저자: 미상 · 외국인
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중국 경제가 아시아 대비 뒤처지고 있으며 부동산 구조적 문제, 주택 미완공 사태, 제로 코로나 지속으로 침체가 깊어질 것이라는 주장. 세계은행 성장률 전망 2.8%, 부동산 투자 GDP 30%+, 미완공 주택 3.85%를 근거로 제시. 연준이 과잉 긴축해 디플레이션 위험이 있으며 중국이 원자재 수요 감소로 인플레 완화에 기여할 것으로 봄. 중국 위안화 약세 전망. 마지막에는 중국 침체 이후 반등을 전제로 한 저가 매수(buy the dip) 관점 제시.
다듬은 글
Oh boy, you better hope drum Powell already has level 99 Slayo because boy, we are getting slayed in this market. And folks, China's struggles are worsening and they're just not making things better for us here in America, at least not yet. But there might be some light at the end of the tunnel, which we'll talk about towards naturally the end of the video.
But first, we need to go through the fact of the matter that things are getting worse in China and the opium that people have for China's party congress, which kicks off on October 16th, may in fact be misplaced. itan and of course the programs on building your wealth, which have a massive expiring coupon code ex which expires tomorrow evening.
Hopefully you join before then because we've got a massive renovation coming to the path to wealth course. And if you get in early, you'll have the best opportunity to lock in some of the most amazing features. All right, folks. Let's hit some facts on how China is weakening and then we'll talk about what's to come for the Chinese economy.
Note, I will reference some publications by their authors, such as Bloomberg or Barclays, but I didn't help write those reference pieces. I'll simply be adding my own commentary and perspective to those. So, first and foremost, let's talk about some of the latest facts that we know about China. First, we know that economic output for China has now officially started to lag behind the rest of Asia for the first time since 1990.
This, as reported by the Financial Times, is because the World Bank has officially revised down economic growth for China to just 2.8% for this year. That's compared to 8.1% where we were last year and the prediction of 4.5% from earlier this year. Now just 2.8%. And for China, that's pretty dang poulry.
Now look, don't get me wrong, in the United States, we're growing at basically negative 610 of 1%. But boy oh boy, this is a bad trajectory, especially since JP Morgan in January is like, "Yeah, we only got a 15% chance of recession." And now they're saying there's a 98% chance of recession. Point is when trae tra trajectories and estimates start going dirty, they tend to go dirty a lot deeper than we all expect.
It always seems to be worse than we expect and that's quite unfortunate. The rest of Asia though, especially as specifically East Asia and the Pacific are expected to grow at 5.3%. leaving China behind and leaving some to consider the potential that Singapore might actually take over Hong Kong as a financial hub.
Not only that, but you just had an EV maker in Hong Kong list. And based on the story from Bloomberg Wednesday, Leap Motors listed for 48 Hong Kong dollars and over $250 million US listing. and they plummeted 42% after listing, which should go to show that even though we're globally in a relative green revolution, this is not the time to IPO in Hong Kong or really do anything financial in China because people are fearful and they're trying to take their cards off the table, not put them on the table, even gamblers.
Yes, quite literally. According to BI and a BI reporter this uh actually just two days ago, Macau casino revenue is likely to stagnate this month at just 11% of prepandemic gambling revenue citing not only co zero policies but most specifically quote the loss of VIP clients. That's probably because they're all getting slayed by Jerome Powell in the markets or in the real estate sector.
Now those fancy VIP clients ain't got money to gamble anymore and the win is suffering though. Interestingly, and we reviewed this in the course member live streams which you get access to when you join any of the programs every day the market is open. We do those. We reviewed the fundamentals of win and we actually noticed that their highest margin product.
I want you to think about this for a moment. What do you think WIN's highest margin product is? Is it food and beverages? A. Is it B entertainment? Is it C rooms or is it D the casinos? Well, I have to say I initially thought the casinos, but I always like to fact check myself and it turns out the highest profit margin item for Win Resorts is always go with C, folks.
Always go with C. Rooms. The rooms are actually apparently the highest margin product for win. And I'm shocked that it was not casinos. Obviously, it's not going to be food or entertainment. Anyway, in my last video on China, we talked about how 52,000 infrastructure projects have been started since January, yet construction and land values are falling.
Not only that, but Goldman Sachs is now iterating the same exact thing. This is a chart from Goldman Sachs showing both construction and manufacturing at some of the lowest levels that we have seen in the last 15 years. We even have data from Society General that shows mobility data plummeting relative to the prior four years.
We see oh there's that same mobility chart. We also see housing sales remaining subdued especially below all prior levels of prior years. Here and the only sector that seems to be a bright spot right now is autos with a little bit of an explosion here towards the end of this reporting period charted here by Society General.
