Why The Chinese Real Estate Downturn Won’t Sink The Chinese Economy

Why The Chinese Real Estate Downturn Won’t Sink The Chinese Economy | Ben Harburg

Рет қаралды 11,382

Күн бұрын

Forward Guidance is sponsored by VanEck. Learn more about the VanEck Morningstar Wide MOAT ETF (MOAT) at vaneck.com/MOATFG.
Follow Jack Farley on Twitter / jackfarley96
Follow Forward Guidance on Twitter / forwardguidance
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Timestamps:
00:00 Introduction
01:18 Has The Bearish Narrative On China's Collapse Gone Too Far?
05:50 Collapse Of Evergrande Was NOT A "Lehman Moment," Argues Harburg
10:21 Current State of Chinese Real Estate Market
15:56 Is Economic Stimulus From The Chinese Government On Its Way?
19:28 Are Chinese Policymakers Worried About Deflation?
21:16 Western Goods Are Being "Slaughtered" By Chinese Consumption of Domestically-Produced Goods
24:35 VanEck Ad
25:29 Spending Is "Definitely Weak" As "People Are Losing Their Jobs"
26:42 Not In DNA of Chinese Government To Enact a "Major Stimulus Package"
28:59 India Is A "Mirage" Where Corruption Is Actually Higher Than In China, Argues Harburg
36:46 Delisting of DiDi Was "Justified" But The Chinese Government Often Does Not Provide Sufficient Detail On Rationale Behind Policies
41:01 The Chinese Labor Market
43:09 Permissionless Ad
44:15 The Chinese Stock Market
49:28 Chinese Electric Vehicles
54:19 Tariffs Against China: Why Chinese Leaders Would Prefer Trump Over Biden
01:00:49 Does Beijing Look Fondly Upon Bank Credit Being Directed Away From Real Estate And Into Consumer Lending?
01:06:21 Private Markets In China Are "Very Challenged"
01:12:17 China's Central Bank (The People's Bank of China)
01:14:11 Chinese Yuan
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Disclaimer: Nothing discussed on Forward Guidance should be considered as investment advice. Please always do your own research & speak to a financial advisor before thinking about, thinking about putting your money into these crazy markets.

Пікірлер: 119

@BlockworksHQ 23 күн бұрын

Forward Guidance is sponsored by Van Eck. Learn more about the VanEck Morningstar Wide MOAT ETF (MOAT) at vaneck.com/MOATFG

@ericyang5237 22 күн бұрын

Guest is weirdly naive as a China focused VC guy. But then, getting into VC scene in China in 2015 wasn't a smart move to start with.

@Jake-sg1xr 22 күн бұрын

I find it really hard to believe that Chinese citizens who are buying multiple properties are not as leveraged as Americans were leading up to 2008. Especially considering the price of properties vs the median income

@drueldorado5700 20 күн бұрын

China has higher savings rate

@junkscience6397 20 күн бұрын

@@drueldorado5700 No it doesn't. Fake News. Their "savings" is...in real estate! Duh.

@Jake-sg1xr 20 күн бұрын

@@drueldorado5700 even if that were true, higher savings “rate” doesn’t mean higher savings. I’m not sure what this guy was referring to but researching it myself I found that Chinese people are heavily leveraged as well as the banks

@nikoblub3755 17 күн бұрын

they are not allowed to own a lot of property they even have to divorce for this so they can officaly own two properties. no shit look it up

@HectorYague 22 күн бұрын

1:05:00 : "As oposed to the US, there is little private overleveraging in the Chinese consumer". Are you kidding me?! Prior to the real estate crash in China, an appartment in tier 1 cities (Shenzhen, Beijing, Shanghai, etc) was up to 30x times the average yearly salary. For reference, tier 1 US cities: New York 10x and San Francisco 9x. The average household is China was SUPER leveraged into their real estate allocations.

@chunmuhe4860 21 күн бұрын

The housing pricing is indeed crashing, but those house owners will eat all the loss bitterly and for others , all will be fined.

@d000dez 21 күн бұрын

@@chunmuhe4860 so the bottom 20% of Chinese citizens will be fine?

