Evergrande: the end of China's property boom | FT Film

  görünümler 2,405,678

Financial Times

Financial Times

Yıl önce

The rapid expansion of China's property sector was powered by a great migration from the farms to the cities - and built on cheap credit. The FT tells the story of Evergrande, the most indebted property developer in the world, which now stands on the brink of collapse. It's a story that changes the outlook for China's position as the locomotive of global economic growth. But is this China's Lehman Brothers moment? Read more at on.ft.com/3tNHO0j
Produced, directed and edited by Daniel Garrahan
#Evergrande #property #China #EvergrandeGroup #Housemarket, #propertymarket #propertyboom #Asia #investinginAsia #investment, #HongKong #business #realestate #residentialproperty #migration #Chinaeconomy #Chinagrowthmodel #financialcrisis #LehmanBrothers #growth #globalgrowth #Greengrowth #factories #factoryworkers #HuiKaYan #bonds #debt #borrowing #bondmarket #finance #Markets
See if you get the FT for free as a student (ft.com/schoolsarefree) or start a £1 trial: subs.ft.com/spa3_trial?segmen....
► Check out our Community tab for more stories on the economy.
► Listen to our podcasts: www.ft.com/podcasts
► Follow us on Instagram: / financialtimes'

m Yıl önce
I feel like this video missed a couple key points which make the problem much easier to understand: first, property is the primary investment vehicle for most Chinese people, which is why property values got so high. They don't put their money into financial markets like most of the west does, they pump it into their homes. Second, real estate companies could use these sky high prices to leverage their property assets for debt. And some of them, like Evergrande, seem to have been overestimating the value of their assets in order to get larger loans. Now that demand is falling, they can't sell their assets at anywhere near the estimated value and thus can't pay back their debt.
Kenny wu
Kenny wu Yıl önce
You can "buy" property in China and it will be yours for 70 years, after that you have to return it to the goverment, thats why they all come buy in the western countries, they buy up blocks of appartments here and rent it out... there are even policies in my country now saying you have to live at the adress you bought for at least 5 years before renting it out to others, that crazy it has become..
StephenC Yıl önce
I believe the general population does not have the option to buy stock investments. so, the only investment they can do is buying houses. The gov't and the builders got the people in their hands as disposables.
Jay Altes
Jay Altes Yıl önce
@Kenny wu That "70-year property rights" is just a misconception, it is just a matter of renewing the "rights" after 70 years; Chinese people buying bricks overseas because it make them feel stable and fulfilled, or it is just diversified investment choice.
D Yıl önce
@Jay Altes At one stage they were talking about a fee of up to 1/3 of the property value to renew the lease though.
F632 Yıl önce
The topic of ghost cities and real estate overdevelopment in China has been a topic of discussion and concern for at least 10 years now. Crazy that this problem was allowed to grow so large when seemingly everyone saw it coming from a mile away. Classic human greed.
theHarbinger Yıl önce
​@The Imperfect Perfectionista It's not that nobody talks about them, it's just that nobody listens
AnabolicSaagAloo Yıl önce
@David Carlsson yeah because this is all "communism's" fault. Anymore brilliant takes?
Shan Yıl önce
@The Imperfect Perfectionista Greed plays a factor too, that credit was taken out to amass fortunes into the future.
fluffyfour Yıl önce
It always amazes me when people seem surprised by extensive growth, which surely cannot last in the long term, tailing off and even resulting in bankruptcy due to over-reaching. I've seen it happen time and time again, even in companies I've worked for, and that level of growth always seems to be the forerunner of just as stunning a collapse. I am no financial or strategic expert, but I wonder why lessons from worldwide organisations aren't learnt?
Andreas Källström
Andreas Källström Yıl önce
It’s quite simple: they don’t think long-term. If you can secure 5-10% growth during a two-year tenure and then get promoted, who cares what happens in 5 years?
Jonathan Odude
Jonathan Odude Yıl önce
umm. have you noticed that there are companies that have lasted from around and many times even before WWII? some people do actually learn. however, 50% of the population has an IQ less than 100. take that as you will.
Eva Lee
Eva Lee Yıl önce
Well so as US stock market, which is now collapsing.
Pitt KL
Pitt KL Yıl önce
@Andreas Källström Yeah the mindset to make quick money. Prevalent in China.
Brian Pan
Brian Pan Yıl önce
@Jonathan Odude , and they are mostly senior managers and above!
Dave Johnston
Dave Johnston Yıl önce
Its truly amazing how the connection between actual householder demand and apartment values has never been seen as the real determinent of viability in China. Unquestioned credit has driven this process and unless occupier demand suddenly firms up the bonds will be defaulted as developers are wound up and new owners buy in at firesale prices.
anony mouse
anony mouse Yıl önce
loans and debt are based on buyer but also in many cases require another family in case you can't pay your debt. they then go after whomever they can find associated with you.in the last resort.! they post your ID /Photo/real world contact and ID on big posters usually at bus stops .
Muhammad Suhaib
Muhammad Suhaib 8 aylar önce
Whether it's your superbly researched and immaculately written FT Newspaper and Editorial articles or your short documentary films, the quality of all your content is simply outstanding. Good Work and Keep it up Team FT!
FrostySnow1000 Yıl önce
It’s not just construction workers! It also affects manufacturers like glass, steel, etc also gets affected. The real estate business really was an economic driving force because it affects so many more types of jobs.
CaritoWest 11 aylar önce
Supply chain. The apartment buyers also work in this supply chain. They lose their jobs -> don’t pay the mortgage -> no money in the financial system to borrow/invest and this vice circle feeds over and over. The 1st phase is taking place now. There is no more money for the real estate developers to continue the Ponzi scheme. All construction being on hold.
Rachel Carre
Rachel Carre Yıl önce
Excellent content. As other commentators have already said many apartments were purchased as investments by average investors. Not only are those apartments empty and likely to remain empty but many were constructed to such poor standards (tofu dregs) that they are probably uninhabitable and in some cases in damage of physical collapse. So they are not just homes people don’t want, but literal piles of waste no one wants. How China manages the fallout on citizens who have lost their life savings and contractors who have lost their livelihoods will probably be more critical to China’s survival/direction than how the default is handled.
Andrew Vare
Andrew Vare Yıl önce
Moses Tekper
Moses Tekper Yıl önce
The person who did the graphics should get a raise. Very intuitive and nice.
