In the long term, the bursting of China's property bubble is probably good news, affordable housing is in the interest of everybody except property developers.
In the short term, though, this is likely to trigger a domino effect of other property developers defaulting and a lot of pain for everybody who (thought they had) bought property with them. The real tests are whether China will allow the Chinese entity to go bankrupt (and not just the HK one), and what's going to happen to foreign shareholders and ordinary Chinese citizens who trusted these companies with lots of hard-earned money.
One unpredictable ripple effect will also be on the crypto markets: there have been persistent rumors that Tether is heavily invested in Chinese property developers in general and Evergrande in particular.
I unironically think a property bubble pop is a great way to defeat the demographic slump in the long term.
That and the recent crackdown/reforms on private education makes me think the party is aware that property bubbles and education costs are a liability
The defaults changed, at least in the West.
When I was little it was still married-with-children by default, probably at relatively young age, and people had to decide not to have children. That was in part helped by the lack of widespread use of contraceptives. The norm in my primary school was two or three kids per family. I remember only one classmate with no brothers or sisters. Of course zero children families were not represented in there.
Now the default is single-no-children and you have to make an explicit choice to marry (you used to be nudged into it by society) and to have kids, by stopping to use contraceptives and to do all the things that long time singles are used to do.
Cost of housing, living, parenting is also an issue but I think that the default mindset is more important and sets the conditions for higher general costs: if on average people can spend all their money for themselves, the society and the market adjust and people who have to spend time and money also for kids are at a disadvantage.
If the default is changing in China too, their population is going to shrink no matter what.
While I agree with that shrink part, you must be living in a bubble for the family part.
Literally all my colleagues in past 5 jobs (that few hundreds guys) have kids if they are over say 35. All colleagues of my wife. All of our friends. I cover western (Switzerland) and eastern Europe here. Same for Swiss colleagues and foreigners. Folks with nannies or family close but also raising their kids just by themselves, like us.
2 kids are standard, 3 are actually slowly becoming a norm. 1 is rare and more related to medical issues rather than an actual decision. From my own personal experience being raised as a single child, it sucks in many ways and will affect you negatively for rest of your life, regardless of all the love you received from parents (which of course helps but doesnt mitigate this).
I'm 30 and literally none of my friends that age have kids.
Where do you live?
Poland.
I am curious what country and industry you work. Most developed countries and some major developing ones have less than 2 children per couple in their data. The data is probably correct thus your anecdote would be an exception. Thus makes me wonder what industry is so exceptional?
we're in HN, its IT, software dev to be more precise
Surely there must be some downsides to siblings too. I also don't celebrate being an only child, but it didn't turn me into a misfit either.
And to your anecdotal evidence, let me respond with anecdotal evidence... aren't we constantly hearing news about declining birth rates and an aging population? I have heard this from Korea, Japan, the United States, generally about Europe and specifically about the Netherlands.
Your anecdotes don't nullify the data
yes, that might actually be _the_ biggest incoming issue china has (through much much less because of housing prices).
Basically by combining one child politics with various cultural and economic effects lead to a very strongly favor for having a boy over a girl. Combine that with natural reduction in birthrate due to reduction of poverty and some other factors it lead to a situation where China isn't just approaching a shrinking of population size but more like a collapse which could easily lead to various social and economic emergencies (like collapse of rent system, collapse of health system, problems to feed all elderly people etc.). Given the current "moral" direction of their government I wouldn't be surprised that if they don't find a better solution they might either start a war to kill many of their young and mid aged single men and/or start to mass euthanizing old people, at least if sick and/or poor. They even have the perfect excuse wrt. of they PR represent that: "hey we just copied Canada why are you complaining".
Maybe I missed something as a European who doesn't always see what's happening over the great pond, but the sentence "hey we just copied Canada why are you complaining" confuses me.
Did I miss Canada embarking on a policy of euthanasia? I know that the treatment of native people had quite a few scandals in recent decades, did you want to allude to that?
Without wanting to make light of that situation, I think it is rather different in scale to what you propose.
Canada allows medically assisted suicide: https://en.wikipedia.org/wiki/Euthanasia_in_Canada
Thank you. I have responded to you, since you were one minute earlier. I won't repeat the whole comment that I had written and lost due to my phone running out of battery, but still wanted to at least add part of it with thanks for the information.
