“Cheap housing? At what cost? 😫😫😫”
Its always funny liberals who try to tell me this is a sign that things in China are going badly.
Like they have TOO much housing, rents are TOO low.
It shows there aspirations to be petite-lords and exposes there world view as parasitic to the core, things are only good for them when the higher classes can endlessly profit off of labour and its bad when things slide too far into the workers favour.
I love how libs were getting boners for a while thinking that China was about to have a 2008 style crash. Now that it’s becoming obvious that it’s not gonna happen, the copes are flooding in. For example, here’s Michael Pettis who is one of many US economists that’s been predicting the failure of China’s model, complaining that China avoided a recession by popping the real-estate bubble and redirecting investment into manufacturing.
It’s absolutely incredible to me that he attempts to spin this as something negative when in practice it means that on top of avoiding a crash, productive economy is now thriving giving Chinese consumers access to low-cost technologies like solar panels, batteries, and electric vehicles.
When China turns a crisis into an opportunity to strengthen their manufacturing power even further while deflating an unproductive sector of the economy, that’s proof they are failing.
When the US declares loudly that it wants and needs to bring manufacturing back yet repeatedly fails to do so and instead just ends up inflating an “AI” bubble that’s a genius 5D chess move.
lol that’s basically what western media has been going with
For the Hexbear post on this article the user Xiaohongshu wrote a long post claiming “local governments are the landlords”, featuring their common talking points of local governments strained for cash after the real estate bubble burst and that Chinese economists are all neoliberals and therefore unable to solve this.
I’ve wanted to ask Lemmygrad’s opinion on this user for a while. To what is their pessimism warranted in your view? Do you take issue with (their interpretation of) their observations?
That user is an ultra / maoist who writes long posts with tons of chinabad claims with absolutely zero sources, and gets heavily upvoted. I have no idea how no one has called them out yet. They’d be banned here very quickly.
That user is one of the more prominent chronic “doomers” over on Hexbear. They are knowledgeable but prone to exaggerating.
My take: If anything this makes it even better news, as those local governments will now have additional incentive to rethink their relationship with real estate and find alternative ways of structuring local financing. Necessity is the mother of invention. Economists don’t make the political decisions, and material reality will assert itself over ideology anyway.
If local governments made bad bets that contradict the policy of the central government, which has repeatedly declared that housing is not for speculating on, has made it clear they wish to make housing affordable for everyone, and has deliberately but safely deflated the real estate bubble, then that is their problem and their responsibility to solve. If they don’t they will be replaced by others who will.
The bottom line is this: where would you prefer to live? A country where housing prices are skyrocketing or a country where they are becoming more affordable? Everything else is just concern trolling. Especially when we see that this has not led to an economic downturn but the opposite, an expansion of manufacturing as investment is redirected from a non-productive (real estate) to a productive sector.
And if China critics’ only response to pointing this out is to start throwing around the buzzword “overcapacity”, then you know they’ve lost the argument, because that’s just cope. No, China does not need to transition to a western style consumption driven model, why in the world would they adopt a system that is clearly seen by the entire world to be failing before our eyes? They would have to be incredibly stupid to do so.
If they don’t they will be replaced by others who will.
Can someone please explain the mechanism for this? Thanks.
What to know about whole-process people’s democracy in China
https://english.www.gov.cn/news/202503/06/content_WS67c8f0a0c6d0868f4e8f0784.html
Thank you. I was wondering about recall.
local governments strained for cash after the real estate bubble burst and that Chinese economists are all neoliberals and therefore unable to solve this
“Solve this” non-issue you mean. Local government in China invests to bring REAL economic growth. Rent seeking is not real growth.
When rents shoot up it’s a problem for RENTERS. When they go down it’s a good thing especially for the local economy. It gets more discretionary spending money in renters pockets.
What sort of whack lib cope is this? How the hell are China’s local governments held to a completely contradictory standard than a Western government?
I mean, I don’t think it’s a contradictory standard than Western governments, as I don’t know if @xiaohongshu@hexbear.net has expressed some other standard for Western governments, and what I’ve seen is usually critical of them as well. The idea from the comment they posted on hexbear appears to be that the local governments were investing in this non-real growth sector to the point with the decreases in rent, they don’t have the funding for other infrastructure growth and are having to increasingly leverage debt to get things done since they can’t extra themselves from the issue.
The crux, from my understanding, wasn’t that rent going down is bad, but that it’s going down due to massive capacity that is heavily invested in by the local government, and such investment was done under the assumption of increasing prices, and with decreasing costs, they lack funding for some of the other projects and with the central government trying to reduce this behavior, are having to rely on other means of acquiring debt.