@peterl545 22 күн бұрын

Let's simplify this. Assume RE is toast and debts reset to zero. Local Govt whose revenue was 80% land sales is sitting on $14T in debt while National Govt. has $11T. GDP is only $18T. FDI went from 400B to 33B. Overstated because they add existing foreign firm's earnings. FDI flows should be negative. Exports are being squeezed by tariffs from everyone will be around $400B at best. How will local govt pay their obligation? National Govt (CCP Party elite's capital account) will not cover that local govt debt. We will either have the biggest financial reset in the world, another Japanification, or most likely both.

@bigtoosh 22 күн бұрын

There's no way Xi would let China's economy collapse before paying debt for local governments. Rest of it maybe. I don't understand your line on exports being squeezed by tariffs. New tariffs? Maybe if Trump gets elected. That's a thick maybe.

@wissamali3136 21 күн бұрын

Why so gloomy

@cosmiclight7829 20 күн бұрын

@@wissamali3136because all these people are happy to see China fail so they can feel validated. Lol

@hkkyt8963 16 күн бұрын

Where is this 400B exports number coming from lol “at best”. 20% of GDP is attributed to exports. New ATH trade surplus was cleared this month

@Zhengc 14 күн бұрын

33B was the NET FDI

@sanshuma0 22 күн бұрын

Amazing interview, and I fully agree with his assessment of India - spot on! (Although, we have to admit Internal growth in India is just as real and robust as portrayed in "Western media")

@TM-fr7gh 23 күн бұрын

Did this dude just say he met with Xi Jinping? Yeah definitely not objective haha

@BobHaikou 22 күн бұрын

You've been propagandized.

@jcgoogle1808 22 күн бұрын

Of course he did. I met with Xi and Putin last week. We got drunk on rice wine and vodka. Xi's a hoot when you get him drunk. They were taking turns imitating senileOleJoeBribem's debate performance. Great guys.

@MrJuanete12 22 күн бұрын

Sure did... bought and paid for...

@Skar_King_Kong 22 күн бұрын

If you clicked on this video then, *you just got punked*

@cosmiclight7829 20 күн бұрын

@@Skar_King_Konglooks like you just got punked. Lol

@pch7490 22 күн бұрын

I can see Ben will be very very rich in 10 years time. I will be watching him.

@cortez9978 22 күн бұрын

Housing crisis, health crisis, cost of living crisis, debt crisis, inflation crisis, EU war crisis, middle East crisis. How many crises can a koala bear? I'm approaching retirement with comfortable millions, yet scared of a banking crisis. Where do I best grow my money?

@FrankHaubrich-mt6gw 22 күн бұрын

Diversify… T bills, CDs, Gold, Stocks, Municipal bonds, Bitcoin, Real estate, etc assets speak when cash has no value

@RayWalker-mo 22 күн бұрын

I would advise the counsel of a seasoned financial pro. It may be expensive, but as the old saying goes "You get what you pay for." "Expert solutions require Expert providers" - my mantra.

@Lindsay-jy 22 күн бұрын

That's right, investing with the help of a financial advisor set me up for life with about $1.6m in stock portfolio. I max out my 401k and have few properties. I worked hard everyday as a teacher for 32 years, and my salary was over 100k annually. But if it wasn't for 2020 covid lockdown, I wouldn't have supplemented my income with stocks and alternative investments.

@Scarborough-c26 22 күн бұрын

@@Lindsay-jy bravo! I've worked in real estate for over 25 years and have neglected a major stock portfolio, however I need a different plan now... mind if I look up the professional guiding you please?

@Lindsay-jy 22 күн бұрын

Katherine Nance Dietz is my FA. Just google the name and you’d find necessary deets. To be honest, I almost didn't buy the idea of letting someone handle growing my finance, but so glad I did.

@tilleytristan 23 күн бұрын

"I am not a CCP apologist". Uh huh.

@champstar9669 20 күн бұрын

I personally did not hear 1 thing of value the entire interview. Just propaganda.

