China faces subprime credit bubble

Looks like the money machine in China is showing signs of toppling under it’s own weight:

The audit office said the loans have reached $1.7 trillion (£1 trillion). While some of the money has been used to finance much-needed investments in water systems and roads, a large part has fuelled unbridled construction with a dubious rate of return.
The local governments depend on land sales for 40pc of their revenue so the process has become incestuous and self-feeding. Such reliance on property sales revenues has greatly aggravated the post-bubble crisis in Ireland.
Mr Cheng said China is entering a “very tough period” as growth runs into the inflation buffers, threatening the sort of incipient stagflation seen in the West in the 1970s and leaving the central bank with an unpleasant choice. “The inflation rate and the growth rate are conflicting with each other: it is very troubling,” he said, describing what is known to economists as the Phillips Curve dilemma.

Full article here.

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Inventory
Guest
Inventory

Property developer going underground

http://www.chinadaily.com.cn/china/2011-09/19/con

…said Zhao Xiuqin, a sales manager at a local property agency. "It's a stampede, like animals running for their lives from a wild bushfire,"

jesse
Member

It's only a matter of time before China will encounter a severe credit crunch. I was tipped off when someone called China's growth a "miracle". I asked them who was prime minister when Japan's "miracle" crashed hard and they said they didn't remember.

logic
Guest
logic

i iz sooo sorry….

bubba
Guest
bubba

VMD has good scoops

Must be a real multi – tasker, like guy in Fed EX ad.

Lance
Guest
Lance

@jesse: it's a bit before my time so maybe someone could inform me, are there similarities between the 80s japan and current Chinese economic 'miracles'?

southseacompany
Member
southseacompany

"Tsunami to hit Australia Real Estate":
http://smh.domain.com.au/tsunami-to-hit-australia

"People in places like Sydney or Tokyo or Miami say, 'Hey, real estate can never go down here, we're a great place, everyone wants to move here, there's not much land for development', and what I say is that is exactly the kind of place that bubbles,"

Sounds familiar.

pricedoutfornow
Guest
pricedoutfornow

@jesse:

Ireland was also an economic "miracle". Look where they are today.

bubba
Guest
bubba

Real disconnect in HAMville

Listings are rising….sales are few and far between.

However various projects are still being planned and constructed.

The project by the Oval is rising, basically a shell, but what were the sales?

Probably another 1000 condo units nearing completion…

However, old Fantasy Gardens site is ready to start construction, pre-load is removed, but looks abandoned.

Wonder what'll happen when the pre-sales , before completion, start going underwater "geronimo" ?

jesse
Member

@pricedoutfornow: "Ireland was also an economic “miracle”. Look where they are today."

The "Celtic Tiger". Out-migration from Ireland is likely going to surpass 50,000 this year (guess which age cohort) and average wages are falling close to 2% in nominal terms. Yeah, not good for Ireland, but they'll get through it eventually, with lower housing prices of course.

jesse
Member

@Lance: Japan had an investment boom and low consumption that was unsustainable and looks similar to China's situation today. China simply cannot take out more debt to recoup the bad investments it has already made, in large part in its residential housing stock.

For Japan over-investment led to 20 years of increasing consumption. People always point to Japan as some case of bad fiscal management but travelling to the country doesn't point to a decrepit ruined economy. The same could be true with China if it "crashes". If like Japan, it would shift its spending patterns away from capital and towards labour. Oh and that means lower housing prices.

pricedoutfornow
Guest
pricedoutfornow

@Inventory:

Interesting article. It seems that it's quite common to borrow from the underground market in China. This makes me wonder if these "rich" Chinese coming with their suitcases of cash aren't actually borrowing the money themselves. Sure, the transaction in Canada is recorded as being paid in cash, but back in China there's a debt to be paid. Possible, and given the amount of debt the world is awash in, it wouldn't surprise me one bit.

whydoItry
Guest
whydoItry

From what I have heard from some of my friends who have been to China is that these condominium towers are not finished inside. Not even a toilet.

The money is made in buying and selling the land and constructing the building – not in selling the units.

Because you can't just move the poor families into these unfinished buildings. A twenty storey building without a working elevator! What good is it! Then there is the shoddy workmanship and substandard materials. These buildings look good from afar but are far from good.

China's big problem is going to be the demolishing of these buildings and cities.

Noodlevan
Member
Noodlevan

@pricedoutfornow

"This makes me wonder if these “rich” Chinese coming with their suitcases of cash aren’t actually borrowing the money themselves. Sure, the transaction in Canada is recorded as being paid in cash, but back in China there’s a debt to be paid."