Shreyansh Verma 22
Shreyansh Verma 22 Yıl önce
Mark Grech
Mark Grech Yıl önce
Was it you?
111Econ Yıl önce
It’s not hard? Once you know, you know.
Shreyansh Verma 22
Shreyansh Verma 22 Yıl önce
@Mark Grech no it was not
Nick Yıl önce
It was terrible, especially the editing. I stopped watching because this is just 20 min of cuts between stylized buildings and some randoms saying the dumbest cone liners before cutting to more useless buildings looking pretty.
Jason isbored
Jason isbored Yıl önce
An underlooked aspect is that most Chinese people don't actually pay much in taxes, meaning that the local governments, (the party technically owns/is all of the land) makes much of their revenue from selling the 99-year land leases that developers need to build upon. While it's been brought up time and again in China, the incentives and culture were all just too strongly resisting the needed reform.
anony mouse
anony mouse Yıl önce
royalty tax is 100% liquor/tobacco is roughly 70% when you pay for products. the tax is already with in the price of said product even a pack of "Huangshan" cigarettes which is common among peasants/low labor workers are now upto 8/9 rmb a pack! where the true value is/should be 4-5 rmb .. this is a 2nd Tier city ,capital of Anhui,Province 1 bottle of maotai costs 5,000 Rmb.
anony mouse
anony mouse Yıl önce
also, land lease is 70 years not 99 years. however, parents can opt on 'reselling' to their kids 'on paper' of course. then they take it for another 70 years. unless the government has plans on deconstruction which was too common in 2010
Brainfryde Yıl önce
One of the problems that seems to be missed in this documentary is strange to the capitalist mind. A lot of property market is actually a lease, because China does not practice capitalism for individuals. Local governments lease property long term to individuals, using that as an income in place of taxes that do not exist. If buildings are not getting built, many local governments do not get financed from property leases, and thus cannot provide services. Emergency services, health services, etc. The financial impact to the world is going to be heavy, but it will lead to restructuring. In China itself though, the level of chaos and misery is not even known yet.
Charles Herrera
Charles Herrera 5 aylar önce
Jim Chanos did remarkable research into the property sector in the early 200'0s. He was shocked by the incredible waste and folly of the entire real estate industry. The Big Short for Chanos was to leave the market for someone else to find a solution.
david s
david s Yıl önce
Great video. Part of the story has been the financing provided by western companies, like the large mutual fund houses, investment banks etc. While ex-post, it may worst case become very clear why all of that has been built on very wrong assessment (the government will bail them out anyway), it may be very interesting to give some more insights on the 'psychology' of those portfolio managers, analysts etc. which made them believe for quite some time there is no issue at all... Thanks
Allan Gibson
Allan Gibson Yıl önce
Less than you might think - China will not permit Chinese currency be exported. Chinese companies cannot pay interest to offshore holders of debt or equity. Tesla for example, can only export profits in the form of vehicles. Building companies can’t export anything to pay offshore debt (which was was why Evergrand was looking at car manufacturing). Evergrand was also using its developments in Hong Kong (whose currency is convertible) to pay its overseas debt.
Kenneth Hymes
Kenneth Hymes Yıl önce
growth defined by finance rather than utility and sustainability always ends badly. period. take no fancy counter-logic seriously. In this case a genuine need for housing was leveraged into paper growth and the proceeds farmed like an mmo, and i think it is important to choose sides. Housing needs to be understood as a social good, not a luxury commodity or an object of speculation. The alternative is all around us.
Mira Riri Lambert
Mira Riri Lambert Yıl önce
Such a great statement! I like when finance and reality go hand and hand.
Imran Naeem
Imran Naeem Aylar önce
After 1 year, i endorse and appreciate financial time, which is responsible news group
Frozen Canuck
Frozen Canuck Yıl önce
To Russell Birkett, the person who did the graphics for this FT segment - Bravo! Amazing visuals. Keep up the good work 👍👍
Fedilla Fancia
Fedilla Fancia Yıl önce
Thanks so much for this video, I'm nearly 32 trying to understand the market, I spent about 8 hours just on this video, taking notes and trying to get at least beginners knowledge, and I have to say that out of all the videos I watched, this one helped the most
Robert Garza
Robert Garza Yıl önce
Lack of trading discipline is the primary reason for option trading losses it is estimated that nearly 80- 85% of forex investors end up losing money in the forex market. Experiencing loss is also part of the game but that don't mean you should give up. Work with a genuine expert is the only way to avoid losses
James Fedrick
James Fedrick Yıl önce
Obviously trading in the financial market is very volatile and risky to trade that's the reason most investors trade with a professionals
Aaron Ferrell
Aaron Ferrell Yıl önce
venturing into the Bitcoin without an adequate orientation with a professional broker for accurate signals. you might lose all your hard-earned money
Aaron Ferrell
Aaron Ferrell Yıl önce
@Ackerman Philipp Mrs Stacy Griffin
Geoff K
Geoff K Yıl önce
Excellent piece. Accounting audits are a bit of a scam. They only certify that a few very specific types of financial fraud are not happening. That's it. They don't certify the overall financial health of companies, even though that's how they are usually interpreted.
Carrick Richards
Carrick Richards Yıl önce
International Audit Standards have been a key issue for decades. An even bigger problem than unprincipled credit rating agencies.
floxy20 Yıl önce
I am choking on my tears of sympathy for those international investors who thought buying Chinese bonds was a good idea.
StephenC Yıl önce
Greed trumps integrity. People will just do anything for some profits. I don't invest with countries who are on the bad side of the human right scale.
StephenC Yıl önce
Zack Smith ...it is not funny to see people suffer under dictatorship or communist controls. But no one is stopping you from investing with them. Good luck to you.
