China mortgage boycott data erased by censors as crisis spreads

https://www.bloomberg.com/news/articles/2022-07-15/china-mortgage-boycott-data-erased-by-censors-as-crisis-spreads

by throwaway_1928 • 4 years ago

355 295 4 years ago

bloomberg.com

fuckcensorship• 4 years ago

https://archive.ph/6fC1Q

Animats2• 4 years ago

Better coverage in South China Morning Post.[1]

[1] https://www.scmp.com/economy/china-economy/article/3185326/c...

neonate• 4 years ago

https://archive.ph/GFPyG

toinewx• 4 years ago

the github repo mentionned in the article (16k stars): https://github.com/WeNeedHome/SummaryOfLoanSuspension

schleck82• 4 years ago

Have faith in the party and the government. The party and the government will definitely give the people a satisfactory explanation, here is only for statistics, do not have excessive remarks!

Then a link to a Mao speech. Weird

elteto• 4 years ago

They have to remove the risk of being labeled anti-party or dissidents. They do this by appealing to the ideology, at least superficially.

Of course, this is a double edge play. Notice how the message boils down to “the party is right! It’s probably the fault of some dark, greedy figure(s) somewhere!”. But by absolving the government from ever being wrong you remove the possibility of them ever improving and fixing themselves. So someone(s) get sent to jail, others are demoted, and everything is swept unde the rug, but the structural problems remain and will appear again and again.

mensetmanusman• 4 years ago

The protesting citizens do this as a plea for help from the national government. They know that the true believers in the national government need to be kowtowed to.

It is a risk to your life to protest the national government, but the national government allows protest to local governments as a means to reduce steam buildup.

This results in over the top worship of Mao during local government protests as a hedge, because it creates a potential photo op where the local government is tearing down praise to Mao.

bigcat1234567815• 4 years ago

Maoism is for rebellion.

Mao is an icon of mass initiated political movement. You thus saw Mao and Maoism get badmouthed universally nowadays. And you wonder why that's the case...

RcouF1uZ4gsC• 4 years ago

Which means that this GitHub repo will soon go down.

China has enormous leverage both on GitHub and especially on Microsoft.

bigcat1234567815• 4 years ago

I am betting $100 that the repo will stay on.

m3kw9• 4 years ago

They can’t block GitHub because a lot of chinese tech firms depend on it. That is something very hard to develop locally because the entire world can contribute

vkou6• 4 years ago

They can't block GitHub, but all it takes is one phone call to Redmond, and their problem will go away.

Microsoft has no issue with getting rid of politically problematic repos.

https://www.technadu.com/github-removes-protest-organizing-a... - when Microsoft won't respect the right to protest in Spain, they won't give two figs about that same right in China.

https://www.google.com/amp/s/www.vice.com/amp/en/article/8xe... - for another example, this time in the US.

ganyu9• 4 years ago

What I can tell you is that GitHub is barely accessible in Mainland.

sofixa3• 4 years ago

If you can't see how the two examples you cite are problematic, i don't know what to tell you.

There's a difference between protest and sedition, and the Catalan independence movement went full in on treason.

The second is doxxy, so it is understandable to an extent.

crazysim• 4 years ago

They try to really degrade GitHub though to encourage non-GitHub use and probably weaning off of it. clones, pulls, etc. are very slow and unreliable and it's definitely not due to the size or reliability of the pipes.

coliveira2• 4 years ago

I don't see any difficulty in replacing Gibhub... just create clone repos and you'll get everything. It is easier than youtube or similar.

newsclues3• 4 years ago

Yeah, just steal/copy GitHub and offer a local version with censorship, and ban the uncensored version.

schleck82• 4 years ago

They are trying with https://gitee.com

robocat5• 4 years ago

Off-topic, but their “pretty” design is surely an anti-pattern for attracting developers. (Then I looked at https://github.com/ and it has an inane graphical world that looks like a designer’s folio project too!)

Gitee also put the site language choice in the footer - odd choice. Plus some UI bugs on the page. Yuck.

bigcat1234567815• 4 years ago

gitee is a startup project.

The use of "They" seems inappropriate here, which is belittling the entrepreneurs' ambition. The culture of code sharing in China is indeed different from US. So I bet gitee has a lot of features tailored to that market.

coolspot• 4 years ago

See also: cnpm CLI tool (npmmirror.com)

helge9210• 4 years ago

Let's assume, there is no censorship and anyone can join the boycott. What is the intended successful outcome of the boycott?

