Communist leadership Chinas has announced that it will provide around 69 billion US dollars to save the real estate sector of the People’s Republic, which is in crisis. The money will be used to provide loans to China’s provincial governments, which will use them to buy, complete and rent out construction complexes currently under construction and as social housing.
According to estimates, there are currently between 65 and 80 million vacant rental units, slightly more than the entire city of Munich. However, international bank experts believe that the estimated amount will not be enough. Some say it could take as much as $1 trillion to keep the housing market from collapsing.
Many Chinese have invested in unfinished apartments
It is not entirely clear how Beijing’s provinces are supposed to repay the huge loans, as they are reportedly already $15 trillion in debt. Before the real estate bubble burst, the main source of revenue for local governments was the sale or lease of state-owned land in the People’s Republic.
Alexander Görlach’s book (advertisement)
Red alert. How China’s aggressive foreign policy in the Pacific is leading to global war
Beijing now wants states to cancel those deals before construction on the properties has even begun, to shore up the balance sheets of troubled companies. How this can be achieved remains questionable, given the mountains of debt and empty coffers.
These uncertainties are not helping to put China’s economy back on the growth track. People do not spend money in crisis conditions. Many have invested in unfinished apartments. They have been living in uncertainty for the second year, whether they will see their savings again. If your apartments are finished, they will not achieve the increase in value that they once bought.
This doesn’t help, but sees consumption as a decline
New home sales fell 28.3 percent in the January-April 2024 period, compared to a 27.6 percent decline in the January-March period. New home prices fell for the tenth month in a row in April, falling 0.6% from the previous month, the fastest decline since 2014, according to Reuters news agency. since November. percentage of national economic output.
At a general meeting of the National People’s Congress in March, Governor Xi Jinping bluntly rejected measures that could boost domestic consumption and improve the strained situation for many Chinese. In Xi’s mind, the hard bread people will eat under his rule is just one step in the path of “national rejuvenation,” as he calls the ideological consolidation of the People’s Republic under his leadership. He sees consumption as a phenomenon of decline in Western culture, which Xi and his nomenclature believe is in decline.
Even the fact that more than 20 percent of university graduates cannot find work and therefore cannot contribute to the recovery of the economy can neither soften the dictator nor convince him that the situation in the country threatens his and the Communist Party’s rule. Rather, he disparages the youth as soft and advises them to go to the countryside and work in the fields or mines, as he must have done as a youth under Mao.
Is Xi hiding the economic crisis with war?
Given the failed measures and the primacy of ideology over economics, there is a danger that Xi Jinping may resort to non-economic means to cover up China’s economic crisis. Just last week, Beijing gave democratic Taiwan another shot Blockade of the island indicated that his troops could attack the island at any time.
The conflict started by Xi with the Philippines over the Spratly Islands can also escalate at any time. Beijing’s rulers have built artificial islands in the South China Sea and forced the military to arm them with missiles. If a serious military conflict were to occur in this region of the world, it would have an immediate devastating effect on global trade and prosperity. In Europe.
The demographic crisis that China is experiencing may also have a double effect on the scenario described here. on the one hand, there will soon be fewer people interested in buying lots of empty apartments. On the other hand, the decline in the number of people of military age will put pressure on Xi to consider military options in the medium term. This is not good news for China or the rest of the world.