This kind of euthanasia (voluntary, with a review board, like in Switzerland) is something I feel should be a human right, though I'm not sure about the intricacies of the Canadian system.
I think one should be very much aware of the extreme chasm between this and the kind of euthanasia committed in the early half of the last century in the third Reich, and not confuse them because of the common name. From the grandparent comment, I had assumed they meant to imply that Canada had implemented something closer to the latter.
It's not as bad as what I believe China might do if worst comes to worst.
But from what I have heard the Canadian system has issues, with cases of especially permanent sick+poor people being in some cases constantly "nudged" to say good by even if they still have a strong will to live. Through I'm not sure how wide spread such issues had been and if they where fixed.
The reason I mention it is because china would also claim it's fully free choice, then if that isn't enough start nudging and then if that isn't enough go further.
Lets just hope it won't happen.
canada legalized it, euthansia that is. first in i wanna say 2017? and then another law expanded it fairly recently, or rather removed some barriers.
That would be stupid, one thing the regime is not. Easier is to allow immigration of brides from Vietnam, Laos and Cambodia. Also, they can simply promote mechanization of agriculture. Right now, ~20-30% population is in agriculture that can be reduced to 2-5%.
this regime, aka Xi Jing Ping's reign is pretty stupid. He has had failed projects after failed projects for 10 years now. Also, dictatorships don't care about unemployed young men, look at Putin, sending waves of unequipped untrained men to their death.
China already has human trafficking of women from Laos and Cambodia. Birth rate still dropping.
Porn and contraceptives did a lot of damage.
It used to be that deciding to conceive made parents get their child into schooling and a lifelong career. Instutions were built and maintainted to support inflow of children and stable corporations were kept alfoat by a growing populace.
Making conception optional for sex has knocked over most of the stability there was in the west and people are scrambling to replace it with electronics and authority.
Tack on top of that, these country wide changes were not made by local governments, but by factories and corporations gradually dragging in the tools to break our society. And immigration on top to plug the gaps.
Something's gone terribly wrong with the West and there's no weasling out of it. It's time to stand up.
> Instutions were built and maintainted to support inflow of children and stable corporations were kept alfoat by a growing populace.
It's absurd to attribute the failure of modern capitalism to demographic flows or contraception.
Western corporations were relatively stable only because the rate of technological disruption was lower and, more importantly, the rate of overall financialization of the economy was so much lower. Capital moved very slowly, and financial instruments were few, often strictly regulated. Most capital was in steady manufacturing and agriculture business, rather than in volatile service industries. That made for a view of the economy where businesses were an institutional part of society, with roles and responsibilities and connections to locality.
Once technological disruption and financialization accelerated, unshackled capital steamrolled society into doing what it's best for capital pretty much all the time, demographics be damned. Part of the push towards later and later parenthood is due to the increased specialization necessary to tech-intensive capital-fuelled businesses, requiring longer and longer training times and complete dedication for several years on top of that - all to earn unstable jobs that disappear very shortly, thanks to more and more automation.
Yes, something is broken in the West: the needs of capital have trumped the needs of people for two generations, and now we're paying the price for it. You won't fix this through demographic tinkering, but through societal and political change. In fact, increasing demographic pressure on Western societies, at this point, is courting disaster.
And there it is. This narrative that immigration hasn't been a constant and deciding factor in the development of the West (and pretty much everywhere else) is so wild. Stability of an insular population is the absolute exception of history.
The "west" and china have _very_ different demographic pressures.
For example china famously had(has?) the one child rule. This meant a deliberate shift in how children were raised (all your eggs in one basket)
I suspect you probably want to look deeper into the causes of that more. Yes contraceptives have a role to play, but they are not automatic, they require a deliberate choice, sometimes daily (https://www.statista.com/statistics/573210/contraceptive-use... granted this is for the UK, and doesn't account for people not taking it. The point is that younger women are taking pills daily)
Why are people not having kids? the answers are more complex than you seem to be suggesting.
If you look at the historical birth rate through the 20th century (hard to find data before 1950, but not impossible), the birth rate hovered around 5 children/woman or 35 children/1000 population. These numbers drop immediately and precipitously starting in 1960, the year "the pill" became publicly available.
