Why the Chinese real estate meltdown is significant - thread
Much like India, Chinese government controls the land and licensing for real estate development.
Also much like India, everyone in China wants to own a house. This leads to demand which leads to appreciation, which leads to more people investing in real estate. It’s a vicious circle.
To fuel their expenses, the CCP has created a structure where almost 65% of cost in a real estate project is land + licenses. Bureaucrats thinking they’re better businessmen than businessmen isn’t unique to India.
So lending to both the developer as well as buyers is from the government banks to pay the government. While this bill run was strong, prices kept going up and everyone was happy. Then Trump happened. Then Covid.
This string of bad news came when China has been giving away sun-prime loans to Sri Lanka and Pakistan like economies to build what no one will use. They’re spending on their military to build a hegemony. They’re building islands in the South China Sea.
Now the party is over and the 1st Domino to fall is the developers. That’ll be followed by banks. As pressure mounts, this’ll impact interest rates as well as put pressure on their artificially pumped currency.
That’s the last domino. It’ll impact the low tech manufacturing in China adversely. The Chinese are in for a rough landing. Let’s hope that unlike Covid this doesn’t get exported everywhere

• • •

Missing some Tweet in this thread? You can try to force a refresh

Keep Current with Abhimanyu Singh Rana

Abhimanyu Singh Rana Profile picture

Stay in touch and get notified when new unrolls are available from this author!

Read all threads

This Thread may be Removed Anytime!


Twitter may remove this content at anytime! Save it as PDF for later use!

Try unrolling a thread yourself!

how to unroll video
  1. Follow @ThreadReaderApp to mention us!

  2. From a Twitter thread mention us with a keyword "unroll"
@threadreaderapp unroll

Practice here first or read more on our help page!

Did Thread Reader help you today?

Support us! We are indie developers!

This site is made by just two indie developers on a laptop doing marketing, support and development! Read more about the story.

Become a Premium Member ($3/month or $30/year) and get exclusive features!

Become Premium

Too expensive? Make a small donation by buying us coffee ($5) or help with server cost ($10)

Donate via Paypal Become our Patreon

Thank you for your support!

Follow Us on Twitter!