Could Evergrande collapse topple China's economy? | DW News
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- Опубліковано 19 вер 2021
- In China, embattled real estate giant Evergrande faces a major moment of truth this week. The company owes an estimated 300 billion dollars, and is expected to default on bond payments.
Evergrande operates and develops 1,300 real estate projects across China and employs 200,000 people. The company financed its breakneck expansion with credit and bond issues. But the pandemic has paralyzed its operations. Its debt equates to two percent of Chinese Gross Domestic Product.
Evergrande was always thought to be 'too big to fail.' If it topples it could take a number of banks down with it, like Lehman Brothers did in 2008.
The risk of defaulting has prompted a sell-off. Evergrande stocks have lost 80 percent of their value since the start of the year.
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#Evergrande #China #RealEstate
everytime they say theres nothing to worry about, thats when you worry
Everytime she says hes like a brother to me you have to assume hes like a brother to her😭🤐
To be fair, the Chinese government's motto to their people is "don't think about that."
Vaccines are safe nothing to worry about.
Underrated comment
@@MrQwertypoiuyty no longer
You know when a Chinese man said he worked hard he absolutely grafted 70 hours a week for the last decade! Very sad to see he may never get his home.
@Apsoy Pike Those are no homes. Those are stacked rocks with cracks 1 year in.
thats why enjoy life..
And his kids grow up in a digital jail.
They will It's China
Unbelievable he didn't see it coming
Did Evergrande never hear about completing one development before starting the next.
1. Collect cash from sales and borrow from banks
2. Start new project
3. Repeat 1 and 2
4. ???
5. Die
@@nocturnal2 * Use cash to enrich the CCP
NO no no no it was a scam that is why they started so many at the one time they had no intention of finishing them and they all leave and come to America America America
@@hermanrogers1325 thought so
Greed..it happens in all countries, however in this case ,people are super desperate to own a home and the company used this to their detriment and also to screw over the trade suppliers.
We know who will end up paying for it, the people who bought a house.
The Chinese government will probably bailout those people. I hope they learned the lessons from the US bailing out companies and what those companies did in return to the people.
@@questworldmatrix China government owns everything
Since the whole business is about holding lands as the assets, as long as the housing price doesn’t fall , no one lose ,that’s why the central government is saying ,the price will stop increase or fall.
@@questworldmatrix No they won't
@@questworldmatrix I think if China nationalized the industry, they will likely bail the home owners out, but I think a more likely situation is that the government will only bail enough parties out to avoid a total collapse…
“Family homes of the future or the bleak monuments to a spectacular business failure”.
What a quote!
They don’t look like family homes at all. I mean, look at them. They do not even look closely like a place for a happy childhood.
@@Feynman981 You've just never been in these asian apartment environments. I grew up in Korea similar to these apt and I had a happy childhood.
@@boshiij3449 which Korea that was
@@kukulroukul4698 I know you are joking, but I wonna add, that if he is posting from the north....
Then this guys is probably Kim himself
@@shermanfirefly5410 HAHAHAHAHAHAHA
High reward, High risk.
Who ever said that too big to fail is a thing
Bankers
People with a lower average than you can dream of....oddly
@@edew9180 yeah but saying that a big project won't have any complications seems unlikely
@@edew9180 anyway, those billionaires won't lose that much
I think too big to fail has more to do with saving the middle class from an even greater disaster but I might be wrong
That Chinese man when he swallowed, I don’t know if he was about to cry or ready to kill someone.
Poor guy just wanted a home for his family.
@@SirFaceFone what family? It is really hard to make a family in china
@@batpoolzilla3200 3 children now. Soon they will be payed to have them with that demographics.....
@@j.calvert3361You said "payed", I assume that English is not your mother toungue. Either way, the CCP is not going to be financially able to pay their citizens in order to make them have children. They already have 15 trillion dollar debt. Getting a house is not the problem in china, 90% of the chinese working age segment owns atleast one real state property. The problem is the price of supporting a new family member when the young chinese adult has to financially support their parents and grandparents.
If someone takes a risk, they should be responsible for any outcomes.
Why do we baby corporations and throw the burden on the every day person?
The whole point of public corporations is to spread the risk. Capitalism is predicated on people taking financial risks with other peoples money which they would balk at if they were personally liable for all losses. There has always been an element of privatising profits, while socialising losses built in to capitalism.
@@q.e.d.9112 well said.
Well, these kind of projects need some type of RISK INSURANCE....for any circumstances...I really do not understand the bank and insurance field go hand in hand....so what is the reason here not to cover the whole project with insurance policy??? As they did in 2008. ,,,..............there could be another reason: this is only a cover building, a cover project to hide something...they could drive into bankrupcty or to shut down it.......for some reasons, we cannot see their play cards...what has been going on in their mind ...
@@q.e.d.9112 Capitalism isnt about socializing losses it is about distributing them. So instead of one prince losing $300B millions of everyday investors lose a few thousand.