Lots of people, young and old, take pills every day. People forget and unwanted pregnancies still happen, but a) that's not suggestive that the pill doesn't work or that it isn't responsible for a significant drop in realized fertility (the birth rate data makes that clear), and, b) the medical advances and cultural shift the pill enabled (casual sex is okay, sex outside of marriage is okay, children outside of marriage still pretty undesirable for most people) also paved the path for emergency contraception and the widespread acceptance and availability of abortion (to the extent that we now end the lives of 73 million unborn per year - that's a top-20 country, by population, per year).
In summary, is it more complex than "the pill did it"? Yes, but not much more. Birth control (of all types) is responsible the bulk of the reduction in birth rate.
Agreed, from everything I've seen the catalyst for this [low birth rates] is birth control and women's rights. Both gave women choices [a good thing]. When they use these choices it creates large demographic shifts. Enough time has passed that 2-earner households are required for a similar QoL, which makes children more expensive.
Don't ignore selection bias. When you're a kid, almost everyone you know is a child, and so almost every adult you know is a parent.
I don't know how old you are, but most of those societal changes - no need to marry and contraception - have been in place for decades. I'm in my early 30s and I wouldn't say staying single and not marrying is the "default" - yes, there's more people doing it, but I still know a lot of people who have coupled up and got married. I don't think I know anyone who's completely checked out of the idea of a relationship yet - the single people are still dating, often with the expressed desire of finding someone.
I have 2 kids, and the main reason people I talk to aren't considering a third is cost. Cost of an extra bedroom, cost of a larger car, incredibly high childcare costs - there's a very large real reduction in living standards that comes from going from 2 to 3. Compare that to my parents generation, where 3 or more siblings was the norm. I suspect a large part of falling birth rates isn't that loads more people are living child free lives, but that the people choosing to have kids are having fewer of them.
My feeling is that it's heavily friend-group or clique dependent, or potentially geography-dependent (metropolitan vs rural).
I'm also in my early 30s, but the majority of people I know are not married. I know about the same number of people who are polyamorous as married despite not running in those circles.
I know I'm an outlier because the stats don't hear anything close to that.
I will say that in the major metros, marriage still feels relatively uncommon. I think I've been to one wedding in several years, and it was a work acquaintance more than a friend (I was surprised to be invited, really). Most of the people I knew that were married were in their late forties and beyond.
I think it's important to delineate between people who want a relationship and people who want to get married. Relationships can exist absent a marriage, and marriages can exist absent a relationship. Some people don't want to be single, but don't want to be married.
That's the demographic that I've seen growing. I don't see people pulling away from relationships so much as marriage. Marriage comes with so much baggage, and a lot of the traditions are based around historic assumptions that don't hold true anymore.
I doubt that's going to help. The decades of property bubble has changed the mindset of the people. Just look at Japan, it's property bubble burst was decades ago, but till now, are there any signs of turnaround? Young people have enough trouble just to get a shelter and feed themselves, and now you want them to have kids which add more pressure onto what they are already struggling to coup with. How likely is that?
Yeah, it's gonna be very hard to get the genie to go back into the bottle, people won't forget that real estate is very powerful for financial speculation, and that even if the bubble bursts again and again you have plenty of years with amazing returns.
At least the same hasn't happened with food and drinkable water yet.
The problem gets deeper: This may sound insane, but I would argue that the productivity is way too high. There is too much stuff, which is too cheap, which makes it too hard to make money by actually producing anything. This it turn splits the economy into two groups: One that doesn't have money, live scrapping the bottom, and typically in debt. The other that does have money, with no good opportunities to invest, which causes bubbles.
Ye the competition is too high in the base and the profit taken by middle men.
However, I think covid changed that, where producers collectivly realized that if they just raise prices the middle men need to pay up.
Being stuck in a sector that operates "efficiently" sucks. You want guilds, like lawyers and doctors, or inefficiency, like the financial sector.
No, not like that:
Evergrande is in the first group here, fruitlessly producing something of no real value, as there is too much of it.
The second group are those who invested in Evergrande itself, or the housing it built.
It sucks for everyone.
It sucks for Evergrande, as sooner or later it had to go bankrupt.
It sucks for those who invested in the housing, as it's clear that if they actually tried to sell or rent out the housing they would end up with some paltry sum.
It sucks for those who invested in Evergrande, as they're going to lose money.