@yangliu3224 17 күн бұрын

@@champstar9669 on the contrary, i don't agree everything he said but his assessment is closer to the reality than most narratives from the western main stream media these days based on my recent trip to China. how many of you actually have been on the ground in that country before commenting? Can you imagine a chinese guy who don't even speak english and has never been to the US giving his 'insights' on the US economy? that applies to a lot of people on social media. Intelligent people know their limits and would not comment on things they don't know. Now who is spreading the propaganda?

@Matt_K 22 күн бұрын

This guy says China is open for business while his behind is also opened by a party member while he's talking.

@VitaSineLibertatenih 23 күн бұрын

The party is pleased with you You now get +150 social credit, a bowl of rice and a cat-waifu.

@mrzack888 23 күн бұрын

Get lost L0000zer

@cosmiclight7829 20 күн бұрын

Vita knows. He works for the CIA after all.

@junkscience6397 20 күн бұрын

@@cosmiclight7829 Good. WuMao ALWAYS find a way to do "Wuddabout America"

@cosmiclight7829 20 күн бұрын

@@junkscience6397 speaking about WuMao, you would know right. After all, you are one yourself. Are you the leader of WuMao? lol

@togoni 16 күн бұрын

@@cosmiclight7829Stop spamming

@Matt_K 22 күн бұрын

Isn't a bigger portion of China's GDP dependent on property market? Moreover, what leverage is there if people paid for properties that weren't even built. And if there was any leverage, Evergrande and Country Garden wouldnt be in the situation they are in. Imagine what the situation would really be if China would allow for free outflow of capital.

@WarsOfate 22 күн бұрын

Not sure when it comes to China but in many countries, the buyers would be moved to other available/soon-readily available buildings. The problem is overbuilding not lack of buildings. There is a "reason" why even with the so-called the biggest leverages + the China doom & gloom, the NPLs for the chinese banks has been steady. Considering that we have heard about this china property explosion since when again? What's the saving rate in china again? 45% or so? High saving rate is also a huge drag for the expansion of a country economy, which is what china is experiencing nowadays. On the other hand, the optimist called the country with 4.9% saving rate, exploding personal debt, where 43% small businesses can't afford to pay rent (which consist of 44% of the economy) and has experienced multiples banks failures (need to be bailed out) even though that country has stimulated its economy with huge piles of cash as the cleanest shirt on the block...... People also tend to forget that many of the entities holding that "leverages"/debt are foreign vultures..... good luck with trying to appropriate properties in china as foreigners....

@sooofisticated0499 22 күн бұрын

I’ve been saying for sometime that the negative coverage on the Chinese economy was largely overblown - a lot of this has to do with Geo political implications… Chinese stocks are probably a solid value right now based on what I know and this excellent interview.

@ZaneRoughley 21 күн бұрын

Vematum's responsiveness to community feedback is impressive.

@richardwills-woodward5340 22 күн бұрын

It's the demographics, stupid. Fantasy stuff over China here and I say that as someone that knows.

@WarsOfate 22 күн бұрын

the demographic is overblown..... just compares the % number above 64 (US has bigger shares) and look at the % population decline between US & China (the number is not that far off)..... remember as well the numbers needed to pay for those seniors are increasing in US at fast pace and health cost is much affordable in China (but again, most places are much more affordable compares to US.... ) ..... unless you gonna argue that US is declining as well and India would be the new super power then I would agree on the premises......

@richardwills-woodward5340 22 күн бұрын

@@WarsOfate China is going to lose 300m by 2050 alone. It has 300m people moving to retirement age by 2032. Its middle class has been decimated. China is a failing state. It is a communist military power akin to the last century (which is a problem) but it is certainly no economic challenger in any meaningful sense. It is a government run entity with no private sector worth a damn. It has no contract law and is collapsing at an incredible rate. The GDP of China is about $10trn NOT $18trn. Are you going to argue that the US is in an equal or worse state than China? Of course not, it is absurd. The US is in a bad way, but correlation and causation are totally different. China has no future. The rest of us in Japan's world within 20-40 years at best. That is a different argument to China now. Unemployment in China is closer to 40% and youth unemployment closer to 60% but who will tell you this? My decades within china and working with Chinese and 3 provincial governments, plus the leaked data from university bodies give me a clear enough insight into how it's going. My wife is Chinese, many of my friends are Chinese. They are not poor coming to the UK and I can tell you their 'wealthy' friends are all afraid, not so wealthy anymore and trapped. China is the opposite of Bloomberg's bought and paid for Chinese propaganda.