I personally think some of this is because of the Giga Shanghai uh shutdown. Uh it's just too convenient that there's this massive hole over here and this massive explosion right up here as uh Tesla deliveries are exploding. Except those Tesla deliveries don't appear to be exploding in China. They actually appear to be using Giga Shanghai as an export hub to produce the vehicles inexpensively in China and then ship them elsewhere, which is great.
You know, it helps China, at least with some manufacturing and jobs and production, but it doesn't send us positive, warm and fuzzy feelings about how the Chinese consumer is doing in China. Keep in mind, the Chinese consumer, in my opinion, is extremely smart. They began doubling to quadrupling their personal household savings as early as January of 2022 relative to January 2021.
They saw the writing of this disaster on the wall a mile away. They've been very smart. It's not their fault. Their government is uh propped up some bubbles and now those bubbles are popping. Those bubbles are popping so badly, especially the real estate one, that institutions are now trying to understand how exposed the national banks are to real estate.
Real estate makes up over 30% of the Chinese economy. And according to society, we have 20% of all outstanding bank loans on average exposed to the real estate sector. Look, we know we've got problems in China. There's no doubt about that. And the reality is the housing crisis is just worsening. I want to share this story with you.
I'm definitely going to butcher the pronunciation of this particular location here, but this was a Reuters reported story where in Zulon, that's my pronunciation of it. In Zulon, there is a county mansion complex, which apparently sounds really beautiful. But there is a 55-year-old investor among countless others who were interviewed by Reuters who uh states, quote, "We invested our life savings into this home, but the home was actually never finished." In fact, the property, this condo, still features unfinished electrical, no water.
They have to walk downstairs and carry up buckets of water and no gas. They do have sewage though, fortunately, but they have to bring their own water up. and the property isn't complete with construction, but they moved in because if they didn't move in, they'd be homeless. That's because in China, you actually buy properties before they're complete and you start paying the mortgage on them before they're complete.
That's despite or or I should say in contrast to the United States of America where you don't actually start making payments on a new construction build unless you're the builder or unless uh you have a certificate of occupancy from a local housing uh building and safety department that authorizes that it has all of the items necessary for you to live in like windows and plumbing and electricity and sewage and all these things.
Well, this is leading to substantial and obvious mortgage strikes. Over a 100 cities now have home buyers protesting their mortgages for unfinished projects. Unfortunately, out of the entire housing market in China, and this includes finished properties, nearly 4% of the entire housing market is made up of stalled projects.
3.85% of all homes in China are stalled. According to Reuters, 90% of new homes in China, keep this in mind, if you buy a new home in China, you are 90% likely to purchase it off plan, which means you're buying it while it's still under construction. So, look, China, I feel like, is just getting used to the idea of private property ownership.
They've only allowed private property ownership since the 1990s, but they're trying their best now to motivate people to keep getting into the real estate industry. Even though the real estate investment scheme is falling apart, the bubble is structurally falling out in China. And they're doing this by trying to lower rates on uh five-year loans.
They're lowering prime rates so that way builders can get encouraged to continue to finance. They've reduced restrictions on like their three red line policy and almost every single company in China has a real estate division. So there's a lot of exposure to real estate. The problem is you now have institutions in America and around the world and famous shorteller Jim Chanos saying things like look real estate is endemic to China.
It affects everything. The problem is real estate in China has potentially large now structural problems. And when somebody says that problems are structural, we're not just talking about home prices declining 37% year-over-year like they have in China. What we mean is you got to start over. That's really bad.
That means a really painful reset is required. That's what we saw in 2008 in America. structural problems in the housing market. For every $1 of real estate equity there was, there were $10 of outstanding instruments suggesting there were $10 of equity on real estate when there was only one. That's because of derivatives and swaps and arcane financial instruments created by bankers on Wall Street, which ended up crushing Main Street with declines as high as 55% for condos, 50% to 45% for multif family properties, and 40 to 45% for single family properties.
the structural problems of dead people getting loans, people without credit getting loans, people with no income, no job, no assets getting ninja loans, adjustable rate mortgages that started with teaser rates that were potentially negative or 0% and then adjusted to five or 6% within 6 months thereafter that ended up bankrupting people and causing a foreclosure crisis in America.
Folks, that is a structural problem. It's very much like structural corruption in China, which Zinping has made it his mission to root out. along with of course rooting out his haters. He's trying to root out corruption. For example, Deote China has just agreed to pay a $20 million SEC penalty. That's Wait a minute.
Think about that. The SEC is finding Deote China. That's because Deote is an American company, right? They got a division in China anyway for alleging that Deote and the auditing division of Deote China rather than randomly auditing company's financials would basically just call up the companies go hey uh you know we're supposed to audit you can you send over uh some selected samples of accounting entries that we're supposed to test and then of course the firms could quickly clean those up and yeah yeah yeah Here.