It suck ls for those who can't afford a place to live because of the inflated prices.
I think there are really no winners here. No middlemen filling their pockets. It was a loss for everyone.
As with any bubble, the winners are the people who cashed out at the right time
Don't worry, the unfortunate side of the "split" could just start a side-hustle! Maybe another podcast, or OnlyFans account. Everyone has a story to sell, and if not, just make it up! "Content creation" to create need for a marketing-made spontaneously mass-produced something, anything, as parasitic load on dopaminergic parasocial relationships. See? Growth finds a way! Super healthy, totally not an indicator of things getting catastrophically unbalanced.
Already, at capacity attention, over capacity exploitation. Infrastructure debts, planetary debts #YOLO
I wonder, when we're finally getting AI enhanced productivity end to end, will we realize how deep we dug ourselves in?
The wrong kind of productivity is too high. Too much consumer crap, much of it disposable. Not enough no-compromise blue sky R&D and research into physics fundamentals.
But Japan has a population crumble, a long LONG tradition of home price devaluation (earthquakes destroy everything, why build super high quality stuff and why maintain, after 10 years your protection is more fragile or obsolete) and prices are extremely low.
In China, they had a speculative bubble sure, but what s gonna kill the market is that in 20 years a lot less young people will exist to even buy the houses, like in Japan.
People live incomparably harder lives in Nigeria than in Japan, and yet they have plenty of children. It's about values, not circumstances.
I wonder how much of the world's growth is squeezed by these kinds of inefficiencies.
Property speculation keeps prices high, and people paying off mortgages in dead-end jobs. Education costs force parents into difficult decisions to move out of HCOL areas where they likely have higher-value jobs. Energy and Water costs spike while providing no societal benefit.
The West is obsessed with keeping these in place, the rising East seems better placed to change economic inefficiencies. Not sure how it'll play out but I feel like Western society is being pillaged by the PE crowd who can take advantage of the above.
What does PE mean?
Private Equity
Probably Price-earning ratio (share price/earning per share)
How is the East better positioned when this article is about a massive failure due to property speculation? It just took a different and exaggerated form in China due to the rightly perceived shakiness of Chinese stocks and the limitations on land and property ownership. If this development cements in the minds of the Chinese populace that buying an extra apartment as an investment is no longer a safe place to store their money then who knows what's going to happen next. If you can't keep your money in stocks and you can't keep it in real estate then how do you invest for your future? This is an even more pressing question due to their rapidly aging populace with the prospect of little to no support from their children and non-existent grand-children.
The real-estate market in the West may be bonkers but at least someone in their prime earning years can invest in stocks if they can't purchase a home. That has its own risks but with a little knowledge you can mitigate them and with patience you can wait them out and even benefit from them.
lol wut? china changing ineffeiciencies? this must be winnie the poo propaganda. china is corrupt as all hell and much of their building material is of dubious and shady quality. japan and korea are stagnating, and much of SEA is still struggling to modernize and combat their own structural inefficiencies.
PE is a cancer, but I'd be curious to know how much of a stake foreign firms have in those orgs.
Can you elaborate on the crackdown/reforms on private education?
it is, but it's also complicated as the problems are quite a bit different in China then in the US
the reason there was a bubble in China was because they sold (barely) affordable (apartment owned, not rented) housing to a huge amount of people while not producing it. Like they financed it similar to a snowball system. Group B buys housing but pays for the housing bought by Group A then Group C pays for Group B etc. But at some point it fell apart and people realized the housing they should have gotten "soon" isn't being build (or stuck in a partial state) and the company has no money anymore. (Kind oversimplifying the whole thing.)
To top that off there are (state build) ghost cities which have cheap appartments and acceptable building build quality, the problem is there is nothing there, no jobs(!), no supermarket, bus, people, "anything", if you are unlucky even electricity might be cut of in parts of it, (also I guess for rent not apartment ownership). (But there are also enough examples of western media reporting about ghost cities messed up because turns out just a few years later it wasn't a ghost city anymore.)
And to make that worse it's not just Evergrande. It outside of the areas with a lot of central government focus there where many cases of houses building companies which had money issues trying to pretend everything is fine by cheeping out on building cost to a point where houses build that way are basically unusable. Through from the outside it looked like there is still progress. Issue with that is, it is really hard to guess how bad it is, pro-china media most times doesn't mention it and if it says it's a rare exception and/or videos are fake, anti-china media says it's bad to a point it's everywhere, and you find little in between. And both sides are known to lie a lot.
