Previous Peeks into Everyday China by the Author :
The second quarter GDP results of China are out…Hence this edition of ‘A Peek into Everyday China’ in double quick time…oh by the way…whatever is written in this article is not my imagination…it is authentic and published by Chinese media…click on each headline and you will get to the original article in full in SCMP. Before proceeding further, the headline in SCMP foretells the future!
China jobs: youth unemployment hits record high in June – nearly 1 in 5 young people out of work
Headline : China GDP: second-quarter economic growth plunges to 0.4 per cent, lowest in 2 years after missing expectations
Excerpts : China’s economy grew by 0.4 per cent in the second quarter, compared with a year earlier, down from the 4.8 per cent growth seen in the first three months of the year…Retail sales rose by 3.1 per cent in June from a year earlier, while industrial production also rose by 3.9 per cent last month…It represents the lowest growth rate since China’s economy shrank by 6.8 per cent in the first quarter of 2020 after the coronavirus shut down large swathes of the country…The world’s second-largest economy had been predicted to grow by 1.1 per cent in the second three months of the year…”We should be aware that the foundation for a sustainable and steady recovery of the economy is yet to be consolidated due to: externally, the risk of stagflation in the world economy is rising, the policies of major economies tend to be tightened, and external instabilities and uncertainties are adding obviously; and domestically, the impact of the epidemic is lingering, shrinking demand intertwines with disrupted supply, structural problems combine with cyclical problems and market entities still face operational difficulties,” NBS spokesman Fu Linghui said on Friday.
Comments: A slowdown was on the cards. The extent is surprising. If the Chinese economy has grown only 0.4% despite expectations of a1.1% growth…after all…taking into account all the cooked-up figures which Chinese produce…the economy has really contracted! It is not a wonder that the Chinese were not even willing to look at giving a helping hand to Sri Lanka. Just add the haircuts of the BRI and all the loans which China has dished out…you will get a better picture.
Headline : China’s tech boomtown Shenzhen struggles under weight of lost jobs, dwindling profits and demand woes
Excerpts : Weak consumption, lay-offs, supply-chain disruptions and other headwinds take hefty economic toll on China’s southern technology hub of Shenzhen…‘Everyone is frustrated about the economic outlook,’ Shenzhen worker laments as livelihoods continue to be adversely affected…Late last month, Zeng Zhao, who runs a Shenzhen tech company developing educational software and has been looking to hire a new software engineer, was surprised to find a large number of experienced but jobless engineers seeking work in China’s tech hub…“My HR interviewed a total of 10 engineers [for the one post]. Eight of them said they left their last job either because they were fired by tech giants or because payrolls were delayed for months by other small and medium-sized tech companies,” Zeng said…“Most of them have mortgages to repay and were in a hurry to find their next job. A software engineer with three to five years of experience is now asking for about 10,000 yuan (US$1,500) to 15,000 yuan per month. It is lower than [last year].”
Comment : This is a report from Shenzen. Is this boom town going bust? What about other tech hubs? What about other manufacturing locations? The tech scene seems to be fully hit.
Headline : China facing more economic woes ahead of GDP release with mortgage boycott in over 80 cities
Excerpts : Buyers of over 230 properties in 86 cities have joined together to collectively refuse to make mortgage payments for unfinished, pre-sold units unless construction resumes…China is set to announce its second-quarter economic growth figure on Friday, with Chinese data provider Wind forecasting 1.1 per cent year on year growth..China’s economy, which is on course to record its lowest quarterly growth rate in two years, is facing fresh risks from an unfolding mortgage boycott quickly spreading across the country….In the past week, buyers of more than 230 properties in 86 cities have joined together to collectively refuse to make mortgage payments for unfinished, pre-sold units unless construction resumes, according to real-time updates on software development platform Github under the “WeNeedHome” project…The crisis further adds to concerns over the financial and social stability of the world’s second largest economy following a cash crisis at rural banks in two provinces, especially at a particularly sensitive moment ahead of a key Communist Party gathering later this year.
Comment : This is serious. After the banking protest debacle this mortgage boycott is like a cat amongst the pigeons. One can disperse protesters from demanding their deposits using strong arm methods. How can you make them pay? In all probability people do not have money to pay either. Is this the beginning of social instability?