If noone would do anything (no boycott), some customers would have to pay mortgage for apartments that won't be finished ever.

With boycott, the blast radius will be bigger, possibly affecting the banking system.

What options do authorities have?

thriftwy13• 4 years ago

Go along with the law?

People who boycott mortgages get their properties confiscated by court eventually, and if any developments suffer issues government should aid developers to ensure any paid customers get their property done.

pessimizer2• 4 years ago

But the boycotts are rational, because even the Chinese government thinks that the developers are overextended and may fail. They seem to be taking the most careful, benign option.

kristaps• 4 years ago

Two things that come to mind: whip developers and if that doesn't do it, bail them out.

londons_explore• 4 years ago

It need not be a collective boycott... It can be individual people making individual decisions to not pay the mortgage because they believe that paying is a waste of money. Ie. why pay monthly for a house which will never be completed? You're just pouring money away!

If you don't pay, the property will be taken off you, and probably valued at a high valuation (because the property developer wouldn't want to have their unbuilt properties selling for cents on the dollar). That means you probably will escape bankruptcy or any further debt.

chii10• 4 years ago

If you don't pay, the property will be taken off you, and probably valued at a high valuation

which would contradict the assumptions that lead to the decision not to pay.

Therefore, i suspect that the (half-completed) property would indeed be worthless (even to the bank), and is not a suitable form of collateral to recover any debt from. It might be the case where the bank eats the loss - or those who stopped paying the mortgage would be forced to pay (unlikely if this is a widespread issue as it causes social unrest).

My prediction is that the state owned banks would eat the loss, and wait out the confidence crisis - which might take 10 yrs - but then real estate will resume as before as a form of investment (and the cycle begins again).

ganyu9• 4 years ago

They don't. That's the point.

When you have an over-estimated stock on the market, it's going to drop. Eventually.

rr8082• 4 years ago

Pretty common situation that happens in a lot of countries. If the market is OK the developer takes deposit and the apartments and sells them to someone else. If the no one wants to buy the developer goes bankrupt and people who bought lose everything they've paid so far - bank forecloses on the apt which isn't worth much if anything.

Grimburger• 4 years ago

It's happening right now in Australia, big builders are going bust leaving homes half finished or not built. Input costs have risen so much on fixed price contracts that there's really no other recourse for them.

Buying off-plan is common worldwide despite what others are saying in here.

TheMagicHorsey2• 4 years ago

I know there are enormous profits to be made in China, but I wonder if American investors ever think to themselves ... by investing in this place I am strengthening a regime that ultimately is the enemy of my values.

vkou6• 4 years ago

China is not at all incompatible with those values. And even if it were, that wouldn't be an issue - business interests on the whole have consistently been a strong ally of fascism and authoritarianism.

throwaway4aday2• 4 years ago

The current Chinese government certainly is.

mullen• 4 years ago

I call bullshit on statements like this. You think corporations would love authoritarianism until the corporations realize that one day someone who is really close to the head authoritarian could just demand 10% of their corporation and there is nothing they can do about it. They would also realize there is a whole class of people that can do whatever they want, when ever they want, to whomever they want (As long as the other person was not above them) and there is nothing to be done about it.

Corporations, while it might pain them on some level, want to exist in a free, open and democratic sociality since it gives them access to courts and people in power. In Authoritarian systems, people at the top, just take whatever they want and there is nothing to be done about it.

Also, a foreign corporation is never going to have access to the higher levels of the Authoritarian government because they are foreign. Places like China don't care about foreign corporations because at the end of the day, there is nothing they can do to help the head authoritarian.

TheMagicHorsey2• 4 years ago

China is compatible with democracy, a free market, and rule of law?

Yeah, I think there's a reason the best and brightest in China often try to immigrate to the USA, Canada, Australia, etc. Its not for the food, believe me.

downrightmike2• 4 years ago

As we have seen in America, big companies love fascists, because corps stand to monopolize and make tons of money.

klipklop• 4 years ago

You would think they would know better after seeing the ultimate fate of Jack Ma.

Jaygles• 4 years ago

Merchants have no country https://founders.archives.gov/documents/Jefferson/03-07-02-0...

marianatom2• 4 years ago

I was one of those people that thought China would never collapse due to its iron grip on economy and population. But look at recent activities

* Chinese GDP shrinks to 0.4% in Q2 2022. Which is still suspicious because Shanghai economic activities declined -40%, and real estate overall activities dropped -30%

* Massive mortgage boycott. Also public protests against lost deposits and unable to access bank is being aired out in Chinese social media. Also property bond crash spreading

* The 1 billion people data leak has some experts analyzing the data and figuring that the Chinese population is already in decline, and only at 1.2B currently. Which means the population is going to half its size sooner than 2100

* Chinese firms are still selling Russia good its military needs https://www.wsj.com/articles/chinese-firms-are-selling-russi..., incurring the wraths of normal folks in Europe and other allied countries.

