You have heard of the saying "a broken clock is correct twice a day right"? You just said that the world's real estate builder is defaulting. Well, the 60 minutes segment showed an actual empty city with almost no residents (from 10 years ago) Who's the developer behind that? And how big was that development in comparison to Evergrande today? And did it default? What happened to it?
No answers? Well that's why this is faulty analysis. It takes more than a few tweets to analyze the real estate market in China. It will probably take hundreds of thousands of dollar and a team of people on the ground to dig up historical data on those past developments and compare it to today.
There is an entire book called "China: The Bubble that Never Pops". I have not read it, it's on my reading list.
I'm not saying there will be no consequences to Evergrande going bankrupt. I'm saying that without an accurate comparison to other bubble talks that has been around for 10 years, the research is by definition faulty.
Be careful what you wish for...
In his book, China: The Bubble That Never Pops, Thomas Orlik lays out the case for China being able to weather economic storms better than most people expect.
I generally agree that China will continue to dodge bullets in the short term.
However, PolyMatter did a great series of videos diving into some of the longer-term structural problems faced by China. If they don't solve these problems, they are likely doomed to decline in a similar fashion to Japan. As some older folks may remember, we all thought Japan was going to take over the world in the late '80s and early '90s, but instead they suffered a "lost decade". Japan remains an important economy, but they are not quite an economic superpower.
PolyMatter Videos (these are great):
China benefitted greatly from a young workforce and a limited number of older folks. Those numbers will be turned on their head in coming decades. Increased immigration is not an option due to an unwelcoming culture and the difficulty of learning Chinese.
Demographic Collapse — China's Reckoning (Part 1)
China's housing market represents a massive mis-allocation of resources, at best.
Housing Crisis — China's Reckoning (Part 2)
China is running out of water, and much of the water that is easily accessible is heavily polluted.
Water Crisis — China's Reckoning (Part 3)
China is stoking nationalism at home by insulting and alienating foreign governments. This could hurt their ability to continue purchasing foreign companies and investing in developing countries.
Politics and economics are fundamentally related, especially in a country where the state exerts such strong control over the economy.
I was going to write up a whole paragraph explaining why China has successfully handled its rising debts and why arguments like "oh they said this 20 years ago" are idiotic (because China wasn't facing a potential debt crisis back then. The 2008 financial crisis changed how they used their currency reserves. it's also why western debt to China hasn't grown much since then. They're lending to their own people now, not to us), but why do that when it's already been done for me?
I'm just going to recommend Thomas Orlik's book on the matter. He explains the whole thing better than I ever could. He lays out why China's averted crisis so far, what they need to do to keep their success going, and a few scenarios for how it could go wrong and how that would impact the rest of the world. He certainly doesn't frame China's continued economic success as a certainty (he's cautiously optimistic, but notes that Xi's more recent moves are steps in the wrong direction, and I think anyone who does is either ignorant or dishonest.
You pinged the wrong user btw. I only noticed this because I saw the other reply.
> i also didn’t think it was fair that you dismissed their critique of those articles you shared bc they are in fact opinion pieces. i checked them out and was expecting to be molested by regression analyses but nah, just words....
Two are opinion pieces, and of course they're opinion pieces. They're talking about what could happen in the future. They couldn't be anything but opinion pieces. The authors, however, have a fair bit of credibility given their jobs and backgrounds. The third is an article covering a study published in The Lancet, an extremely prestigious medical journal. Attempting to dismiss any of these because they're opinion pieces is very dishonest, and I'm just not interested in that kind of argument.