China’s export growth may have slowed compared to recent months, but it is nonetheless up 7.1% year on year in August. I don’t know what the global figures are, but I suspect that China continues to grow its share of total exports.
This should seem pretty remarkable given the problems the Chinese economy faced, but it isn’t. The government continues to release measure after measure aimed – almost desperately – at keeping total production rising. And production has risen, even if only slowly.
The real problem, which Beijing still seems unable to address, continues to be very weak domestic demand. Imports were barely up year on year, rising nominally by 0.3% and almost certainly falling in real terms. This is the third month of surging exports and flat imports.
It is my understanding that middle class Chinese have bought homes. Chinese corporations have sold homes not built. Chinese buyers have revolted & stopped making payments on those resold homes.
China’s real estate crisis is escalating, raising concerns about growing risks in the banking system.
Desperate homebuyers across dozens of cities are refusing to pay mortgages on unfinished homes, according to state media reports and economists at international banks.
In China, real estate firms are allowed to sell homes before completing them, and customers have to start repaying mortgages before they are in possession of the new property. These funds are used to finance construction by the developers.
The payment boycott comes as a growing number of projects have been delayed or stalled by a cash crunch that saw giant developer Evergrande default on its debt last year and several other companies seek protection.
Unemployment amongst the young (16-24)is now a big problem in China.
Covid city wide shut down likely ain’t helping household finances.
So will China avoid a real estate collapse that could take down their economy into recession?