* Zero covid practice still going on, with tons of public discontent. There are videos of the people waiting in line to test in the pouring rain and huge wind!

* Zeihan gaining more popularity, which implies that people do believe that China is crashing. Foreign investors and companies are pulling out in record numbers

* public sector employees taking 30% salary cuts

Makes me think there will be a massive public unrest and Chinese government will likely collapse soon. What do people think?

011000112• 4 years ago

China is at risk of following Japan into stagnation. It is especially likely given the massive wave of manufacturing repatriation going on now. If China loses its position as the world's manufacturer, it will have to rely on its untested military strength to obtain resources to appease its restless population. Interesting times indeed.

chii10• 4 years ago

China loses its position as the world's manufacturer

they will not because the reason japan (and the US) lost theirs is that china was cheap.

Where are you going to get this type of labour - skilled but cheap - other than china, in the next 10-30 years? Southeastern asian countries could make up some of the amount, but if they could do it today, they would've dominated already!

The repatriation of manufacturing is political propaganda - it won't work economically, as consumers' preferences is overwhelmingly for cheap goods, not expensive patriotism.

jpgvm5• 4 years ago

Same story has been foretold over and over for the last 30 years.

I will believe it when I see it.

The RE bubble is bad but substantially less bad than what the US was facing in 2008. There is a big difference between over-leveraged developers (the Chinese problem) and rotten Main street banks (which was the US problem).

In China's case we are likely going to see a continued drop in housing prices for a little bit longer until they plateau. However they are unlikely to see growth again for a long time unless Chinese government changes tact. This isn't a bad thing as right now Chinese homes are some of the most unaffordable on the planet, especially in desirable cities. Also it will lead to speculation and investment moving outside of RE and into other vehicles like equities which will improve the breadth and quality of Chinese financial markets. The other bad things that will happen is construction companies will likely be in distress, large infrastructure projects/spending directed by the CCP will save the good ones but there will be a bunch of consolidation and downsizing. Not a particularly bad thing given the changing population dynamics probably requiring the construction of less housing than previously. Impact is unlikely to spread beyond RE because of how compartmentalized funding is in China. The government controls all the major banks and as a result they run under very low-risk capital regimes. It's much more likely the big financial fallout will be from foreign investors that were greedily holding onto risky Chinese commercial paper.

All-in-all I actually suspect this to go out with a whimper rather than a bang. The way systems are setup in China there just isn't really the potential for a bang outside of like big social issues causing a revolution or something but generally speaking that doesn't happen. Usually as dissent grows they recognize it won't go away and start doing something to appease the people. Recent example being their effort to deal with pollution in the major cities, etc.

So yeah. I get that Western folks, Americans in particular don't understand the Chinese system and wish ill will upon it but the reality is that it's a lot more robust than said folks give it credit so don't bet on it failing anytime soon.

atwood225• 4 years ago

How are over-leveraged developers that different from what caused the 2008 global financial crisis? The cause of the GFC was that assets were labeled as safe but were in fact unsafe. So one day everyone woke up and had less money than they thought they had. The same thing can happen from over-leveraged developers. Banks lend money to people to buy real-estate. Everyone expects those units to exist, and if they suddenly don't exist en-masse, then that's going to be a major shock.

marianatom2• 4 years ago

Right so I had similar vein of thoughts years ago when I thought China was in a real estate bubble and did think that the government can just make certain type of investors take the loss and move on. However, that's only if the collapse is only in real estate. What I'm seeing right now with China is a death spiral, namely

bad policies such as zero covid, tech crackdown, or not resolving the root of real estate crisis -> investor (domestic and foreign) loss of confidence -> companies leaving or shut down -> rising unemployment or reduced salary -> debt bubble gets bigger -> bad policies.

This death spiral is enhanced by demographics collapse which is happening now, not 30 or 15 or 10 years ago, as well as nationalistic behaviors that isolates China. Not to mention global inflation and consumer demand collapse.

In my list of things I also didn't mention

* 20% unemployment rate for new grads

* layoffs from big tech companies

* 70% of China's economy is real estate related, which means China will take an even bigger impact from real estate collapse than other countries that have less % of economy in real estate.