I know of two instances where Canadian properties were purchased with 100% cash, financed with 100% debt taken out in the home country. This is entirely consistent with the high rate of credit growth (and bad debt) in China in recent years. When China slows, there is going to be a fairly significant margin call across the pacific ocean. You better stock up on popcorns for this.

whydoItry
Guest
whydoItry

With all this money flowing into the city from mainland China from questionable Chinese business practices you wonder how safe our streets will remain. The Chinese may be moving their families to a safer city than they are leaving, but we live in an open society and its a lot easier for a rival Chinese "business" to take revenge on another's family here. Asian gangs are unstoppable in Vancouver when the best our government can think of is to confiscate their street rods.

vreaa
Member

UBC Staff And Faculty Housing Demand Study – “Inability to settle in Vancouver may lead me to leave UBC, despite being ranked as top faculty both in terms of teaching and research”

http://wp.me/pcq1o-2Jg

Is the cost of housing in Vancouver having a detrimental effect on the quality of research and teaching at institutions like UBC?

“There is NOT ONE public academic voice in Vancouver pointing out that there is a massive speculative RE bubble in this town.”

space889
Member
space889
@whydoItry: In China, most if not all apartments are not furnished because people prefer to furnish it themselves rather than taking a standard layout/template like here. As well, not furnishing means the price can be lower, developer can hand over the project faster and move on. People can also do their furnishing and such and potentially save money. That's the preferences in China, people prefer to do their own thing, layout, furnishing, etc unlike here where prefer prefer to take standard template. As for elevators, again it has to do with cost. Higher end highrises have them. The way Chinese apartments are building – thin and very wide rather than the Vancouver/Western style of a rectangle building with elevator shaft in the middle means having an elevator is of limited use and in-efficient. Usually each set of stairways in a… Read more »
space889
Member
space889

@vreaa: He needs to have a little talk with that UBC RE professor that's on TV all the time – Camerion Muir or soemthing??

I guess this guy just can't cut it here in the best place on Earth.

whydoItry
Guest
whydoItry

Buying a property with cash here but financed privately from China is just a form of money laundering to get cash out of the home country. There is nothing the Canadian government can do to stop it. And really why would the Canadian government want to! Its in the host country's interest to stop this kind of transaction by setting limits. And at this point, its in the Chinese interest to have these select people move to Canada and other western countries to establish business relations.

Think of what Vancouver will be like in 20 years from now – do you want your kids going to school here?

Administrator
Guest
Administrator

UBC Staff And Faculty Housing Demand Study – “Inability to settle in Vancouver may lead me to leave UBC, despite being ranked as top faculty both in terms of teaching and research”

____

Having worked at the senior administration level at UBC, I would like to remind people that UBC actually offers extremely attractive loans for up to 500k for UBC faculty. They have been doing that since the early 2000s.

I don't know how many other companies provide such relocation incentives. That being said, I still would not want to borrow 500k, regardless of who is lending it.

Rocketeer
Guest
Rocketeer

Think of what Vancouver will be like in 20 years from now – do you want your kids going to school here?

_____

Nope – I would NEVER raise kids in Vancouver.

If you are raising kids in Vancouver in 10 or 20 years, they will be held back in ESL dominated classes, they will have to deal with the highly visible wealth divisions, the increased prospects of gang violence and crimes, and the neuroses and false bravado of Vancouverites (transplanted Vancouverites that is)

I would not expose my kids to that type of toxic environment.

paradox
Guest
paradox

A friend of mine moved to Surrey around the Newton area this year.

His son is in grade 8 attending the school nearby.

It seems that he is the only white kid in his class.

He told us that he cant participate in the activities during the gym as the teacher gives instruction mostly in Hindu language and he can barely catch an English word in between.

What can be done about this?

Is there a legal requirement for the teachers to speak in English in class in BC?

P.ENG
Guest
P.ENG

Is there a legal requirement for the teachers to speak in English in class in BC?

_________

There are two official languages in Canada that inform all government operations – federal, provincial and local. Until Hindi or Mandarin become official languages (which I am sure will be pushed for within 5-10 years), schools have to teach in English or French.

I was in engineering at McMaster University. I attended a tutorial in which the TA's taught in hindi because most students were East Indian. I had to launch a formal complaint with the University to have it changed. I obviously had to change tutorials to avoid the wrath of the TA and the fellow students.

This is a taste of what is coming down the barrel.

bubba
Guest
bubba

@vreaa:

This looks like a job for " SUPER Tsur"!

Yes, meek and mild mannered tenured (redundant) UBC prof, in a sub faculty sponsored by vested interests, …….ready to wrestle a sound bite ….and tackle "tall data graphs" in a single bound !!!!.

jesse
Member

@Administrator: "offers extremely attractive loans for up to 500k for UBC faculty"

Huzzah for the faculty. Are the same terms offered to UBC staff? The report surveyed both.

bubba
Guest
bubba

@Administrator:

We attended UBC in late 1970's early 1980's

A minimum wage summer job allowed us to buy books, pay tuition, own a vehicle, drive to "C" lot , be debt free, student loans were almost unheard of, and still have money left over for weekend partying etc. If you want a number…$5000 was PLENTY

WTF has happened since then ?

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