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Newsletter 125 - July 31, 2022

Dexter Roberts
Jul 31, 2022
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Welcome to the 125th edition of Trade War.

  • China’s property market crisis is not going away

  • Is decoupling really happening?

  • Politburo meeting disappoints on economic policy

  • US-China ties sour further over Taiwan

Jeep pulls out of China. Foreign investors face record losses. And the latest Politburo meeting is cold comfort for companies hoping for an end to Zero Covid and an economic boost.

The U.S. Congress passes the $280 billion CHIPS and Science Act, with $52 billion for chip companies that set up shop in America. China cracks down on corruption in its semiconductor industry. Biden and Xi have fifth call amidst growing tensions over Taiwan.

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And on a lighter note, in the Stand Up! podcast this newsletter author talks about how a home Zendō or meditation hall and book of Chinese philosophy, helped convince a Montana kid to pursue a career in China.

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‘The timing couldn’t be worse’

To begin, here are my quick thoughts on China’s serious housing market problems, a crisis which shows no signs of going away - from an interview (Swedish) I did with Dagens Industri’s Johan Nylander.

Q: The mortgage boycott and demonstrations outside banks are coming just months before Xi Jinping’s important party congress. Is this a political problem for Xi and the party?

DR: The timing couldn't be worse. Every party congress is a time of high political sensitivity and this particular one, the 20th, is even much more so given Xi's plan to stay on for an unprecedented third term. 

Q: How do you think the government might react?

DR: The government will try to find ways to appease upset apartment buyers who are still waiting for their homes to be finished. There are already reports that officials may allow those Chinese with mortgages but still waiting for their apartments to be delivered, to temporarily stop monthly payments, without facing a hit to their credit rating.

At the same time Beijing is telling local governments to find a way to ensure cash-strapped developers get access to continued funding and so are able to eventually finish construction of the many apartments they have promised. The last thing the CCP and Xi need is an angry middle-class protesting as they move into the homestretch before the fall party congress.

Twitter avatar for @dtiffroberts
Dexter Roberts @dtiffroberts
Thanks to @dagensindustri's @johannylander for reaching out to me to discuss China's housing crisis (article in Swedish)
di.seKinas fastighetskris fortsätter förvärrasHONGKONG. Krisen inom Kinas fastighetssektor tilltar. Tiotusentals investerare vägrar betala amorteringar på köpta lägenheter, och fastighetspriserna fortsätter att pressas. Myndigheterna uppmanar nu bankerna att öka utlåningen. På börsen rasar fastighetsbolagen.
8:37 AM ∙ Jul 29, 2022
2Likes1Retweet

Real estate market w/ 90% sales in unbuilt projects

And here is more on the unfolding property market crisis, from an interview I did with RFA Chinese’s Grace Guo.

Here is the text version (Chinese). Watch the video below, in Chinese but with my comments in English (with Chinese subtitles) extending well beyond the snippet here:

“I don’t think that a real estate market should be based on the fact that 90 percent of sales are happening in projects that have never been built,” I say to RFA Chinese.

“I think the government is right that they have to deleverage the property sector. And they have to start to, longer term, end this sort of implicit promise, that prices will continue to go up.”

Twitter avatar for @RFA_Chinese
自由亚洲电台 @RFA_Chinese
#房地产 市场层出不穷的 #烂尾楼 问题近日引起越来越多业主无奈之下的“停贷”抗议。据GitHub平台上业主统计,截至7月24日,已有113个城市的321个楼盘的业主对外公布了“停贷”通知。“停贷”后的业主会面临哪些风险和困境? 谁应该为烂尾楼负责? 中国房地产烂尾楼问题的出路在哪里?@dtiffroberts
1:00 PM ∙ Jul 29, 2022
80Likes26Retweets

Jeep pulls out of China

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