Evergrande files for bankruptcy in US

Chinese real estate developer Evergrande (one of the largest in the world) filed for bankruptcy protection in the US.

17 August 2023

[Steven Cochrane of Moody’s Analytics] added that many homes are pre-sold but if construction stops, buyers no longer make mortgage payments, which puts more strain on developers’ finances.

Earlier this week, China’s central bank unexpectedly cut key interest rates for the second time in three months, in a bid to boost the economy.

19 July 2022

Homebuyers in China frequently purchase “pre-sale” homes long before developers have completed them, with mortgage funds then used to finance their construction.

If the current crisis continues, no one will want to buy property developed by these vulnerable developers. And this will bring the financial ruin of these developers, as presale accounts for more than 80% of their revenue.

— Houze Song (@hzsong) July 14, 2022

8 August 2023

Weaker economic growth overseas has also reduced foreign demand for Chinese goods

15 August 2023

The Chinese government has suspended the publication of youth unemployment data, an indication of just how dire the labor market is for 16- to 24-year-olds in urban areas. Youth unemployment hit a record 21.3% in June.

When Xi Jinping took over as general secretary of the Chinese Communist Party in 2012, China’s national and municipal statistics bureaus published over 80,000 statistical series. Today, fewer than half of those series are still published.

Some analysts believe China is experiencing “all-out deflation,” an assertion the National Bureau of Statistics dismisses: “There is no deflation in Chinese society, and there won’t be in the future.”

9 August 2023

China’s economy has slipped into deflation as consumer prices declined in July for the first time in more than two years.

The official consumer price index, a measure of inflation, fell by 0.3% last month from a year earlier.