@junkscience6397 20 күн бұрын

@@WarsOfate Remind us the average salary in China again. And pension payout? Not just cities. Then do the US. Whoopsie.

@WarsOfate 19 күн бұрын

@@junkscience6397 what that has to do with demographics? Yes, they are less depended on handsout and pension plan. Imagine depending on SS that may not be there especially with high withdrawal lately. Also yes, even if their average salary is low in terms of numbers compares to US, you don't see many of them have to live in a tent that cost the government $6m like in NYC or under sewers like in vegas, plus fixing pot holes doesn't take millions and so much time. What's your point again?

@elation0x 22 күн бұрын

I have one rule to investing, just one: NO CHINA

@ShaylynFraniak 21 күн бұрын

Vematum's partnerships are a testament to its credibility.

@BrianneSchach 21 күн бұрын

Vematum's leadership team is stacked with industry experts.

@JS-ih4qi 20 күн бұрын

This didn’t age well

@bingebinge3722 19 күн бұрын

The truth is often somewhere in the middle.

@bp5662 22 күн бұрын

"This isn't like we're Singapore or something like that. So for an economy of our scale to still be growing at 5% is great." My man, you're a laowai. Always will be. None of that is yours. You better be trying harder than wealthy Chinese citizens to get any money you make the hell out of there, ideally to a country that operates by the rule of law, not the rule of who you know.

@metwo1492 21 күн бұрын

Technically not a Lehman moment (i.e., bank failures), but the amount of overall wealth destruction for individuals is actually worse, where their household savings accumulated over years or even decades is destroyed when the bubble bursts. So he is technically correct, but he is burying the lede. Effectively, hundreds of millions of Chinese people have invested their savings in something that is valueless. There are probably enough homes currently existing in China to house double the current population.

@fisherwilliam 22 күн бұрын

There is a big gap between the data of employment data analysis and the actual employment situation in China

@RodriguesLimaso 21 күн бұрын

Vematum has the potential to outperform many in the current market.

@CharlesMagire 21 күн бұрын

Vematum's community-driven approach is what crypto needs.

@ivayloivanov8153 23 күн бұрын

Too soft on a China apologist. China (banning Google, Facebook, X, etc.) less opaque than India? Give me a break!

@Zhengc 14 күн бұрын

My goodness! What did China do to you? By the way, China did not ban Google, Facebook or X. Those companies did not want to abide by the Chinese law and hence decided not to operate in China. Please check your facts before commenting, and don’t mislead people. By the way, no government is transparent, not even US, who consider itself the beacon of democracy. So get over yourself and give yourself a break.

@KrisenMoore 21 күн бұрын

The integration possibilities with Vematum are endless.

@ICDeadPeeps 23 күн бұрын

Considering that you could be jailed for saying anything critical of "that" country; the fact that he's residing there DOES NOT add to his credibility.

@mrzack888 22 күн бұрын

china is alot freeer than you think dummy

@bp5662 22 күн бұрын

I wonder the same thing about people like Michael Pettis. There's a trade-off for being a 2nd-class citizen and having no legal rights, but what could possibly be worth it? I lived there for several years in my late 20s-30s, but I was broke, single, and hungry for opportunity and adventure. I found it all, but now that I have something to lose, you couldn't pay me enough to live under those conditions.

@cosmiclight7829 20 күн бұрын

@ICDeedPeeps, so how many years did you spent in prison?

@AlexaForbes-ps7dp 21 күн бұрын

The more I dive into Vematum, the more bullish I become.

