions within both countries have incentives to ignore the problem pretending that banks do not have large pools of non performing assets. However this behavior is and will continue to lock up the banking assets of the countries and prevent the writing of future loans. Europe has a similar problem though not as systematic as they have already written off some of their bad debt. The US after the 2008 loan crisis was able to write down and collect (cents on the dollar) on much of the outstanding non performing loans, this has enable the US to lead the recovery. If either China or Japan are able to move forward with this process then their economic climates will improve, China has not yet demonstrated that it will be stuck in the same perpetual rut that Japans has been stuck in. But there is some hope for both countries., Both Japan (since the 1980s) and China (now) are facing over leveraged financial industry ripe with bad loans/loans in default/loans in arrears. Both systems financial systems have incentive to not recognize the extent of bad debt, if either system is going to have capital available for future innovation development and growth, then old bad non performing debt will need to be resolved. The system will need to foreclose on loans and force the
A Stock Market Slide Ignites Broader Fears
It was rocky start to the new year, as investors worried about the health of China’s economy. In the first week of 2016, steep losses in the Chinese market triggered a circuit breaker, shutting down trading early and sparking a global rout. The situation has started to stabilize, with Chinese stocks edging higher of late.
May 2016 update: more infrastructure and prop up the economy with construction and infrastructure jobs. This has been a successful strategy from 2008 till about 2013. But the economy has become attenuated to such aggressive fiscal spending policy and the high return projects that were obvious low hanging fruit were completed years ago. It is not that the new projects are make work, but the jobs in the manufacturing sector and urbanization – urban growth has not been sufficient to provide occupancy for prior real-estate construction. Building more empty infrastructure may create jobs but otherwise it may only create a supply and demand problem that would cause real-estate prices to fall an thus endanger existing mortgages. Further softening the banking sector that may already be sitting atop large cashes of non performing mortgages.China is again borrowing to build
More on the inflated economic numbers being reported by the government of China.–