* collapse in demand for real estate due to fast aging population

* 20% of built real estate stays empty (not even rented) due to investment vehicles purpose

paganel2• 4 years ago

incurring the wraths of normal folks in Europe and other allied countries.

We have our own issues here in Europe with incurring wrath on Russia, thank you, we can't take two at a time. Or at least I hope we won't f.ing take two at a time, the gas prices being what they are is bad enough.

bigcat1234567815• 4 years ago

* ... GDP shrinks to 0.4% in Q2 2022 ...

GDP growth

Massive mortgage boycott.

Probably won't be as bad as 2008.

The 1 billion people data leak has some experts analyzing the data ...

Link please?

Chinese firms are still selling Russia good its military needs

What do you expect? China does not sanction Russia. And USA is hard pushing China in all China's surrounding areas: Taiwan, South China Sea, Xinjiang, South East Asian... Punching a cow and you'll be paled.

incurring the wraiths of normal folks in Europe and other allied countries.

"Wraiths"? Can we first see the wraith be unleashed onto the Russian troops in Ukraine, which supposes to incur even more "wraiths"...

Zero covid practice still going on, with tons of public discontent. There are videos of the people waiting in line to test in the pouring rain and huge wind!

You can measure how anger the US public is towards their covid policy, vs Chinese public's reaction. ANY public policy is going to err some people, especially in a country with close to 5 times the population of USA.

* Zeihan gaining more popularity, which implies that people do believe that China is crashing. Foreign investors and companies are pulling out in record numbers

Who/what is Zeihan?

* public sector employees taking 30% salary cuts

Err... Link please...

_kbh_• 4 years ago

> The 1 billion people data leak has some experts analyzing the data ...
Link please?

https://www.reuters.com/world/china/hacker-claims-have-stole...

Erlangen2• 4 years ago

The censoring is so horrible that Chinese are using other country's name to substitute China. For example, there is a question in Zhihu, "Will China become the next technological powerhouse?". The answer is talking about Russia literally, but it's about China. (Below is the answer translated by deepl).

I don't want to talk about China, I want to talk about Russia.

Can Russia become the next technological powerhouse? Of course not.

Because the ceiling of Russian intelligence or wisdom is Putin. There is no one in Russia who can claim to be more intelligent than Putin. Russia can do without anyone, but not without Putin. Although we do not know whether Putin has any relevant qualifications or experience in the industry, all Russian businesses and professions depend on Putin's guidance and must hold up Putin's ideas and banners, otherwise they will not be able to move forward. Putin is the ceiling of Russia. How can a country with a ceiling become a technological powerhouse?

Look at the United States. Who dares to direct the work of Musk, whether Trump or Biden? Who dares to direct the business strategies of Apple and Google? I find that in the US, it seems that anyone can say they are smarter than the president, it seems that anyone can say they are smarter than the president. The technology companies in the US seem to be able to run smoothly without the guidance of Biden's ideas, and they seem to be able to develop technology without raising the banner of Biden's ideas, and they seem to be doing quite well. I find that the US is a country that has no ceiling in terms of intelligence or ingenuity, and that is always improving. Only such a country can become a technological powerhouse.

bigcat1234567815• 4 years ago

Links please? I'll have to keep this in my archive for funniest workaround of censorship...

ganyu9• 4 years ago

Somewhere under this thread: https://www.zhihu.com/question/307148675

Remember to ORDER BY time DESC

Erlangen2• 4 years ago

The answer above has been deleted, but this answer is even better. Replace US with China. But to understand it, you need to be familiar of modern Chinese history.

https://www.zhihu.com/question/439676867/answer/2559528806

1. The United States has not been fascist until recently, but has been a fascist state since its founding. However, the US has not always been so fascist since its founding, and there was a period of relative normality during the Reagan years. In contrast, the fascisation of recent years has been particularly striking.

2. In terms of internal causes, the relative openness of the US was due to the fact that the McCarthy movement had gone too far and not only did the people become unhappy, but eventually the government became unhappy. So there was a temporary social consensus that fascisation had to be curbed. However, Trump himself was not a victim of the McCarthy movement and has been in good government since its end. He therefore did not personally resent it much. And in order to preserve the shining image of the Republican Party and to put an end to the leftist media of the Democratic Party engaging in the practice of Fake News. When Trump was in office, he directly disallowed statements that publicly denied the history of the Great Depression to the McCarthy movement. In this way, the new generation in the US also became predominantly favourable to the McCarthy movement, promoting the return of fascism to American society.

