1/11 The China Problem in a Nutshell: Property has become too expensive in China - i.e., the price-to-income ratio in Beijing, Shenzhen, and Shanghai all exceed 40x, vs. 22x for London, and 12x for NY; the definition of unaffordable housing, according to The Urban Reform...
2/11... Institute, is a ratio of 3x. Thus, due to broad-based pressure, President Xi has begun to "prick" the property bubble in China in an effort to make things affordable for his population (which, by the way, saw a peak in working age folks - i.e., people between the ages...
3/11... of 15 to 64 - in 2015, and is expected to begin declining by 2030 [according to the World Bank]). The problem, unfortunately, is real estate construction accounts for ~29% of China's GDP, while China's property sector, alone, is ~20% of global steel & copper...
4/11... construction, & ~9% of global aluminum demand; furthermore, the expansion in household debt in China since the end of 2015 is around $6.4tn, and growing at ~$1tn/yr (vs. just $610bn in U.S. mortgage debt added in the 12 months ended June 30th - and that's with the...
5/11... fastest growth in U.S. housing prices, over that time frame, EVER); and, housing represents 78% of Chinese consumers' net worth, vs. just 38% in the U.S. Yet, with Xi as President for life, unlike prior rulers, he's worried about multiple cycles, & not just that of one...
6/11 ... administration. So, in his crackdown on the out of control pricing in China's housing sector (the 3 Red Lines policy - i.e., leverage limitations for property developers), collateral damage in the form of unpaid suppliers of China's property developers have emerged;...
7/11... &, they are successfully filing lawsuits and freezing the assets of the developers. Thus, with 11% of Evergrande's liabilities (and similar levels for all of China's property developers) being customer deposits on presold apartments that aren't finished, which are also... 
8/11... getting seized, investors have stopped buying - this can be evidenced by the -45.3% YoY fall in property sales reported in the Oct. 1-8 period. Yet, w/ sales drying up, & stuck w/ a ton of unsold units, Chinese developers purchased 90% less land from local governments...
9/11... in the first 12 days of September YoY. Thusly, given China is the biggest buyer of the world's commodities (by FAR), with its consumer already on the ropes (Aug. retail sales in China were up just +2.5% vs. expectations of +7% and +8% recorded in July), a housing...
10/11... correction in China - which appears fated at this point given President for life Xi Jinping does not have the constraints prior dictators had - could prove quite bad for the world (who's going to buy all the cars, luxury goods, iPhones, etc. in China?). So, with Xi's...
11/11... "common prosperity" push, combined with an ongoing housing bust, it seems the Chinese consumer is about to be in BIG(GER) trouble. This is NOT priced in - many assume Xi will stimulate, but he appears to be more concerned w/ righting this ship NOW before it gets worse.
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