Rent going down is simply the function of the real estate value going down. In other words, a symptom of a much deeper problem.
The local government income source is tied to land premium (on average across China, 30% of local government revenue comes from leasing and selling land, and this figure has already dropped from a higher proportion after the implosion of the property market sector in the last couple years), and the fall in revenue makes it much more difficult for the local governments to repay their overhanging debt, and have to cut expenses for the city as they have to spend more of their dwindling pool of income on debt servicing.
You can read the report on China’s land financing 2024 and note that the data was compiled from a year prior. It has gotten worse since then, and I’m still waiting for the publication of their 2025 report (the data already exist, the compilation simply makes it nicer and easier to grasp everything in one go).
The person you’re responding to doesn’t know what they’re talking about, as is typical with many Westerners. Don’t get too hang up on that.
investment was done under the assumption of increasing prices
Okay. This is just a bad way of percieving a real-estate market because property can be rented or sold off. The price of rent matches the service of the debts plus any depreciation. If it’s not going to break even or profit in the long term then it would be SOLD as soon as possible.
If it’s being rented for a low price, the debt is NOT through the roof. I am skeptical that debt is a problem.
This is the opposite of the problem everywhere else where asset prices and debts are all going up and up.
This doesn’t mean an asset is worth more. It means the currency is depreciating in value.
And it means inequality is rising. (The higher price relative to incomes is an indication that the asset is out of reach for more people)
Okay. This is just a bad way of percieving a real-estate market because property can be rented or sold off. The price of rent matches the service of the debts plus any depreciation. If it’s not going to break even or profit in the long term then it would be SOLD as soon as possible.
If it’s being rented for a low price, the debt is NOT through the roof. I am skeptical that debt is a problem.
Won’t get disagreement from me here, I presumed costs would be cut to minimize losses as well. Makes sense to me just seemed like a different type of potential issue than how the short comment above may have some assume (and would lead to different criticisms) so wanted to clarify.
You provided the hexbear link and I read it. Frankly there is a tonne of doomer “but at what cost” bullshit.
The metric is simple. Why second guess it? Rents down = good for renters. If you want them up, you’re a fucking landlord.
You want rent to fund the next project? Then you’re an austerity nut.
There’s a recent video by Garry’s Economics where he says everyone has gotten too obsessed with monetary policy and not focused on fundamental principles like resources. The last 20 years have shown it is not the cure all for economic issues. Putting more money into the system or taking it away will change prices but there’s no correlation with economic success.
If housing is being rented then those resources are being used in the economy. Price discovery has set the money value. Putting housing where people will live is the true sign that government has invested well.
The metric is simple. Why second-guess it? Rents down = good for renters. If you want them up, you’re a fucking landlord.
You want rent to fund the next project? Then you’re an austerity nut.
For context, that user generally wants China’s government to recentralize to a degree and think these things are an “issue” insofar as the local governments are essentially filled with Western neoliberal brain worms and need stricter oversight and centralization to prevent dumb neoliberalism. I don’t think they want higher rent, but believe that local governments do due to landlordism brain worms.
I think (again, this is how I read the comment) the core of the frustration is they feel like the financial sector is making bank off this, and because it was done relatively recklessly, some of the massive amounts of resources being used to manage the falling prices aren’t being used in other sectors, which is contributing to stagnant wages, an absurd young unemployment and a continuous deflationary spiral that aggrevates the other two. (I’m realizing I’ve read far too many of their comments lol)
I will let you know many refer to xiaohongshu as Hexbear’s resident doomer, so you aren’t the first to feel that way lol. Some of their comments I’ve gathered also work within a neoliberal framework as the user fully believes much of China’s economic policy is working within it and are meant to highlight the impossibility of solving those issues within its framing as a rhetorical tool for a break from western neo-economic policy.
Frankly, I don’t spend nearly enough time on economic studies and theory to dismiss it myself, and most the time I’ve seen people argue against their ideas on our side they just resort to calling the user names so was also curious how grad would interpret things.
could be true and a great opportunity for central goverment to purge local governments engaging in these schemes.
Won’t someone think of the landlords!?
Sounds great. More available housing and lower housing prices is a huge win
Meanwhile in the West rents keep climbing at a staggering pace. It feels they’re going up more than 10% each year in my country.
In Canada, it’s now common for people in their 40s to live with multiple roommates because it’s impossible to pay rent on a median salary.
Jesus…