StephenC Yıl önce
Zack Smith .I have lived in a communist ruled country and are currently living in the USA. I can promise you that the poor in a communist (including China) country cannot be compared to the poor in the US. The standard for comparison is different. The US has way higher standards, 15 times better vs China. Folks in the US get rental assistant, food assistant, free healthcare, free education. But why didn't all of them get out of poverty? that is another discussion in itself. The opportunity is there, they just need to take the initiative (not counting mentally ill/drug users). Under communist, the poor is shoved out of the way so the land can be developed, and the people don't have much voice on it. As for the total welfare equality, lets take China as example, because they arguably has the best among the communist countries. The poor doesn't get the same treatment as everyone else. Job placement, healthcare, and other benefits are heavily corrupted. You have to bribe your way to get good service. In the US, you get safe (not cutting corners) services the same way, for everyone. Of course, the rich can go one step up, by having their own private doctor. That doesn't count. As for privacy, there is none in China. Freedom of speech, none in China. Everyone is constantly watch and cannot say anything political, especially against the current party ruler.
vincent anguoni
vincent anguoni Yıl önce
I was in the building business in a very small way.. went through 3 booms and busts. During a boom the mortgage brokers gave loans without income documentation. the appraiser would ask me how much the appraisal needed to be.. They all worked on commission....perfect recipe for disaster...after the first cycle I could see the next two busts coming from a mile away as the saying goes.... everyone in the business could see...
Steve Estebon
Steve Estebon Yıl önce
Tell me. Is it coming again?
Bill Johansson
Bill Johansson 6 aylar önce
@Steve Estebon Do you read any newspapers that describe banks or other similar financial institutions that are in trouble today? How safe are you and your pension...
Steve Estebon
Steve Estebon 6 aylar önce
@Bill Johansson yes
Tony Little
Tony Little Yıl önce
The issue is the mindset of "investing" not to rent out and get income, but to sit on empty properties in the expectations of future capital gain, as a way to build family wealth. This has worked in the past in particular situations, however when everyone is trying to do it, and you have 90 million unoccupied units, it takes on the characteristics of a pyramid scheme. The Chines govt. should have foreseen this, and taken steps to protect the people at the bottom who are going to lose, the three red lines were too little too late. I think they wanted the kudos that came with "economic growth" too much.
Issac Newton
Issac Newton Yıl önce
That's incredible how China was able to spur significantly economic growth on the back of borrowing billions of dollars of money for high rise dwellings to the point the country's top developer is unable to satisfy those debts prompting calls for the Chinese government to intervene to prevent the collapse of not only Evergrande and the construction industry but the overall global economy
Eva Lee
Eva Lee Yıl önce
Not nearly a tenth of what the Fed has printed over last year.
Ackwell Yıl önce
Also the fact that the buildings are shoddily built to siphon as much money from the project to private pockets. Even the finished projects are not of the quality expected by the investment.
magnuslord Yıl önce
Adv China has a great few videos on the lack of any enforced Chinese building codes...if China has any building codes...
Hohenheim Yıl önce
Tofu Dreg buildings
RN Yıl önce
Paper Buildings, no wonder China is called a Paper Tiger, lol
Conor Yıl önce
That’s,, “made in China” for you!
French onion
French onion Yıl önce
They have all kinds of industrial accident's too from poor regulation
Bert James
Bert James Yıl önce
With the way the markets are moving, we might have to hold longer than expected, I think a video on "How to profit from the present market admist the recession will be more appreciated. I mean I have heard of people still making more than 100K within few months, and I'd like to know if it still possible.
Buryatia Ducky
Buryatia Ducky Yıl önce
The market is a zero-sum game, there are good days, and there are bad days. However, always follow these tips: Study the charts thoroughly; Make sure to diverse your portfolἰo so when another is down, the other will be up. You can do so by getting an experἰenced specἰalἰst whose platform has dἰverse investment choἰces to choose from. Lastly don't put what you can't lose. By doing this, you gἰve lἰttle room for regrets and perhaps gain more.
Bakha Little
Bakha Little Yıl önce
@Buryatia Ducky Great tips. Generally, diversification is a key factor. Pragmatic... I have been into all of these for some time and though I won't say I have lost a fortune, I have squandered quite a lot... Do you mind recommending a specialist whose platform has diverse investing choices? I anticipate your response.
Hebei Gucci
Hebei Gucci Yıl önce
@Buryatia Ducky Exactly! This whole thing is a zero-sum game.
Sonya Ken
Sonya Ken Yıl önce
@Buryatia Ducky This is the second time I am coming across that name Sandra Yvonne Webster last Tuesday, I saw a telecast on the economic bubble there were lots of testimonies from her clientele on how her strategies turned them into miIlionaires overnight. The testimonies were so impressive and sounded too good to be true. I am a bit skeptical, though she's one of the oldest around. Do you work with her? Thanks if you reply.
Hope Robin
Hope Robin Yıl önce
@Buryatia Ducky Nice one. I study the charts thoroughly. 2 -3 months back.
providename Yıl önce
This is symptomatic of the end of the long term debt cycle which Ray Dalio talks about in his new book. Ray seems very bullish on China long term but seems to overlook this aspect of debt fuelled growth which will not be immune once the system starts to unravel.
MrSlave Yıl önce
Looks like this is happening in Australia too, big companies like ProBuild folding every week. Even happening in the domestic sector, no monitoring of these projects, councils handing out approvals for townhouses in crowded streets with narrow roads and no places to park. Domestic builders developing new builds so cheap after the first few years things start to fall apart.. we must of adopted the Chinese methods
MrSlave Yıl önce
Neil Rusling you would think it would be cheap but even in the most affordable suburbs now it's overpriced (I'm sure that's everywhere at the moment) And yes you're right, unfortunately Australia's building standards are horrible. Poorly insulated and built, I guess it's a cultural thing too, people here are careless 😂
Bob Yıl önce
I sum it up as we ignore winter. It's just kind of a thing we pretend doesn't happen. That's in Brisbane, anyway. Sydney is looking a bit different
Tandia VonBonBon
Tandia VonBonBon Yıl önce
@Bob Yes! My shoddily built 9-year old apartment has needed extensive repairs (poor electric, plumbing, cracks, leaks from floods) and has 2 ridiculous glass doors facing east. So I'm blasted in summer and freezing in winter. 5c minimum this week what on earth.
jimmy lee
jimmy lee Yıl önce
It's the same here in canada. in the biggest city toronto and the gta area, condos are cheaply built. My brand new unit I'm renting always have elevator problems, leaking water in the garage, just the over all poorly bulit but buyers are paying over 600 k for 2 bedroom unit . Even in downtown toronto where 2 bedroom units go for over 800 k, people will tell me each condo getting built now a days it's getting worse and worse. Not sure the logistic of building a condo but I'm sire they have a time frame they have to be finish by and any day later, they probbaly get penalized which is causing them to rush everything. Also these companies cutting corners by using cheapest raw materials they can buy or get away.