@jamesfree69 23 күн бұрын

Luckin coffee is the same as Starbucks Difference is you can order in advance to minimise waiting The app is really the only special thing and a few more flavours, which I'm not interested in

@mattanderson6672 22 күн бұрын

Thanks

@dogetaxes8893 21 күн бұрын

Beartards are still quite strong in the comments, likely not at a top yet. Once most of these bearish comments either pivot or are ignored is when I’ll truely get scared. I’d rather react to potential recessions than predict them with my “macro model”.

@dankurth4232 22 күн бұрын

The Lehman Moment didn’t sink the US economy, to the opposite the rather hard landing allowed a rather quick, yet not mild resolve of the real estate mess. On the other side China will to her severe disadvantage not have a hard landing followed by an upturn and thus to the opposite a very prolonged far more damaging economic and social decline. This will poison the social fabric of the PCR and since it is accompanied by a fast demographic decline as well there is no way to stop this decline on a large scale. Real estate is the by far largest asset class attainable by normal Chinese citizens, it will lose value for decades to come and on top of it it isn’t actually owned by the owners but just a lease for 70 years and to be turned back to … the state. Quite a lot of real estate „property“ is already „owned“ and paid for for more than 10 years and not properly finished, not habitable and not rented to someone. Think about that and then think about what this guy wants to sell you

@question_asker_93 22 күн бұрын

Why even consider China when overnight your investments go to $0 when US or Chinese government forces you to divest? Not worth risk/reward

@MrJuanete12 22 күн бұрын

Jack uses the word "deflation" and dismisses it like a "boss"

@fubarbrandon1345 22 күн бұрын

Nice to hear some accurate information about China for a change.

@jakethunder1447 22 күн бұрын

Mark my words. This guy will be the first one out of China as soon as he sells his bags to you. Until then he needs to deliver good news.

@stepheniezhang775 22 күн бұрын

This guy knows about China 👍

@congomac2001 22 күн бұрын

Great interview!

@rupertmitchell8487 22 күн бұрын

Great conversation Jack! Really enjoyed this.

@briancutsinger 22 күн бұрын

Fantastic!🌞

@dave8212 22 күн бұрын

Awesome insights!👍🏻💛

@chunmuhe4860 21 күн бұрын

As a Chinese, i think this guy nail it!

@togoni 16 күн бұрын

😂😂 So go back to China, what are u doing in the west 😅

@BobHaikou 22 күн бұрын

Excellent guest!!! The best you've ever had. Fantastic.

@jaygatsby1 22 күн бұрын

China low ain’t in bro

@CryptoCryoto 22 күн бұрын

Cause it’s already sinking 😂

@jonathanlee5185 23 күн бұрын

👍Thanks. This sounds quite balanced in contrast to a lot of Western media👍

@draveed 22 күн бұрын

Ben just sounds like he's 10 years out of date. China is no longer run by pragmatic technocrats who are solely concerned with wise economic thinking. There's not going to be any major deals with other countries that bring back the China trade like it used to be. China will grow ever more politically and economically isolated, and the government will turn inward. Good luck ever getting your investment money out.

@MarkfGame 22 күн бұрын

Lately, I got interested in crypto but has no idea how to go about it. Can anyone Help with a reliable tra-der?

@Stefanie-qj7lw 22 күн бұрын

I think all you need is an expert assigned by a brokerage company that will trade for you and handle your capital professionally and give you weekly returns of investment without any extra fees attached

@Stefanie-qj7lw 22 күн бұрын

Evelyn Turner is the professional that guides me and her optimal returns are really impressive

@melissaziglar6620 22 күн бұрын

Yeah, I believe investing with a professional is the optimal approach, as it mitigates the risk of significant losses. Did you genuinely know her? I was under the impression that I was the sole beneficiary of her guidance through the challenges of trading.

@michaelbrad9173 22 күн бұрын

Seeing a remark regarding my manager Evelyn Turner is quite energizing. It was just like this when I first met her a few weeks ago. Having started with just 4k about 2-3 weeks ago, I have already made it to 21 k. She is very remarkable!

@wiamlaamoumri2375 22 күн бұрын

Goodness gracious I'm so excited seeing Ms. Evelyn Turner been mentioned here also. Didn't know she has been good to other people too, this is wonderful because I also started with a KZfaq referral like this