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interestrateripoff

Building Boom In China Stirs Fears Of Debt Overload

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http://www.nytimes.com/2011/07/07/business/global/building-binge-by-chinas-cities-threatens-countrys-economic-boom.html?_r=1&ref=business

In the seven years it will take New York City to build a two-mile leg of its long-awaited Second Avenue subway line, this city of nine million people in central China plans to complete an entirely new subway system, with nearly 140 miles of track.

....

In the last few years, cities’ efforts have helped government infrastructure and real estate spending surpass foreign trade as the biggest contributor to China’s growth. Subways and skyscrapers, in other words, are replacing exports of furniture and iPhones as the symbols of this nation’s prowess.

But there are growing signs that China’s long-running economic boom could be undermined by these building binges, which are financed through heavy borrowing by local governments and clever accounting that masks the true size of the debt.

The danger, experts say, is that China’s municipal governments could already be sitting on huge mountains of hidden debt — a lurking liability that threatens to stunt the nation’s economic growth for years or even decades to come. Just last week China’s national auditor, who reports to the cabinet, warned of the perils of local government borrowing. And on Tuesday the Beijing office of Moody’s Investors Service issued a report saying the national auditor might have understated Chinese banks’ actual risks from loans to local governments.

Everyone loves the off-balance sheet con.

Still at least the recovery will pay for it all.

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http://www.zerohedge.com/article/guest-post-imagine-grand-central-station-after-flesh-eating-virus-outbreak-and-you-get-guang

In the end, it was a 27.82 kilometer (17.39 miles) cab ride from my downtown hotel, and took 49 minutes to get there. I know this because Chinese taxis are very efficient and give you a highly detailed receipt.

Guangzhou South Station is absolutely COLOSSAL. By comparison, it is much bigger than any of the 3 international airport terminals in Manila where I live… and I’d say it’s over 8 times larger than the Central Airport Express Station in Hong Kong.

For a start, the Guangzhou South Station is built on THREE levels. I was dropped off at level 2. When I entered there was an “Information” booth straight ahead. It was unstaffed. In fact, the entire second level was completely deserted. Very spooky. It was something out of a low-budget zombie movie.

And then we have this on Zerohedge.

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the chinese bubble popping is going to be epic,even by the standards of boo.com

Not really, China isnt that much of a bubble yet. Sure the Eastern property markets are a bubble but the percentage of cash buyers is significant compared to the West. add in the minimum 30% deposit requirements.

Likewise there are serious debt problems in some of the provinces but with growth at 7%+ and huge reserves, China is in a lot better position than the West to deal with their problems.

The USA's dire situation is a much bigger risk to the world than China's.

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the chinese bubble popping is going to be epic,even by the standards of boo.com

It is.

It's frightening to think about actually, because the standard MO in these circumstances is to scapegoat someone and attack them.

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The ghost towns of China:

Amazing satellite images show cities meant to be home to millions lying deserted

By Daily Mail Reporter

These amazing satellite images show sprawling cities built in remote parts of China that have been left completely abandoned, sometimes years after their construction.

Elaborate public buildings and open spaces are completely unused, with the exception of a few government vehicles near communist authority offices.

Some estimates put the number of empty homes at as many as 64 million, with up to 20 new cities being built every year in the country's vast swathes of free land.

The photographs have emerged as a Chinese government think tank warns that the country's real estate bubble is getting worse, with property prices in major cities overvalued by as much as 70 per cent.

Read more: http://www.dailymail.co.uk/news/article-1339536/Ghost-towns-China-Satellite-images-cities-lying-completely-deserted.html#ixzz1RVHndDlY

It's already a disaster if this has happened. Where are all the Chinese with the money to buy the houses going to come from? I'd love to know what Bank has taken all this concrete as security and for how much?

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Not really, China isnt that much of a bubble yet. Sure the Eastern property markets are a bubble but the percentage of cash buyers is significant compared to the West. add in the minimum 30% deposit requirements.

Likewise there are serious debt problems in some of the provinces but with growth at 7%+ and huge reserves, China is in a lot better position than the West to deal with their problems.

The USA's dire situation is a much bigger risk to the world than China's.

+7% growth fuelled by debt and building/economic capacity that isn't needed? Not that the West figures can be trusted more than China's but I wouldn't bet on China's position being any better than that of the West.

Edited by interestrateripoff

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+7% growth fuelled by debt and building/economic capacity that isn't needed? Not that the West figures can be trusted more than China's but I wouldn't bet on China's position being any better than that of the West.

The Chinese financial community have been setting up off the shelf companies big and small and defrauding anyone they can sell the shares to. It's exactly right to say that they cannot be trusted. In this case better to just say that gigantic empty cities are the clue.

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China gets rich from exports

Lends money to local governments

Local government uses money to build stuff

Investors buy properties

Somebody realises nobody can afford to actually live in these places

Investors cant sell

Bubble bursts

Local government can't pay back loans

Central government repossess properties and turns them in to social housing?

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Central government repossess properties and turns them in to social housing?

Yup and this is the master stroke, it wipes out 150 million or so middle class types the ones with the money. Yet wins the love and appreciation of 1.2 billion people (the poor).

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  • 295 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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