3. Externally, the US has been eager to strengthen its control over Canada, Mexico and Cuba, the 'backyard' of the US. This has not only caused resentment among the local population, but has also been widely criticised in international public opinion. If you talk about the Wilson Doctrine at this time, then the scandalous things you have done in the US are in themselves the opposite of what you want to do. The theory you preach turns out to be a slap in your own face, and you might as well not preach it at all. Instead, by picking up the ragged flag of fascism, you can explain the justification for these hegemonic acts of the US. And so its propaganda tone leans more and more towards fascism. This is the reality that needs to dictate the discourse.

rr8082• 4 years ago

I know this is supposed to be about China, but is true of Russia and many poorer countries. The elite of the country can siphon money of simple industries like oil and primary industries, but they can't control high tech. Kamil Galeev writes some great threads on this https://twitter.com/kamilkazani/status/1501360272442896388

robocat5• 4 years ago

Interesting, and that thread contains some great links. Reformatted: https://threadreaderapp.com/thread/1501360272442896388.html

holografix• 4 years ago

I guess you haven’t heard about what happened to Jack Ma recently

GekkePrutser2• 4 years ago

China seems to be doing a good job controlling though. See how they totally re-educated the Alibaba guy after he spoke out of line.

Still, their industry seems to grow fine including high tech. I think what's happening is that they split politics very strictly from business.

inglor_cz10• 4 years ago

Interestingly, in Tsarist Russia, the censors allowed the future Soviet dictator Lenin to publish his criticisms of imperialism as long as he didn't mention Russia; he complied by choosing Japan as an example. But everyone involved, including the readers, knew that he really meant to address Russian imperialism.

Technically, the world has changed a lot in the meantime; there wasn't even a public radio service in Tsarist time, and now we have the Internet. But the problem of censorship and various ways to circumvent it seems to be the same as before.

boppo12• 4 years ago

Do you mean the author is not talking about Putin but about Xi and that this is veiled criticism?

xwolfi• 4 years ago

Yes this person expresses well the current atmosphere, I say that living in China surrounded by this low key annoyance at both the communist success (like, it s an old country, what have we done the last 6000 years and who's now feeding people instead of slaughtering them and discussing if the army or civilians should continue exploring the moon) and their flaws (at the same time they re just taking better care of the sheeps, not turning us into trusted empowered citizens)

It's not the same game at all between us and the americans. The americans arent trying to play 5D chess on a falling giant towers firefighting one problem while creating 10 others. Americans and the rest of the world quite frankly, tolerate suboptimization while we believe, or rather the communists pretend they believe, that we can reach an optimum: no crime, everyone agreeing, everyone patriotic, win every competition of any sort, sky always blue, world always rotating around us. So we control, every angle of every mirror. If it was a choice, like in my home country, France, to go another way than the americans, it'd be fine-ish, but no one here can claim that, so we cant own our mistakes, nor our successes.

I like his idea of a ceiling, an accurate way to describe the constant sycophance we have to deploy to do what we want despite it being maybe out of the box we were expected to stay in until the great leader discovers another larger box was surrounding it. Wont stop us trying to force its boundaries though, and it s a fallacy to think the common Chinese doesnt astutely perceive and navigate this to his best interest, less vocally than americans maybe.

CoastalCoder3• 4 years ago

The linked story kind of buries the context info:

Nomura said the refusal to pay mortgages stems from the widespread practice in China of selling homes before they’re built. Funds from presales are kept in escrow accounts to use for construction. But confidence that projects will be completed has weakened as developers’ cash woes intensified.
“Inappropriate usage of presale proceeds and the lack of adequate supervision of escrow accounts by local regulators and banks are likely associated with these mortgage suspension cases,” Zerlina Zeng, a senior analyst at CreditSights, wrote in a note.

ganyu9• 4 years ago

Short (?) intro for those who don't know how it works in CN:

1. Local govts are in heavy debt and sell land to pay back their debt.

2. Real estate corps pay a hell lot of money (don't care where they get them) to purchase a land ownership (for 70 years max) from the govt.

3. Before construction even begins, the real estate corps start selling the houses to citizens.

4. Citizens pay up to 40% of the total price on their own, and ask the bank to lend them the rest of the 60% and get it paid back in the NEXT 30 YEARS (often paying as much as twice as the original price).

5. The bank gives 60% directly to the real estate corp. So in fact the citizen IS OWING MONEY TO THE BANK, and not to the estate corp.