Here. Look at these. Don't mind these over here. Look at these SEC's fighting. So, we're finally seeing some structural repair by shining a light on corruption and structural damage. But unfortunately, the pain that America went through in 2008 is now likely to be felt in China. And we could see a lost decade much like Japan has seen a lost decade.
This is of course leading to a lot of opium that things are going to get better when China holds their party congress. Now a little bit of background here. Zjinping is widely expected to be renominated as premier. Uh and he might end up becoming premier for life. We also believe that Zjinping is going to give us his guidance on a policy plan for housing, some form of guidance on COVID zero, some form of uh comparison to the American way and how they want to do things differently.
I wouldn't be surprised if they end up showing some kind of contrast to the United Kingdom where the United Kingdom is trying to essentially tax the rich less and uh essentially motivate trickle down economics where you tax wealthy people less and hope everybody gets more money. And China is going to go with a more of common prosperity approach, common ownership, more censorship and control sadly, but with a broad goal of reducing poverty, expanding the middle class, affordable housing, education, and maybe a little bit less priority on green because right now they got to focus on not collapsing into a massive depression, but eventually then refocusing on green.
It doesn't help that the Chinese population is aging. It doesn't help that we've got drama with Taiwan, although China is likely to continue their strategy of quote strategic composure and historic patience, which is very much in contrast to Putin. And they're probably also likely to continue their calls on Putin to come to some kind of negotiated settlement with Ukraine.
We might continue to see some form of uh suggestions that local cities partner with struggling housing developers or the lowering of interest rates and other sort of guidance for nationalism. common prosperity and party strengthening and ultimately a a very big contrast drawn between the way China envisions the world and the way the West views the world.
And we might even hear some comments about how China is going to continue to make it more difficult for individuals to short the Chinese yuan and try to prop up the Chinese yuan as a currency because right now it's at levels we quite frankly haven't seen since 2008 as the yuan weakens due to Chinese economic weakness which makes sense.
So, we're expecting to get a lot of opium, but the reality is we probably won't see a lot of real change in the near term. These party congresses tend to give us a vision for the next 5 to 10 years. These party congresses only really happen twice a decade. And so, we're going to be living with this vision for the next 5 to 10 years.
And it would be a surprise to see anybody other than Zjinping nominated and elected here. But what we do expect is that whatever kind of opium is going into this Congress party meeting on October 16th is likely to fade into sadness because little change is likely to come of it anytime soon. In fact, researchers suggest, including uh Goldman Sachs and uh Barclays, that ultimately any kind of stimulus the Chinese government ends up performing is unlikely to make any difference because it's going to get canceled out by CO zero.
Society General tells us that only 67.1% of people over 60 have received their third dose of COVID of a COVID vaccine, making really getting away from CO zero quite difficult. On top of this, Barclays estimates we're probably not going to see a removal of CO zero until we actually get through another winter because CO winters are usually the worst and China just doesn't want to go through that.
Now, how do I think this affects us in America? Well, ultimately, I think that China will be a global anchor to inflation. I think that the Federal Reserve is likely to overcorrect and create not only substantial disinflation over time, but potentially even deflation. Now, I think that China is actually going to help contribute to this as Chinese GDP ends up waning and bringing down global growth and global spending.
And there'll be less money coming from China purchasing say electrical machinery equipment from the United States, which they do. Uh, and otherwise potentially less demand for Teslas or whatever it might be. We might end up seeing a very quick decline to inflation. And China's actually going to be helping us with this.
So, we might consider sending China a thank you card. Though, the Chinese probably don't feel that way because they're going through hell much worse than we are in America right now. They're being rational to save money, being very smart people, and they have a country that has a whole lot of potential, but they're going to go through some more dark times ahead.
And unfortunately for China, it's not going to benefit them as much as it's going to benefit countries like America who are going to benefit in my opinion off of the reduction of commodity or demand for commodity prices like oil or steel, iron or other goods like even lumber quite frankly or even as simple things like cars and chips as China actually as much as they want to build up their internal supply chains will probably have to look outward and ultimately beg for contracts from countries in Europe and the United and obviously the United States and North America just to continue to stay afloat.
It's a difficult time, but eventually we'll get through it. I think smart investors today would actually consider encouraging brilliant minds like Elon Musk to take advantage of an opportunity like this stimulus in China and a lot of available labor in China and potentially build factories in China during the depths of despair.
not only to help the Chinese people and give them some opportunity to build, to work, and invest in their own country, but also because I think it's a great buy the dip opportunity because China will be back. Good luck.
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