Very curious how these opportunities for housing were marketed to the masses? These ghost cities you describe, I can see how the new housing can be presented as a life-changing opportunity, with nice images/videos but the reality is...a ghost town, facade of a city.
China is still urbanizing rapidly. Just like GP said, it won't be a ghost city for long. It depends though on how long the investor can hold out, and whether or not the new city is doomed from the start.
CCP planning is just different. TBD if it's doomed to fail like the Soviet Union, or if it will make it through a crisis like this. It's also hard to tell what will ultimately call a crisis; just thinking back to 2008, a lot of the story is only figured out in retrospect (eg how critical Bear Stearns was).
Many things wrong with that statement. There is a reverse migration from cities back to countryside, since the wages in the city have fallen, jobs have disappeared, rent is still expensive, and it's harder to justify living in the city when you can only save a few hundred dollars a year from a job.
Thus, empty retail stores in major tier 1 cities. Empty apartments in Dongguan and Shenzhen. Small crowds at malls.
From what I heard that is a somewhat "recent" trend while most ghost city cases I heard of outdate that trend by month potential over a year.
I think a lot of people living in the west without ties to china haven't realized that there are many huge but sometimes subtle changes in China in the last view years.
They are marketed as investments, not housing. The majority of people buying these "Homes" never intended for themselves or anyone else for that matter, to live in them in the first place.
Ghost cities are a good example of how simply building housing is not a perfect solution. If the housing is somewhere where people don't want to be then it is worthless and also useless since no one can make use of it if they can't make a living there.
The effect of China's property bubble was an oversupply of houses, leading to unnaturally low property prices. The long term effect will be a consolidation in the property branch, leading to less supply and higher property prices.
Whether this is good or bad I don't know, but it certainly will not lead to more affordable housing than right now.
Was there an oversupply in actually built properties in places people want to live? My understanding is that property prices in major cities are still massively unaffordable
What does it matter? All the people who bought apartments in the middle of nowhere as an investment now want to buy the apartments in real cities => thus more demand.
Tether is by far the largest counterfeiter of USD and has already been shown to be backed largely by nothing.
The introduction of Tether coincided with the hijacking of the Bitcoin GitHub repo by the for profit company Blockstream.
Blockstream's Samson Mow had close ties with Tether and El Salvador dictatorial President who made Bitcoin a national currency on exchange for billions of dollars of free Tether dollars.
Tether is not and does not need to be backed by anything other than US intelligence agencies. There is no proof of this other than the fact that the larger USD counterfeiter is allowed to exist and control the price of the hijacked Bitcoin chain with the ticker, BTC.
I don't like Tether myself, but it's definitely not counterfeiting. To counterfeit something, you need to pass it off as the real thing. Tether is not the real USD, it's just a currency made to be worth around the same amount as a dollar, and the value often hovers around $1, but it's not always $1.
Another real world example is the Hong Kong Dollar. Just because it's pegged to the USD, does not mean it's counterfeit.
This is ridiculous, sorry. The NY AG investigation showed Tether was actually mostly backed at the time (surprising me, too!)
And the Blockstream FUD is tired (I am the longest serving technical employee at Blockstream)
In the long term, the bursting of Tether is probably…
and in the short term too!
Property developers are the answer to affordable housing. We cannot have affordable housing without building millions of new housing units. It's the home OWNERS who are dragging their feet to try to artificially inflate their property values
This is true. The (ironic) lack of control of property holding to sell moronic. Well, technically it is the lobby industry which helps no citizen when they push back for measures that avoid accumulation of properties causing the market to concentrate loads of money on real state for obvious reasons.
In my city, they tried to implement taxes for those who own more than two properties and it would be more expensive for properties that had no one living. The result is that the proposal was quietly removed from the voting in a Friday night before a weekend followed by long holidays.
It has already happened. Evergrande and Countrygarden, two of the biggest developers both defaulted.
The insolvency of Chinese property sector is old news.
When large groups of assets and securities go to zero, it always has a a ripple effect on markets across many other assets. That was the story of Bear and Lehman in 2008-9.