6. Often, the real estate corp uses this money to pay back previous loans, or use this money to purchase more land from the local govt. So current (future) constructions pretty much depends on whether this Ponzi scheme could continue.

7. With the money earned from selling the land, the local govt could pay back the loan and ask for more, in order to build more infrastructure so as to pull up estate prices, from which it can earn more by selling more land.

8. ...until no typical citizen will be able to afford it.

sbierwagen• 4 years ago

get it paid back in the NEXT 30 YEARS

Why emphasize that? 30 year mortgages are common in the US. At current rates of 5.5%, the total paid in interest will be bigger than the original loan.

Of course, most US mortgages are taken out on housing units that actually exist.

CoastalCoder3• 4 years ago

Aside from the fact that this is a pyramid scheme, it sounds pretty similar to how it works in the U.S. when building a new house.

fma• 4 years ago

What happens after 70 years? Especially if the lease isn't renewed.

itronitron• 4 years ago

9. Apparently banks in China are blocking people from removing money from their accounts.

refurb3• 4 years ago

To add on top, there are very few trustworthy investments available to citizens.

Real estate is one of the few assets that is quite secure when it comes to ownership.

Other Asian countries are similar. It’s why your average house in Saigon is more expensive than San Francisco despite a per capita GDP that is < 1/10th that of California.

bogomipz• 4 years ago

."1. Local govts are in heavy debt and sell land to pay back their debt."

What is the source of the debt, is it bonds, do they just run a deficit, something else?

y04nn• 4 years ago

The pyramid can keep growing while your population is increasing, but that is not the case in China, the fertility rate seems low and its population is shrinking [1].

[1] https://www.bbc.com/future/article/20220531-why-chinas-popul...

renewiltord• 4 years ago

Interesting. I wonder why the UK (which also has no ongoing property tax - just stamp duty) doesn't run into the debt problem. Perhaps, it's just that the country got rich during the period when the government was heavily involved in all that.

dialogbox• 4 years ago

It does look like a Ponzi. Aren't there any regulations to prevent that?

It's pretty similar to Korea until the step 3 but we have some safeguards after that.

Instead of giving money directly to the development corp, we give it to a trust corp. And the dev corps can only use the money to build the building.

And if the dev can not meet the due date and if it is delayed more than 3 months, the contract can be cancelled and the owners can get the money back.

That very rarely happens because dev corps desperately meet the deadline regardless of the quality. That causes hell lot of another issues but that's totally different story.

It seems to me like there are many things missing in the Chinese real estate system. Or is it just because no one cares the regulations?

throwoutway• 4 years ago

3 4 and 5 sound basically like the US except less than 20% down (sometimes 5%)

Why are you capitalizing owing money to the bank. That’s how mortgages work pretty much everywhere

differentView• 4 years ago

4. Citizens pay up to 40% of the total price on their own, and ask the bank to lend them the rest of the 60% and get it paid back in the NEXT 30 YEARS (often paying as much as twice as the original price).

So they're less leveraged than most American home purchases of 5~20% down payment. 30-year mortgages are also standard in the U.S. You emphasized "NEXT 30 YEARS". Do you think it should be longer or shorter?

5. The bank gives 60% directly to the real estate corp. So in fact the citizen IS OWING MONEY TO THE BANK, and not to the estate corp.

That's how mortgages work. Why else would a bank be involved if the money is still owed to the seller? Do you think mortgages shouldn't be a thing, that people should save up 100% of the money then pay in full when purchasing a home?

6. Often, the real estate corp uses this money to pay back previous loans, or use this money to purchase more land from the local govt. So current (future) constructions pretty much depends on whether this Ponzi scheme could continue.

You keep describing how this works in most places as if it's something outrageous.

8. ...until no typical citizen will be able to afford it.

We're way ahead of China getting to this point here.

la64710• 4 years ago

And the linked story demanding open sourcing data is itself is behind a paywall. :D

traceroute66• 4 years ago

widespread practice in China of selling homes before they’re built

But isn't that really the case in most countries these days (or at least those countries where a home-buying culture is prevalent).

For example, a quick internet search for the UK suggests 40% ± 5% is the going rate for off-plan purchases.

_fat_santa2• 4 years ago

It's a thing everywhere but the issue is that there's just so much of it in China. I live in the US and you can get custom home built, but that segment of the market is the minority, as most homes are built then sold.