Louis Giokas
Louis Giokas Yıl önce
There is a big miss in this video. The analysis does not take into account one of the key drivers, outside of raw urbanization. This is the use of property as investment. In the West, most people invest in stocks and bonds. In China the populace has little or no understanding of this. Thus, you see people buying multiple properties, mostly apartments, as investments. With rising prices, this made sense to them, and it was something they understood. One of the outcomes of this is the empty cities one sees only in China. Some of these are massive. The sector is massive for another reason. Much of the income for local government comes from selling land. Thus, they encouraged this massive amount of property development.
Doncarlo Yıl önce
The Chinese government discourages stocks as an alternative investment strategy with its heavy limits on available shares and projects that traded companies are allowed to undertake.
María Rodríguez
María Rodríguez Yıl önce
Another important factor us that the quality of the building is garage, even they call the tofu buildings, they start to fall apart after 5 years, sometimes less, and there is maintenance whatsoever because they thought they just could buy a newer one... so yeah, not only there is a lot of real estate vacant, in the middle of nowhere, but also completely dilapidated to the point it can't be used
Louis Giokas
Louis Giokas Yıl önce
@Dongxu Zhou You need to look at economics and finance. Lehman Bros. in the US actually had twice the debt, but in a larger economy. That crisis spread worldwide very quickly. It was also about property values and leverage.
Kimchicracker Yıl önce
They probably also wanted to encourage Chinese investors to buy real estate in China rather than buy in the US or other countries. I knew one Chinese community college student who owned several properties that he bought cash with his father’s money. The government would prefer that money stay in China but that currently doesn’t seem like a good idea, to say the least.
rhomotor Yıl önce
It's sad to see all these people that put their life savings into buying a home and never see it come to fruition.
avitarmageddon Yıl önce
It seems to me that the Chinese govt needs to figure out away of transferring at least some of the benefits of economic growth away from the cities back to the countryside. There remain around 400 million Chinese who do not live in cities and many never will - the demand for their manufactured goods is tailing off , though still very high. Without redress this problem of imbalance could be their undoing.
BlackDoveNYC Yıl önce
Once they figure that out then they have to tell the rest of the world how to do it.
Nigel Cheriyan
Nigel Cheriyan Yıl önce
They have been rather successfully with the rural country side,including massive transportation schemes, cadres to deal with poverty and their belt and road initiatives. I think they have it pretty well figured out tbh.
Glicerio Acosta
Glicerio Acosta Yıl önce
@Nigel Cheriyan🤏😢😥😰😭🥵
Thomas Zhang
Thomas Zhang Yıl önce
Right on! You had the exact same thought as the Chinese gov. They call this program “Rural Revitalization”, which is part of their strategy to deal with overproduction and global economic downturn, in addition to the Belt and Road.
kuya sam
kuya sam Yıl önce
I was on holiday from Dubai to Guanzhou with my family in 2013 and stayed at the Ramada Plaza for a week! I was fascinated to see the buildings all over the city ! Truly amazing!
Nara Veng
Nara Veng Yıl önce
This is what will happen if u play with debt without enough knowledge and skill to manage it. Robert Kiyosaki once said “he use debt to make money 💴 💰” however, not all people have the ability to do that. And now we all can see the examples first hand in this video (:
Stefan Frischauf
Stefan Frischauf 11 aylar önce
When I worked at Hangzhou on urban planning in 2011 / 12 negotiating between German and Chinese partners the bubble already had bursted. The question was just, whether the landing would be hard or soft. It was very soft, because assets from all over the place were generated in the "Chinese urban revolution", taking place actually less than 30 years after the "Cultural Revolution". And building and real estate industry have become quite powerful. Local governments are also emphasized in the film as key stakeholders. After my return in 2012 I told some colleges here in Germany, that I had worked in phase 0.2 till 0.5 of our German system of work phases of engineers and architects: evaluating land, that was owned by the People's Republic of China since the Revolution in 1949 and in many cases had been given to locals and farmers for private markets and their stakeholders. Amongst them also many local party hacks. Land grabbing and other ways of greedy exploitation all inclusive.
TheMrFishnDucks Yıl önce
Fantastic video. Very informative on the build up of how it got to this point. Keep up the good work.
Belly Lik
Belly Lik Yıl önce
Honestly, this dude ) is indeed a life saver, don't know what I would had done, he helped me retrieve my money back. My whole family thanks you and will recommend You...
Strykenine Yıl önce
A great video. One question - will the FT please use chapters on their YT content to allow us to re-watch certain portions more easily?
___Beyond Horizon
___Beyond Horizon 10 aylar önce
I first learned about this while I was traveling all over Egypt, in September 2021. I didn't keep up with the news for almost a month since I was traveling. When I turn on BBC in my room, the news pop up, I was shocked 😲. Everyone in China has invested in real estate, big company likes to show off their portfolio!
WikiTraveller Yıl önce
Evergrande's debt problem is tiny compared to China's High Speed Rails with over USD$2 trillion of debt. It borrows more money just to repay interests owing, excluding railway running cost. China built so many unprofitable high speed railways.
D SEVEN Yıl önce
But those high speed railways really boost Chinese economy without doubt.
Tiny compared to Evergrande alone, but dwarfed by the entire real estate market which is almost entirely in trouble
Paritosh Daurwal
Paritosh Daurwal Yıl önce
@D SEVEN exactly Railways underused are still used But empty flats are total liabilities.
David blaine
David blaine Yıl önce
@D SEVEN yeah definitely. Enough to get close of offsetting losses? I don’t think so.
Jerome Barry
Jerome Barry Yıl önce
China's property development debt collapse should not be compared to U.S. 2008. Rather, it should be compared to the property development debt collapse of Texas. Governing structures capable of untangling and resolving the problem were created in U.S. and can be created in China. However, investment opportunities available in Texas to make the world forget the Texas problem do not exist in China and cannot be created by government power.
Advance to Tabletop
Advance to Tabletop Yıl önce
A huge change that started over 15 years ago. That’s when I started seeing posts of the abandoned Chinese shopping malls on the internet. Thanks for the videos.
H 8
H 8 Yıl önce
Makes sense, housing bubble happens for decades, some people forget about these.
xia en Gao
xia en Gao Yıl önce
Shopping malls without shoppers. Cities without citizens.LOL!
michael loong
michael loong Yıl önce
This story of Evergrande borrowing no stop to finance a property bubble game is like the US borrowing non stop via selling Treasury bonds worldwide to fund the US luxurious life style must come to an end in due course. Why this scenario happens in both China and the US is that there is no control of the financial market. Same as the massive 1MDB default crisis that happens to Malaysia.but it involves massive corruption with government blessing.