Headline : China housing analysts call for more stimulus as July sales plunge and report predicts 17 per cent slump through 2025
Excerpts: Economists and experts predict at best an ‘underwhelming’ recovery for the US$2.7 trillion sector this year …after early July sales fell 45.2 per cent….Even if the current pace of recovery continues, national sales may only return to last year’s level in September or October, an analyst says…Housing demand in China will slump over the next five years, according to a new report, as plunging home sales in early July signal at best an “underwhelming” recovery for the sector
Comment : Who says the Chinese economy will recover? Better adjust to the new reality of China in decline.
Headline : China home prices fall for 10th month as property crisis deepens amid economic slowdown, credit crunch and mortgage boycott
Excerpts : New home prices in 70 cities slipped 0.1 per cent from May, when they fell 0.17 per cent, the statistics bureau says…Analysts say crisis is likely to deepen, with lower-tier cities bearing the brunt…China’s US$2.4 trillion real estate market is showing increasing signs of distress. Contagion is spreading to the financial system amid reports that a rapidly growing number of homebuyers are refusing to pay mortgages for incomplete flats. That has alarmed investors, sinking property bonds and Chinese bank shares…Authorities held emergency meetings with banks this week to grasp the impact of the mortgage boycott, people familiar with the matter said. Buyers of at least 100 projects in more than 80 cities have stopped payments due to construction delays and concerns about falling prices.
Comment : The ghosts in all their empty cities are coming out!
Headline : China bank scandal protesters report harassment, restrictions
Excerpts : Several depositors in the Henan banks at the centre of fraud allegations say they have been called by police or had their social media use limited…The affected customers travelled to a protest in Zhengzhou on Sunday that ended with a violent attack…A depositor surnamed Wang – whose information was registered on Sunday along with other protesters demanding a fair payment plan from the government – said he received a call from the local police after returning home on Monday…“He asked us to express our concerns in a legal and logical manner, do not gather and do not turn [the situation] into a riot,” Wang said. “But the thing is, the government had given us red health codes and caught us. They were illegal first, and there’s no word on our savings.”…Another depositor who attended the Sunday protest said he had also received phone calls from local police, telling him to “not get involved with foreign media”. And a woman said her access to the WeChat social media platform had been restricted to private messages, leaving her unable to join group chats or share articles publicly…Chinese regulators have not confirmed the amount of money that has been frozen, but depositors – who have formed groups on various social media platforms to air their grievances – claim the figure totals tens of billions of yuan.
Comment : The brew is getting stronger! Which Brew? Social unrest of course.
Headline : Cholera infection puts China’s Wuhan University on high alert
Excerpts : Patient ‘greatly improved’ and no new cases discovered after dormitory is sealed off and sterilised over the weekend..Students from the affected residence were isolated and tested for the potentially fatal disease, according to Chinese social media
Comment : Ab ye cholera kahan se aaya hai bhai? We only knew of COVID from Wuhan!
Overall Comment :
Tech sector plus real estate is 50 % of Chinese GDP. That defines the outlook for China. This has been building up for the past six months. Recovery of the Chinese GDP will not take place in a hurry. Any one betting on China to be the next superpower?
The real danger is that whenever there has been an internal issue…China has externalised with external aggression…let see which way the cookie crumbles.
Moral of the Aesop’ Fable from China….you deposit your hard earned life savings in a good Chinese bank which offers good interest…the good Chinese bank gives loan to the strong local government to develop land and also to the reputed builder to develop the property…you take a mortgage on your deposit to book a flat with the reputed real estate firm…all well so far…the economy slows down…cement and steel prices go up…covid regulations ensure electrical items do not reach the building site due to supply chain lockdowns..the builder cannot complete the flat for which he has taken payment…he can not repay the bank…in the meanwhile you have shifted to a lesser paying tech job…you cannot pay the mortgage dues…you go to the bank to ask for your deposit…the bank cannot pay back since the developer cannot payback…the local government has not earned taxes on the flats since they are unoccupied…they cannot pay the bank.. you stage a protest for your money… you get manhandled by auxiliary police…also arrested by police…your health codes turn red though you do not have Covid…you refuse to repay your mortgage…what next in this Chinese fable being played out in reality?…well by the way …when read between the lines you find grease in the pockets of the local CCP boss…the developer is a compulsive gambler…and the local mayor is an alcoholic…anything missing in my imagination? Of course do not forget…Xi Jinping’s economy is crashing…and guess what ? Pakistan is waiting after the Sri Lanka episode with bated breath to see if China will bail it out…
….kahan se kahan pahunch gaye yaar!
Leave a Reply