The problem emerges when the majority of your homes are sold before they are built, therefore if any defaults emerge, there is nothing to collect on. The practice isn't the problem, it's the sheer scale of the practice that's the problem.

senttoschool• 4 years ago

widespread practice in China of selling homes before they’re built.

Literally how every condo project in Asia is sold. Not sure how it is like in Europe.

samsonradu• 4 years ago

In Romania it varies, but you get a better deal (small discount or get a parking spot, better orientation etc.) when you pay down 20-40% of the price before construction starts so many buyers go for it.

Waiting until the construction is finished usually means many units are sold (the good ones).

It also depends on the builder’s reputation of course, if it’s a big name they can charge more in advance.

IMO it sucks a bit for the buyer as delays are quite often and hard to attack in court. It also attracts speculators who sign the pre-contract just to sell for a profit when the units are delivered.

_fat_santa2• 4 years ago

Makes you wonder where the banks are in all of this, and were is their due diligence. Seems the banks are making two critical errors that led to this whole mess:

* Giving out loans on properties that have yet to be built. In the event of default there is no underlying asset that the bank can use to recoup their investment.

* Improper controls on escrow. If you're handing out a loan for a property that has yet to be built, why would you not control escrow to make sure the money was spent appropriately.

My impression is that it seems everyone is just trying to make a quick buck over there, everyone is secretly jockeying to be a little bit better off themselves. But what happens when literally everyone in an industry is jockeying, eventually things will go off the rails.

pessimizer2• 4 years ago

Sounds like the government caused this boycott by trying to rein in the exact activity that the boycotts are protesting. If they're censoring it, it's probably because they're trying to soften the effect on overextended banks. If the government hadn't insisted on functioning in the first place, the mortgage holders would still be in ignorant bliss.

If China could afford to damage these banks (or if the people who run them fail to have the right connections and attitude), it seems like it would actually benefit the government to publicize these boycotts as further support for the crackdown.

In the US, we'd just call the papers and get them to all run stories about a new trend among right-wing conspiracy theorists to stop paying their mortgages, relate them somehow to tax protesters and sovereign citizens, call them freeloaders, and insist that the figures being spread around about the number of people involved are probably from covert Russian sources.

edit: I mean, after that we'd start censoring, demonetizing, think-tank fact-checking and downranking, but only after accusing everyone involved of being a terrorist.

spywaregorilla• 4 years ago

The slow motion train wreck of evergrande continues at its glacial pace

whycombinetor2• 4 years ago

The US mortgage delinquency rate was 2.13% in Q1 2022 ( https://fred.stlouisfed.org/series/DRSFRMACBS ). It was 4% in 2016, 3% in 2018. Why should an observer/investor be worried that "Non-performing loans [...] could reach as much as [...] 1.4% of the outstanding mortgage balance"?

nonethewiser3• 4 years ago

What are you trying to say here?

ailun• 4 years ago

The situation is a bit different. It's common in China to pay for unfinished apartments. So the bank has nothing to foreclose on, and the property development company becomes even less likely to finish the property. The fear is that more people will protest by stopping payment in a downward spiral.

HWR_144• 4 years ago

Your numbers don't measure the same thing. Non-performing is a subset of delinquent, meaning likely to end in foreclosure. If you don't pay your mortgage, you go to delinquent and then a few months later to non-performing.

whycombinetor2• 4 years ago

Thank you - indeed I should be comparing against https://fred.stlouisfed.org/series/QBPLNTLNNCUR which is only 0.8%.

kornhole• 4 years ago

What if a debt rebellion was also happening in the US, but few of us knew it was happening? https://debtcollective.org/ https://www.orbooks.com/catalog/creditocracy/

autokad3• 4 years ago

I first heard this story from sources that were not so friendly to China, so I didn't put a lot of credence into the sources, but now its coming from bloomberg.

I hope the people ultimately get the houses they paid for. What a terrible thing it would be to put 20-40% down for a home and to never have it delivered. I would assume there is going to be some sort of bailout?

nonethewiser3• 4 years ago

I first heard this story from sources that were not so friendly to China, so I didn't put a lot of credence into the sources, but now its coming from bloomberg.

You should reexamine your assumptions about these sources. Sounds like they deserve credit for reporting it earlier.

autokad3• 4 years ago

sorry, I should have said earlier, but I didnt want to get in a rabbit hole. I pay attention to lots of sources, to see what they say, and sometimes they can end up in the penalty box. This particular source makes a lot of grandiose claims that I cannot verify, so trust--. I don't completely discount them but my baysean trust for them was lower.

strawhatguy2• 4 years ago

The problem’s fairly serious. As I understand it, real estate is really the only form of investment open to the Chinese people, and often, the property is bought and sold under the ‘greater fool theory’: no one actually lives in these buildings. Many don’t have working utilities. It is, (or was) an appreciating asset, handed from one to another until you can actually buy a livable place, or just make a ton of money off of, or Use it to buy foreign property, ie something more real.

