IMF: your housing market is collapsing
China: yeah we know
IMF: so how about you bail out those poor housing investors
China: …no thanks
IMF: surprised Pikachu
Majority of those housing investors being the common people who are buying homes…
This isn’t about people getting a place to live, this is speculation, like Bitcoin, but with housing. There’s a mass of people buying housing to commodify it by selling it later at a huge price or by renting it out. This mass of people got scammed by housing developers who promised to deliver the apartment or house (at a good quality). Unfortunately, that didn’t happen; developers ran ponzi schemes. They used investors’ money to start new constructions and attract new investors, and stopped working on the old constructions or finished them poorly with bad materials.
This is how capitalism works unregulated. So the small investors fucked around trying to become petite bourgeoisie, and they’re finding out the beauty of capitalism.
I know this is hard to hear for Americans, but if you’re making money from being a landlord or flipping houses, you’re a piece of shit.
Bailing out these investors would be like bailing out Bitcoin “common people” investors when the “currency” crashes.
edit: grammar
If you buy a derelict house(that no human can possibly live in) and fix it up to a decent standard with the intent to sell it, are you still a piece of shit?
You add the repairs to the price.
If you’re creating a luxury house/apartment, well, the word “luxury” is already there.
I’m really confused… Did you answer my question?
I clarified how it depends. The answer was “it depends”, which is a very displeasing answer, so I skipped a step.
if they bought the houses to live and not speculate, it doesn’t matter
But the article is specifically talking about unfinished projects.
So you don’t have a flat to live in either, you have an abandoned construction site.
Homeownership rate in China is over 95%
https://en.wikipedia.org/wiki/List_of_countries_by_home_ownership_rate
What kind of world are we living in where people who have no idea what they are talking about argue with absolute certainty?!
So where do all the renters come from?
https://www.yicaiglobal.com/news/a-quarter-of-china-city-dwellers-rent-survey-shows - same website that your wikipedia link lists as source
But none of that is relevant to the article of this post. That article talks about money to complete unfinished projects. It’s in the very first paragraph. There are people who took out loans to buy pre-construction apartments with plans to live there, who are now in trouble.
China made the right move here. If you think the IMF is right show me homeownership rates in countries that did as the IMF suggested.
There are people who took out loans to buy pre-construction apartments with plans to live there, who are now in trouble.
mostly foreign speculators, what’s wrong with having them lose money?
There are people who took out loans to buy pre-construction apartments with plans to live there, who are now in trouble.
you do know that homelessness and lack of affordability in many Western countries has nothing to do with the supply or demand? there are more empty homes than there are homeless people
In May, officials unveiled the biggest rescue package yet. It contains a 300 billion-yuan ($42 billion) central bank fund that attempts to help local governments buy finished but unsold homes and turn them into subsidized housing.
Separately, the IMF warned of “significant downside risks” to China’s inflation outlook, saying “a negative domestic demand shock amid high debt levels could trigger a period of sustained deflation.”
Does it tough? Why would aggregate demand collapse because of real estate developers going bankrupt? They make up a small part of the population and hoard more of their wealth. Also, very funny that IMF only cares about private debt buildup when it affects the .
Where is the concern for a demand shock when you pressure Kenya and Nigeria into raising sales taxes, which has much greater impact on aggregate demand?
China rescues people, not investors. 😏
IMF: Imperialist Monetary Fund
Impossible Mission Force
Why subject your self and enslave yourself to the IMF?
If it was my country’s government, they would have accepted it without a second thought and the people have no say about it.
Isn’t the rate of homeownership like 95%? Seems like a tough market.
Why did it crash like this though? Its really hard to find truthful information about this housing thing.
The quick answer is because the housing market was used for speculation and was causing real estate prices and rents to rise. China introduced “three red lines” policy to mitigate this and let the housing market crash and let the billionaire CEO Hui Ka Yan (and mostly foreign Investors) hold the bag
Because housing is for living in, not for speculation or asset price inflation*.
- Oct. 2017: China’s Xi says to maintain principle property is not for speculation China will maintain the principle that houses are for people to live in, not for speculation […]
- Mar. 2024: China’s housing minister says real estate developers must go bankrupt if necessary
.
*Radhika Desai and Michael Hudson Discuss the Causes and Politicization of InflationWhat has really been inflated, since 2008, has not been consumer prices, but asset prices — [that is,] real estate prices, stocks and bond prices, things that the 1% hold. Wealth has been inflated much more than goods and services. [This is especially true] for real estate.
This debt has been inflated not by government debt, not by government deficits, but by the Federal Reserve creating a $9 trillion subsidy to the banks to support real estate prices, and hence the value of bank-held mortgages and stock and bond prices.
This is not discussed, or even recognized, in the mainstream economic models. Instead, we have a kind of mythology by right-wing anti-labor financial lobbyists.
This mythology is about what I think most of the listeners are expecting us to discuss: the inflation of rising consumer prices. That’s the only kind of inflation that the Federal Reserve talks about. This is all blamed on increasing the money supply, as if somehow money is creating the inflation.
They are not talking about inflation as the result of monopoly pricing. They are not talking about inflation as a result of NATO’s sanctions against Russia. They are just talking about money [as if] somehow, if we [could] just stop money supply, if we could stop the government spending so much money on Social Security and Medicare, and other social spending (not military spending) then everything would be over.
We’re actually going to be talking about the relationship between, [on the one hand,] the inflation of housing and asset prices [and,] on the other hand, how this actually affects the inflation of consumer prices, and how debt and inflation all go together.
On a more practical and immediate level, it crashed because of COVID. Chinese real estate companies were using new money to finish old projects, and when supply shocks and work stoppages interrupted the system, it fucked the whole thing. The government has been reacting to that crash ever since.