I have written and posted videos of the situation of China’s economy.
Now, it seems that the real estate bubble in China is finally starting to pop.
Gordon Chang over at Forbes reports the following:
Nothing is going right for Hangzhou at this moment. Walmart will be closing its Zhaohui store in that city on April 23 as a part of its overall plan to dump marginal locations—about 9% of the total—in China.Thanks to the world’s largest retailer, another large block of space in Hangzhou, the capital of Zhejiang province, will go on the market at a time when there is generally too much supply. The problem is especially pronounced in the city’s premium office market. Hangzhou’s Grade A office buildings at the end of 2013 had, according to Jones Lang LaSalle, an average occupancy rate of 30%.
The real weakness, however, is Hangzhou’s residential sector. The cause is simple: massive overbuilding. Sara Hsu of the State University of New York at New Paltz writes that Hangzhou faces “burgeoning swaths of empty apartment units.”
Hangzhou’s market has not yet collapsed. There are still secondary sales, for instance. Singapore’s Straits Timesreports Allen Zhao, a businessman, has been looking to sell his two-bedroom flat in Hangzhou for 2 million yuan. His neighbor just let go a similar unit for 1.7 million. If Zhao also sells for that amount, he will make a profit, but he will be disappointed. “That is not much more than the price I paid in 2012,” Zhao told the paper. “Now I’m regretting not selling earlier—more bad news about the property market keeps coming in every day.
The People’s Republic in the “reform era” has not suffered a nationwide property crash. Analysts say the problems in Hangzhou are “regional,” but now fundamentals and market sentiment either are or will be pushing markets down across the People’s Republic.
“The banking system and the shadow banking system are becoming concerned about exposure,” says David Cui of Bank of AmericaBAC +1.46%. “Once people refuse to provide credit to developers, their balance sheets will be under pressure, forcing them to cut prices. Once enough of them cut prices, fewer people would buy because most people buy property only when they think the price is going up. If this persists, it will turn into a vicious loop.”
Premier Li Keqiang has a few tools at his disposal, but they look insufficient to stop a general collapse of property prices across the country. The problems, deferred from late 2008 with massive state spending, have simply become too large. And we must remember that he works inside a complex, collective political system that is generally unable to meet challenges swiftly.
But that does not matter. There is little any leader can do. Collapses occur when people lose confidence. That is now happening in China.
Whether anyone wants to admit it or not; China’s economy is directly tied to ours. If their economy tanks, so will ours. You think 2008 was bad? China’s collapse will trigger a Worldwide panic and a massive, and I mean MASSIVE Worldwide economic meltdown that has never been seen in the history of mankind. As of 2012, we were borrowing 3.4 Million from China, a day.
Could you imagine, if China saw that things were getting rough and decided to sell off all of their bonds of ours that they hold? The so-called “experts” say that it would not happen; personally, I would not want to tempt fate.
There is but one solution to this — well, actually a few. We need to do away with these free trade agreements and put back into place tariffs on all imports from overseas. Then penalize any and all businesses who continue to manufacture products overseas. Then we need to elect a President that will stand up to the Federal Reserve and order them under full congressional oversight; and then order them to cease all printing of money; until further notice. This would help pay down our debt and fund our social safety net.
Then we need to do away with this idiotic progressive tax system that we have in this Country, which basically punishes those who are successful in business. We then need to replace it with a flat tax or a consumption tax system. This would free up the hands of entrepreneurs to create businesses and also create more jobs in this Country.
However, if what this report above that I quoted is true; we are not going to have time to do all of this. Because if China is about to crash; we are going to find ourselves in massive rock and a hard place. We are going to have massive social safety net and no way to pay the people in the net. For the record, Patrick J. Buchanan and Ron Paul; and some very other well known Conservatives have been warning that this was going to happen. Now, it seems that their warnings are about to come true.
I believe it would be a good time, for all of God’s children to pray; because things are about to get interesting….very interesting.