Video Tular Malaysia
Video Tular Malaysia Yıl önce
Evergrande halts trading of its stock and subsidiaries, raising expectations of an overhaul in the world’s most indebted developer
Ryan Yıl önce
it isn't just the property market that is totally based upon debt. It is the entire "success" story of China.
MasterMind Yıl önce
50 years to own a modest apartment? Compared to 10 years in New York?? When you consider the time you can really appreciate the Chinese people who invested everything they had into pre-buying homes that were never finished. Also the foreclosure rate has gone to about 197% within the last 5 years.
Jake H
Jake H Yıl önce
What I don't get is why apartments cost so much when there's 90 million apartments unused?! The system has failed hard...
Tydal M.
Tydal M. Yıl önce
@Jake H That's a crucial part the did not mention in the video. Real estate has been one of the only market where normal Chinese people could invest in. So it's not only those property developers taking out huge loans but also a massive amount of average people who would also ask family members or friends to leand them money. They were banking on flipping the apartments for a good profit and it worked for quite some years This was a major part of overheating the market, and the demand of migrant workers was only the kindle for it.
Nihal Pathak
Nihal Pathak Yıl önce
Same here in major cities of India. It almost takes all of your life savings. I am in 30s and actually have got an apartment from my company. But the day I will retire I know I cannot afford to buy the same house in my city. It can be possible only if I keep working till my 60 and invest my money in focused way to achieve this goal. It sometimes pains me to see so many people working so hard all of their life just to get a roof over their head in the end. However it is also true that may be this dream has a great meaning and value which keeps people awake and get going inspite of every kind of challenges around them.
AnonUK Yıl önce
Since 2008, the pendulum between Greed and Fear seems to be swinging much more towards fear.
Tuomas Holo
Tuomas Holo Yıl önce
5 months later and borrowers have stopped paying their mortgages. Banks have refused to allow any bank withdrawals. The failure of China’s banking system is closer than it appears.
Emily Jacobsen
Emily Jacobsen Yıl önce
In a word scary. Because ultimately the global market is so interlinked and the world has been decoupling from China. This creates massive economic stress and a scenario no model or econometric analysis would have predicted.
Sven Grot
Sven Grot Yıl önce
Wait, what are your thoughts on the emerging crisis in China (mortgage payment strikes and systemic risk from fractional-reserve banking) and it's likely impact on emerging markets?
Elizabeth York
Elizabeth York Yıl önce
@Sven Grot Great question, I think it's a really interesting area and so many factors in play right now. I wouldn't let any macro news affect the way I invest at all, otherwise you'd probably never invest a single penny - but that being said, it's a reminder to be well diversified!
Jan Bechler
Jan Bechler Yıl önce
@Elizabeth York Emotion is the biggest enemy of investors. It’s one of the toughest things to control. I’ve paid the price also plenty of times and However, overall invstment ought to significantly improve your net worth so I had to work with "Katherine Duffy Burke ," whom is a fiduciary. She clarified my mistakes and enabled me to make clear progress.
AmandaBellz Yıl önce
@Jan Bechler There is only bad news out there but yet stock prices are up which shows that even though the market is meant to be forward looking it is clear the string results are the only things they are interested . Also, i searchon Katherine using her full name and found her official-onlinepage, read through her resume and it was really impressive. She is a fiduciary who will act in my best interest. So, I booked a session with her
Yong Deng
Yong Deng Yıl önce
The world isnt decoupling from china, the world just CANT, just like europe just CANT break away from the Russian gas and energy supplies. If u cant see that then u shouldnt comment on this topic.
Trushar Yıl önce
This was an amazing insight. Really puts the scale of this in perspective
Nikko Yıl önce
up too late
up too late Yıl önce
Does it?
BetterLifeCreations Aylar önce
Amazing story great summary 👍
Tuomas Holo
Tuomas Holo Yıl önce
Suppliers were not paid since the collapse. Developers who didn’t meet the three red lines find themselves in a situation where suppliers refuse to extend credit for building materials now must complete projects with no money or materials. Those projects that are being completed now are using poor and cheaply made materials.
Ronnie Yıl önce
Thats been going on for years (bad materials)
Dr. Burak Deniz
Dr. Burak Deniz Yıl önce
One thing you should know is that a crash and bullish market provides equal high-yield potential, it's all about information and strategy application, I've seen folks make huge 7figure profit in a crashing market and pull it off much easily in a bull market the recession is getting somebody somewhere rich.
Hoang James
Hoang James Yıl önce
Access to good information is what we investors need to progress financially and generally in life, this is a good one and I appreciate...
Todd Hozier
Todd Hozier Yıl önce
I engage in different prolific investments such as Launchpad IDOs, Crypto, Stock & NFTs through Amela Friedman, proper planning and management of a widely known investment professional like her; I've acquired $72k as a result so far working with her.
Debby Yıl önce
This is not the first time I am hearing of Mrs Amela Friedman and her exploits in the trading world but I have no idea how to reach her.
Dr. Burak Deniz
Dr. Burak Deniz Yıl önce
@Debby You can communicate with her on telegram, with the Username below
Dr. Burak Deniz
Dr. Burak Deniz Yıl önce
@Debby Investwithamela✔
Chetan Ghasava
Chetan Ghasava Yıl önce
Great insight into the looming danger. Loved the video!
Lam Par
Lam Par Yıl önce
Built monumental personal wealth by feeding off from average home buyers deposit, bond holders saving, and easy financial institution credit worked out really well for Chinese property developers in the past. Seem like the party is coming to an end sooner than expected.🥴🥴
Monkey Wrench
Monkey Wrench Yıl önce
But the problem is that the apartment locations don’t agree with the flow of people and they sit empty. Many of the buildings containing the apartments are inhabitable. Many of these buildings will have to be teared down and rebuilt before anyone can live in them. To me a debt is fine, but if the debt is for air and smoke (empty city) there’s a big problem. Well what is happening in China is not building with debt but a ponzy scheme.
Casino Dave
Casino Dave Yıl önce
"You can't just grow an economy by borrowing borrowing borrowing" That's exactly what the fed does every time it prints money.
