“China’s Ministry of Housing asked local governments in hundreds of cities to “vigorously” buy unsold commercial homes and convert units into affordable housing for the working class.” -Ben Norton
“Isn’t it ironic that the Chinese housing bubble was cited across the West as a “failure” of the Chinese gov when it was in fact created by runaway private enterprise, only now being resolved by Beijing’s intervention…?” -Brian Berletic
There is an issue to watch out for, here. Local authorities don’t always get their money from the central government. They may have to find another way to raise the capital. This is sometimes achieved by borrowing against or selling other local authority assets. Doing it this way can empower the banks. Michael Hudson has suggested that this is a contradiction that the CPC hasn’t yet been able to resolve.
True, but atleast unlike the west, the commercial banks in China are all state owned. So, any debt by local Governments can be written down or written off.
That’s amazing :)