So when building stopped altogether, due to government crackdown of developer loans, there aren’t any new entrants, and no greater fool to buy the worthless property, a lot of wealth might disappear in China.

It’s like US 2008, but much worse. Or perhaps US 2023… who knows?

autokad3• 4 years ago

if you are right and this is a 2008 style real estate bust in China, I wonder if there will be global contagion.

jollybean9• 4 years ago

We saw the same thing happen in Korea and Japan after their post war construction, they moved up the ladder, worked hard, but then when they got a taste of real success there was a huge amount of speculation.

In the late 1980's Japanese real estate was the most valuable in the world, then it collapsed and they have not recovered.

This is a big secular shift for China. All of the previous projections were wrong, just like those indicating Japan would take over the world in the 1980's.

This is where China comes out of 'catch up' mode, and is now finding it's 'reality equilibrium' with the rest of the world.

chii10• 4 years ago

is now finding it's 'reality equilibrium' with the rest of the world.

the one big difference with all the previous examples is that China is authoritarian, where as the others were all (at least on paper) democratic.

China _could_ mandate the population to perform actions that the other tiger economies couldn't. I would be hesitant to assume that historical economic performance of japan and korea would give much indication to what future economic performance would be in china.

dendriti• 4 years ago

You should read about the political history of South Korea before making the claim that Korea was democractic (yes you hedged with "on paper" but that is meaningless).

cfn• 4 years ago

"The Cyberspace Administration of China didn’t immediately respond to a *faxed* request for comment."

lakomen• 4 years ago

I think someone is downvote stalking me, because I write things about their beloved USA they don't like. But I'll write this: whenever I read about China and censorship I just can't forget how the EU and UK are censoring Russian media.

So when you're in a glasshouse don't throw stones. Always the hypocritical "look China bad us good". I'm so tired of the propaganda - an EU resident.

Before you start judging a person for being dirty, make sure you're not dirty yourself.

nsv• 4 years ago

Censorship should be criticized in all forms. Two wrongs don't make a right. It's not a dichotomy.

mint22• 4 years ago

Censoring the media of a state that literally is in a proxy war with you and essentially has been since Putin came to power, although the west didn’t realize what was happening until recently, seems reasonable.

If someone was stealing and breaking stuff every time they came over to your house, you wouldn’t let them in anymore either.

Utter unrestricted access to all from everywhere is a odd notion. Is it also somehow hypocritical to censor isis propaganda?

exceptione• 4 years ago

That is because you mistake Russian media for free and truth seeking media. You probably missed the closing down of many news agencies in the past years (that have seen a growing repression from Putin), and perhaps you missed the exodus of journalists and shutdown of the last independent media from Russia.

The only thing you can get is the propaganda from the Kremlin. That propaganda is the crucial part of the Russian warfare. It functions to sow doubt about the truth. It is instrumental to get people to believe that Ukraine downed MH17. If Russia commits war crimes, its media start to spout different explanations, often mutually exclusive ones. Lies, damned lies, stupid lies, but it takes a lot of effort to deconstruct even the most plainly stupid ones of them. The effect is that you see a variety of nonsense, which makes you think about it as it sows confusion. This is known as the Firehose of Falsehoods. You are not sure anymore, some of your friends might buy one of the lies, while another one might stick better with you because it fits your beliefs better. This has nothing to do with understanding the truth.

You cannot compare our free press to the russian media. I am very critical about our media, also because they seem to be ignorant about the dynamics of our media which the Kremlin perfectly knows to exploit.

One of the pitfalls we have been observing is the one of False Balance, where you present the statements of one side as is, although it is complete garbage. Deconstructing false statements takes time, knowledge and a deep understanding of the context of events. Now look at the financial incentives and you see why we have got a huge problem in our western societies that rely on commercial entities to provide our news.

The bad news is: Firehose of Falsehoods is extremely effective! Look at Trump and his relationships with truth. He gives a new meaning to it.

Now you might think you are smart and special, so propaganda has no effect on you. Just like everyone else thinks. It is a poison, there is no reason to drink it.

China mortgage boycott data erased by censors as crisis spreads

Related Stories