Michael Callahan
Michael Callahan Yıl önce
I found the Jenga tower analogy to be both more confusing and less informative than a simple flow chart diagram of money. Some of the graphics were also so over-done that they were hard to read quantitatively. Lastly, an important point that is never addressed in the video -- if this crisis was proximately caused by the red lines the CCP drew up to curb borrowing, isn't this shock to the system precisely what they wanted? This is not a collapse at all. This is deflating a balloon to ensure it doesn't pop. Further, if you compare these red lines to the standard solvency frameworks in the west, are they more or less strict? Would have been great to know to lend some perspective on the severity of the problem.
Persistent Dreams
Persistent Dreams Yıl önce
Shout out to Russell Birkett who did the graphics for this piece. Nicely done!
D S R Aylar önce
There are now a lot of people with multiple properties that were previously all on rent, but now find themselves with several empty properties, no one looking to rent, but mortgages still to be paid. Bankruptcies are now hugely on the increase. Since covid and the ultra strict lockdown that was enforced causing many foreign business to move elsewhere and along with them all the foreigners have also gone.
Toby Ihli
Toby Ihli Yıl önce
I dated a Chinese woman a couple of years ago. She claimed to have sold an apartment she owned as part of her divorce settlement. She and her husband had bought a couple of units as an investment. By the time the asset settlement was finished so she was free to sell it, the boom was just starting to bust. She was able to sell it, but the price had dropped $200,00 USD, below what similar apartments had been selling for before the divorce proceedings. She was distraught, but honestly, she should consider herself fortunate, as right now I don’t think she could give it away, yet her HMO monthly bill would still have to be paid. That was two years ago. Also, the Chinese local governments don’t “sell”land. You’re paying a 100 year lease. If you don’t think the Chinese won’t let the property be improved and take it back, just ask the British about Hong Kong. Britain had a 100 year lease, and look what happened.
Victoria 💕
Victoria 💕 Yıl önce
Toby 🤔
Green Traveler
Green Traveler Yıl önce
There's a fundamental point which is missing in the video is China is still a fast growing economy with fastest urbanization speed ever seen in human history, that means demand for housing is extremely huge. About 12 million people moving from rural areas to urban areas in China every year, so basically the huge demand for housing is huge.
Jib Cot
Jib Cot Yıl önce
They did mention it at Starting @02:06 , but also said that that urbanization was slowing down as so many people now live in the cites.
Green Traveler
Green Traveler Yıl önce
@Jib Cot according to the Chinese official data there are still more than 10 million people become citizens from famers, plus millions unregistered population urbanization due to the Chinese hukou registration system. for example, in the southern city of Shenzhen, the official population size is 12 million, but there are actually more than 20 million people living in the city. urbanization in China slows down just very tiny fraction but didn't change the whole picture.
Glicerio Acosta
Glicerio Acosta Yıl önce
But people from rural areas can’t afford to buy these properties.
Advance to Tabletop
Advance to Tabletop Yıl önce
I’m assuming you mean livable housing. Too many of these properties are tofu dregs.
RGS classic Music cafe Top Hit Re mix Songs
RGS classic Music cafe Top Hit Re mix Songs Yıl önce
EverGrande ....huge dreams to supply housing...but very tight Financial management is required to accomplish such huge projects...and most importantly they should be in fully control over their Financial calculation that this much Debt required....this much we have to pay interest.....and this much we will earn profits.....that's should be your Financial control from beginning to end....then big dreams becomes true.......Thanks....RGS
A W Yıl önce
The real problem is using debt for one project to fund other vanity expenditures.
Ganesh ram
Ganesh ram Yıl önce
Every builder through the 🌎 does that. They will launch 1 project and collect around 30% ,then use part of it to launch another project...and it's vicious circle . People are stupid and builders not to blamed. Buyers should do due dalliance before putting their hard earned money. I invested in 2 apartments in India. I made sure it was ready to occupy. Once that was ensures I made payments and moved within 3 months as Interior took that long to complete. Now the property value has shrunk by 40% due to wrong investments by buyers and doing distress sales. For me no issue as I have to breath my last here.I will be happy to sell it at lower price as I have no children.
spacetoast7 Yıl önce
Using earnings to secure loans to keep selling your core product is a problem?
C.S. Potter
C.S. Potter Yıl önce
My main issue with Chinese housing market is this While on this vid they say that the land was "sold" to developers, in reality it was leased. In China (which is still a communist country like it or not) the government owns all the land. There is no private land ownership. Now the lease the developer acquired is for 70 years. And the land is never leased to the people who bought the apartments. The lease remains with the developer. Also the majority of the cost of apartments in China is tied to the cost of the land lease. What l wonder about is what happens at he end of the lease? Does the developer have to pay for another lease? Do the apartment owners? Wouldn't that mean that every 70 years these apartments essentially have to be rebought to pay the lease. One last tidbit. Many of these parcels of land leased do not get developed for decades. So the apartment "owners" never have the full term of the lease before the lease on their property runs out.
Ja Subion
Ja Subion 7 aylar önce
Happening in the Philippines too but unfortunately, after the surge of Chinese POGO workers in the past years buying units, the market price of the units skyrocketed and even after all these Chinese POGO workers left the Philippines, middle class people cant still not afford to buy one 😅 Maybe these condominiums will be a ghost building too and will end up unfinished as well.
Fingr'z B'Grubbin'
Fingr'z B'Grubbin' Yıl önce
its not just people moving into cities, cities are being built where it used to farm land
o'neil jerry
o'neil jerry Yıl önce
You don't know what the Chinese (stock)market will do, owning Chinese stock does not mean you own a part of the company, please be aware of that. BYD is making mini cars, hybrids and ice cars, not so much BEVs. Numbers are not looking that great too. Their batteries are great tho and will be used by Tesla as well.
clara Clouse
clara Clouse Yıl önce
Only if I had more time to play around in the market, retirement is around the corner and my primary concern is how to grow my reserve of $300k which has been sitting duck since forever with zero to no gains, I'm having serious anxiety.
Bobby mainz
Bobby mainz Yıl önce
@clara Clouse I agree with clara, I have been pretty much on the sideline observing for awhile, figuring out the best strategy to get in, until I came by a coach, commended by a pundit on Reddit, reluctant at first but I went ahead and reached the coach, long story short, it's over 3years and counting and I've made over 1.5million simply following the guidance of my coach.
joesph cu
joesph cu Yıl önce
@Bobby mainz my 401k lost everything it’s gained since early 2019. wouldn’t mind looking into the advisor that guides you, I believe the best way to beat this recession and inflation is to earn more.
