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Financial "collapse" leading to severe internal turmoil and/or communist crackdown/extremism is a possibility. China has a severely over-dimensioned property+construction sector and now also a severely over-dimensioned manufacturing base. If they can't get (enough) paying customers for their exports then a lot of these investments will be worthless.
There is a lot of malinvestment in china and as much as people have been wrong so far predicting a Chinese contraction/collapse, it is still very much a question of when the chickens will come home to roost, much like America and the rapidly escalating levels of national debt, deficit and asset inflation.
Perhaps it isn't a question of who's gonna win but if anyone can avoid losing. Perhaps we're heading for a period of global economic contraction and malaise, with at best Japan style anemic growth/contraction everywhere. Unless AGI pans out that is...
In 2015 the Chinese government already stopped emphasizing real estate and announced that it would cut incentives for constructing and investing in it. To stop the "disorderly expansion of capital", they purposefully deflated the bubble, e.g. legislating huge down payment requirements for housing loans, high transaction taxes etc. The expansion stopped a while ago and workers have been reallocated. (Didn't you read all those articles about China's real estate collapse?) (There was a popular narrative around ghost cities too, but they quickly filled up. China urbanized many hundreds of millions of people and still has 150 million to go.) (Freezing real estate, which holds the majority of household savings in China, lets them inject liquidity to specific industries without inflation.)
The industrial base is what you would call an asset. In the absence of trade unions, irksome regulations etc. a greater concentration of capital should reduce production prices (instead of raising them, as e.g. happened in the US) particularly as labor is often quite a modest part of the balance sheet in today's firms.
To paraphrase Rick Rule: "In the super market, when you see tuna half price, you happily stock up. But in the stock market, when your holdings are on sale, you freak out instead of buying more." China did load up on infrastructure. And now commodities are significantly higher than in the past decade, but they just pay their cheap loans off instead of building for 5x the cost.
I think the “ghost city” narrative may have been built out of ignorance, perhaps deliberate, of how China redevelops its land.
In the West cities tend to scale up one project at a time. Typically a single property, sometimes an entire block when the footprint of a building necessitates it.
In China they raze and rebuild entire districts at a time. Imagine San Francisco deciding that the Tenderloin was due for redevelopment. They move everyone out into temporary housing. They flatten every single building. And they build an entirely new set of streets and buildings.
As construction nears completion you have what appears to be a brand new yet eerily depopulated city. There might be a few buildings coming online but residents move in slowly. Perfect for Western media to take pictures of and within bounded distrust represent as a newly constructed city sans residents.
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Now I know your lying, not sure what your motive is exactly but it’s well known that China built more home than could actually be used or purchased
Well, they (China) could also have initiated mass immigration (which they did not), or also started destroying the excess (which they have been to limited extents).
It is certainly a significant fly in the ointment of the China economic narrative, however, particularly the impact it had on private Chinese savings/investments when the market value of housing investments went kaput. Any Chinese economic narrative that waves aside the property bubble is like trying to discuss the 2008 financial crisis without acknowledging that property bubble.
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It is an asset if you have (enough) paying customers, otherwise it's a liability. Overinvestment in industrial capacity is a common and recurring problem not just in China. The difference here is the scale as well as overreliance on external customers.
Exports are less than 20% of Chinese GDP (and domestic GDP is lower because of accounting differences like imputed rent. In China, they use construction cost depreciated over the building's life, so rent is 2% to Chinese GDP, whereas almost 10% of US GDP is imputed rent; much of US GDP growth is just bureaucratically increasing what home owners pay themselves...Oh, and remember, as Trump says, China's artificially weakening its currency, which... decreases domestic GDP!) Japan and India rely more on exports than China. The US, EU and China are roughly equal in total volumes, although China's GDP is 2/3 of the US (or 4/3 if PPP).
And what is their plan for the future? What percentage of GDP is manufacturing? What percentage of global manufacturing is in china? Who are their customers?
China's plan is to increase manufacturing from an already very inflated state in a world where their customers are increasingly hostile to them. This is not a risk free state of affairs.
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