Re:Investors Are in Denial About China
by seanmcdirmid on Tuesday March 29, 2016 @11:55PM
(#11386862)
> Sure the east coast has nice modern cities which look like the cities of any Western country.
Not really. I mean, there is shanghai and shenzhen, but the rest of eastern china is very much like...
> But large parts of the country are still poor, rural and remote.
Infrastructure has definitely gotten better, but a lot of capital has also been sunk into white elephant projects and...
> Houses are built for people to work in the city doing high-productive factory jobs where they before were doing small-time farming in the country side.
Those aren't the houses that are being built though, rather they are focusing on luxury apartments that migrant workers will never be able to afford.
> This is a massive lift in real economic activity which can finance a lot of debt.
If the debt was spent wisely, yes. But a lot of the ventures are dubious (lux apartments), farmers still can't mortgage their land or acquire urban hukou anyways, and wealth descrepency is only getting worse.
> Completely incomparable to the expansion of credit to low-income families to finance housing that gave the boom in the US and other western countries from 2002 to 2007.
Agreed. Those kind of people would never get a loan in China. The money has been mostly lent out to those with power and connections, a lot of that money won't be repaid because it was invested very unwisely.
> Secondly there is a now huge upper middle class who are travelling the world, sending their kids to Australia or US for study and still buying Apple products. They are not going away.
Uhm, ya, well, they aren't leaving the planet, but many of them are definitely leaving china. What do you think that apartment in Vancouver they bought is for?
Not really. I mean, there is shanghai and shenzhen, but the rest of eastern china is very much like...
> But large parts of the country are still poor, rural and remote.
Infrastructure has definitely gotten better, but a lot of capital has also been sunk into white elephant projects and...
> Houses are built for people to work in the city doing high-productive factory jobs where they before were doing small-time farming in the country side.
Those aren't the houses that are being built though, rather they are focusing on luxury apartments that migrant workers will never be able to afford.
> This is a massive lift in real economic activity which can finance a lot of debt.
If the debt was spent wisely, yes. But a lot of the ventures are dubious (lux apartments), farmers still can't mortgage their land or acquire urban hukou anyways, and wealth descrepency is only getting worse.
> Completely incomparable to the expansion of credit to low-income families to finance housing that gave the boom in the US and other western countries from 2002 to 2007.
Agreed. Those kind of people would never get a loan in China. The money has been mostly lent out to those with power and connections, a lot of that money won't be repaid because it was invested very unwisely.
> Secondly there is a now huge upper middle class who are travelling the world, sending their kids to Australia or US for study and still buying Apple products. They are not going away.
Uhm, ya, well, they aren't leaving the planet, but many of them are definitely leaving china. What do you think that apartment in Vancouver they bought is for?