Bobby mainz
Bobby mainz Yıl önce
@joesph cu The coach that guides me is Eileen Ruth Sparks, it shouldn't be a hassle finding her, she's quite known among her peers, so just search her name.
joesph cu
joesph cu Yıl önce
@Bobby mainz Thanks, her website popped up on the first page immediately I searched her, I read through her resume and seems pretty tight, so I booked a call to discuss with her.
archer65 Yıl önce
the problem started when the GOV'T started checking and controlling how Evergrande change the lifestyle of the people. From Alibaba, Evergrande, etc.
Dan Farrand
Dan Farrand Yıl önce
Nobody in finance even thinks about the very poor quality of construction in many of these projects, the curious Chinese attitude about maintenance and the fact that all these buildings are built on land people don't actually own but are leasing from the government with no clear idea of what happens after 70 years when the leases expire.
pinzazzzz Yıl önce
hognoxious You miss the part where the people are usually compensated.
YU XI Yıl önce
You can renew the 70 year lease for a registration fee ranging from 1% to 20% depending on local policy
spacetoast7 Yıl önce
hognoxious There is no private land ownership in China. There's no way to own it. You can only extend the lease.
troooooper100 Yıl önce
it's literally manifestation of a bubble in physical form, buildings will start to crumble on their own.
xia en Gao
xia en Gao Yıl önce
@pinzazzzz LOL! Pennies on the dollar!
Mach Daddy
Mach Daddy Yıl önce
It really surprises me that no one figures out these schemes, until it's too late.
Azian Madun
Azian Madun Yıl önce
Unfortunately the impact is also visible outside China such as in Malaysia. A very expensive ghost project where nobody lives called Forest City located in the southern part of Peninsula Malaysia, where lots of abandoned and incomplete high rise apartments were built, is the evidence of China influenced elsewhere.
Porky Sharma
Porky Sharma Yıl önce
Chinese influence, or just pure capitalism? Capitalising on cheap loans to create a booming real estate sector. The US also fell into the trap back in 2008.
OTL Kuband
OTL Kuband Yıl önce
This is what happens in Human History, when we try to advance and leave other humans behind. Advancement cannot be sustained this way. The model must change and fast 💨
D S R Aylar önce
On top of everything these construction companies have been on a major cost cutting exercise for some time now resulting in poorly built apartment blocks that are basically falling apart due to them being constructed using inferior materials which have left many people on the verge of bankruptcy. They are still forced to pay the mortgages even though they can’t live in the properties as they’re just unsafe and they can’t sell as it’s built into their contracts. Anyone heard of ‘Tofu Buildings or Dregs’?
Bumblebee Yıl önce
Very well explained 👏👏
Kimchicracker Yıl önce
Curious as to whether this is just a glimpse of what is happening in China and that there are more issues then we know about. It’s likely that the Chinese economy isn’t as strong as we would think.
Titus P
Titus P Yıl önce
where do you think the world's strongest economy is? Healthiest?
Kimchicracker Yıl önce
@Titus P If you’re just looking at GDP you’d have to go with the USA. China has a strong economy but I don’t think they’re telling us everything.
xia en Gao
xia en Gao Yıl önce
Likely? Guaranteed.
Titus P
Titus P Yıl önce
@xia en Gao when you are so very abosolute ... you are LIKELY to be wrong
xia en Gao
xia en Gao Yıl önce
@Titus P When you're a fake account like you, you're nothing.
Frank Things
Frank Things Yıl önce
This is probably why the whole 'infrastructure bill' should hold more significance than it does. When the bubble finally bursts, the money will simply move. Governments elsewhere should provide the conditions for that money to settle and grow.
Mike Dodd
Mike Dodd Yıl önce
Greed. Always Takes over the normalised thought pattern ..
Greg Leavitt
Greg Leavitt Yıl önce
This is the way economics works: If you're not growing you're going (under). Ask any empire or culture or corporation. So, it's all thrilling and fun and games in periods of growth BUT there's always a fall -- gravity always wins. More people riding that roller coaster, the bigger that first hill climb, the more potential disaster ensues on the fall. It's not IF, it's WEN (pun intended). From Star Trek, "Warp speed is not sustainable."
Seni Anns
Seni Anns Yıl önce
Huge assets that cannot be 'realized'. The poor can never own these properties but they have fundamentally built them and bought into them! It's a mess for sure!
Josh H
Josh H Yıl önce
Great analysis and very informative!
Fredrick Onjiko
Fredrick Onjiko 4 aylar önce
He remains a hero despite the minor setbacks
Ryan Yıl önce
Economic development is driven by the growth of productivity. When the high rises are empty, the economic growth in China mainly relying on the real estate sector is unsustainable.
Andi A
Andi A Yıl önce
economic growth in china .rely on other sectors, exports, tech etc mr genious
Ryan Yıl önce
​@Andi A The real-estate sector accounts for one-fifth of the total Chinese GDP. Therefore, the looming property sector overwhelmingly affects Chinese economic growth, adversely affecting other industries like the technology sector.
johan hirte
johan hirte Yıl önce
@Ryan The very interesting thing will be when the prices collapse. 70% of Chinese savings are in real estate. This is their pension and lifetime savings. Just imagine the prices come to a level orientating on the average income of Chinese people.😨😨 That’s a big 💥 then ….
Ryan Yıl önce
@johan hirte I believe CCP won’t let the property price collapse, because that would undermine the social stability. But CCP may not bail out property developers, particular private real estate developers, so the whole sector would gradually go down over years.
Jonathan Yıl önce
Especially given drastic population decline real estate is doomed
Carlos Oruna
Carlos Oruna Yıl önce
Poor bondholders. This is not the only squeud example. Loads of leverage everywhere.
Raymond Lam
Raymond Lam Yıl önce
What I like about China's policy is that they are willing to throw their billionaires under the bus eg. Jack Ma. Here, we would be taking our tax dollars from the poor to give to rich for the reason of too big to fail.
J Yıl önce
I wouldn't mind if the government here in the US did something about our obnoxious billionaires
Jayant Choudhary
Jayant Choudhary Yıl önce
hognoxious lol
lyq 232
lyq 232 Yıl önce
Yeah but then here comes the conundrum: When is it exactly good to throw a certain billionaire under the bus?
Raymond Lam
Raymond Lam Yıl önce
@lyq 232 You have a point, not all billionaires are bad or should be villianised as there are good ones too. But, I would say when their interests out weigh the interests of the majority of the countries citizens.
Advance to Tabletop
Advance to Tabletop Yıl önce
Billionaire without blood ties to the CCP, that is.
Joe Baldwin
Joe Baldwin Yıl önce
I didn't realize that Shanghai (about 2500 sq miles) had more than double the population as New England (about 72000 sq miles); while having more than double the population. My state (New Hampshire) is 9,300 sq miles large, with about 1.4 million people; however the terrain, and industry make it a poor comparison.
Imperatoris Servi Hominis
Imperatoris Servi Hominis Yıl önce
Why does anyone trust Big 4 auditors anymore is beyond my understanding. Every major financial disaster has shown that the Big 4 have certified everything as ok as long as they were well paid.
Jon J
Jon J Yıl önce
Auditors can *sometimes* detect *obvious* fraud and *obvious* regulatory non-compliance. I find it absolutely laugable that people think that a business is sound just because it passed an audit. The clever people at the centre of complex transactions can be very confidently incorrect, and there's simply no way that a small team of auditors will be able to find that error.
Alex 3594
Alex 3594 Yıl önce
They hire people unable to grasp the complexities of such subterfuge and send them out to audit businesses.
kreek22 Yıl önce
They're pretty good at detecting minor problems, it's only the big things they tend to miss. Also, it's not their job to predict market bubbles--if they could do that kind of magic they'd be in a more lucrative business.
spacetoast7 Yıl önce
Weird how they are only able to retroactively detect malfeasance in their audits, and that they're not able to predict unprecedented future events!!
Kenya Tanzania
Kenya Tanzania Yıl önce
Chi Na people are so funny
Francesco Misasi
Francesco Misasi Yıl önce
Spettacolare lavoro di FT.
hungson215 Yıl önce
China has been off the spotlight lately, the war sure helped them to shift the focus out of their economic issues
dxelson Yıl önce
You always need a enemy on TV
j d
j d Yıl önce
It will come back to hurt us. Evergrande started to come back into the news and it isn't looking pretty.
Matthew W
Matthew W Yıl önce
Whoever did the graphics/animation for this video - great job!
S 11 aylar önce
People don't realize that in China, the investments and stock market is even riskier than the property market. The stock market is under regulated. That's one of the reasons people go buy property as investments.
Kenz300 x
Kenz300 x Yıl önce
Empty cities with thousands of unfinished or unoccupied buildings. How did this go unnoticed for so long.
Pavel Golodoniuc
Pavel Golodoniuc Yıl önce
How come there are never any legal repercussions for auditing firms like pwc and EY? Shouldn't they lose their licences and be banned from business for decades?
Jack Nicky
Jack Nicky Yıl önce
China can easily rein in Evergrande debts crisis. Compare with property debts and China savings, this debts is a minuscule amount. China purposely want this irresponsible entrepreneurs to bear the losses personally rather than pumping in monies to salvage the companies like what the US did for all their banks in 2009.
DavidJMa Yıl önce
Extraordinary that any Chinese would pay 100% up front for anything - let alone property!
It's surprising how little investors know about investment. They continue to create the "bubbles" that they then complain about! Basically the big investors have struggled to find areas of above average growth and this creates a weakness in their armour so that it can be exploited by foreign governments and commercial organisations who create policy's to exploit their weaknesses. India has been doing it for decades but slightly behind China. India will crumble next although no "investor" will listen, they are already rechannelling funds from China into India. It's so predictable.
Vidalion 3 aylar önce
The US should have reigned in the 2004-2008 housing bubble more, but the Chinese government really let their real estate bubble inflate too far. Bubbles always burst eventually, it’s not “different this time” and trying to keep the bubble going for a “soft landing” generally just makes the eventual bust more painful.
Dana Peck
Dana Peck Yıl önce
Exactly, although they seem to be managing it much better than the West did. Love to hear Walliston do a comparative analysis.
Rob R.
Rob R. Yıl önce
With economic stress and social stress along with a more authoritarian government, China is moving towards finding a win through war. Logically speaking, they’ll be looking to take Taiwan. With the US and Europe tied up with war in Ukraine and suffering from their own economic, political, and social woes, there might be no better time to make such a move.
Nic B.
Nic B. Yıl önce
The Grande Debts is similar to Lehman Brothers but not as bad. Grande overtrade but the company hold huge amount of assets i.e. properties but Lehman Brothers bankruptcy left nothing.
Andrew Lambert
Andrew Lambert Yıl önce
Real Estate debt plays a major role in Sweden as well.
French onion
French onion Yıl önce
Most countries are addicted to debt because it allows more spending. It work's till velocity of money can no loger keep up now they can't convince the banks to keep lending because the growth has ended. Greed is what keep's people borrowing till it's too late.
DF Yıl önce
@French onion I hear most countries are pursuing expansionary policies nowaday.The US and EU are champions, but many other places are doing it. I wonder, though, how much of that money in chinese real estate comes from the US.
True North Strong and Free
True North Strong and Free Yıl önce
The excesses and the waste of human energy and natural resources in the building scenario in China is mind-boggling. It appears to be the CCP‘s way of ensuring the 200 million migrant workers are employed and getting a paycheque so that they don’t revolt.
EGull Yıl önce
PolyMatter did a series of videos on this subject, but a bit broader, about a year ago, for anyone who's interested: "China's Reckoning" Really good and interesting!
nna Yıl önce
Thanks man
Peizxcv Yıl önce
PolyMatter really is just repeating nonsense. For complicated financial issues it’s still best to listen to economists. They don’t guess right often but still closer than people that don’t get it and just repeating nonsense
LeetCodeKing Yıl önce
Love this. Please share fellow Comrades.
Noluyo Ya Köy Evi Turu Mu ? Obuaaa
Noluyo Ya ¿
görünümler 1,9 Mn
FTX: the legend of Sam Bankman-Fried | FT Film
Financial Times
görünümler 447 B
How Evergrande Became China’s Biggest Financial Headache
Bloomberg Originals
görünümler 1,2 Mn
The race for semiconductor supremacy | FT Film
Financial Times
görünümler 85 B
Credit Suisse: what next for the crisis-hit bank? | FT Film