Or at least thats the theory. What actually happens is a cabal take their million dollar salaries and walk away, the government socialises the institutional investors losses, and thousands of investors lose their small stakes.
The company can not default china will bail it out otherwise it will cause a crisis in china
The company is indeed to big to fail 200k employees while over more then 1 million people working for óther companys hired by evergrande
If it fails if will cause more harm to the hard working people
it's an unpopular thing to do but that's cuz people don't understand it
Tbh this seems essential to deflate the housing bubble...
@@Ruth-wu3vf whats your iq?
Ofc. Nobody ever mentions this Evergrand thing was triggered by the Chinese government pushing out policies to burst this bubble - on purpose, lol!
@@pinkcichlid The banks were making risky loans that allow speculators to buy real estate for the sole purpose of speculating on the price going up. Can you get loans from the bank to buy stocks or go to the casino?
The CCP was just doing what it should have done from the start, but their hands are in the cookie jar since the government makes money from selling real estate as well.
Will it impact our markets though or will it only impact China/asia? I'm afraid of the latter.
It also gonna deflate the poor and middle class wealth
So, opening figure is 300 billion. We'll see how much debt there really is in the coming days...
Exactly, since evergrande also has a lot of sub-companies that are off the books, and whose debts are (apparently) covered by evergrande. So there might be a lot more debt here than there is on the records.
Even without that much debt, I suspect its equity has dipped to negative
One wonders how many other companies own stock in this deadbeat or have loaned money to them.
And that number is incrising, 50 million interest a day ---opening figure . Millions have lost their business in the covid lock down , and there will be another 3 million people lost their job, and 2million bought their house with life saving become homeless
99999999 billion probably. Evergrande is easily another bill hwang.
A few things DW has not got it straight:
1) Why Evergrande failed? DW said that's because of the pandemic - but the reality is that China has been doing exceptionally fine during the pandemic, supporting the world with its industry; Evergrande instead failed as a result of a surgical move by the China government via introducing regulations for the real estate developers.
2) DW said that "the crisis is causing panic in Beijing with fears that the collapse would..." In the contrary, I think this is a calculated collapse planned by Beijing to get rid of these over-leveraged real estate developers. There is no "too big to fail" mantra to solve the capitalists in the eye of these communists country planners.
As in the goal is to nationalize Evergrande?
@@BicycleFunk maybe, who knows? But my guess is that the goal is to reduce that debt through intentional self-inflicted damage
Good point 👍
@@DevNicholson Keep your stupidity to yourself
China is far too smart see a total collapse. Things will be worked out for the best
we all saw it 5 years ago...when we were watching all those "ghost cities" documentaries. this is the biggest bubble in the history of man kind
How so??
@@AlexisCardona too much supply not enough demand
how does it compare to the US Great Recession?
people just waiting for some bad news, always the same comments...."CCP nationalising everything" - "Chinese economy is collapsing" - "corrupted party officials" bla bla bla...
meanwhile their economy is skyrocketing the last few decades!!!
@@anti-bullingjames so those properties were already massively overvalued, and then they went up another 10x, and you dont think its a bubble? u do understand evergrand e was 300bil in debt for a reason rite? how are u this dumb?
“Too big to fail’ is the western question. ‘Not close enough to the CCP” is the Chinese answer.
That's a contradiction. you can't get big if you're not close enough to CCP. Racism sees ccp connection when you see a big company, you see lack of connection when you see possible default in the same company. lol
Not close enough to the ccp's current ruling faction..
@@nav5801 Yup. Everyone thinks he/she has good connection with CCP, until Xi Bear's goons show up at your front door. We have all seen this scene in some mafia movies.
To be this big, their CEO,majority shareholder has to be big CCP member.
thats true . ''too big to fail'' its only an American thing...not even western
EG paying those debts with real estate is just liquidation without calling it liquidation.
It’s unfinished building and empty lands ….
Payment in kind!
And a potential way for some communist party member to get a steal of a deal and use it to gain more power. Potential political shift possible with an event like this and that’s not good for anyone
Pretty much, unregulated liquidation at that, just everybody making off with what they can grab.
@@Howdoyoupurr your idea of CP official is one from 1935!! 😒
Only the names of the players change, the story always remains the same. Someone clever once said that.
Never interrupt your enemy when he is making a mistake.
Napoleon Bonaparte
It was a scam from the start only the faces and names change but the scam stays the same real estate scam
@@deyvijosegutierrezatencio9668 isn't he quoting Sun Tzu?
@Azurie 917 he actually normal sized for his time
It is so easy to do China reports，just combine some keywords such as crisis, debt, har landing, collapse etc.
1990. The Economist. China's economy has come to a halt.
1996. The Economist. China's economy will face a hard landing
1998. The Economist: China's economy entering a dangerous period of sluggish growth.
1999. Bank of Canada: Likelihood of a hard landing for the Chinese economy.
2000. Chicago Tribune: China currency move nails hard landing risk coffin.
2001. Wilbanks, Smith & Thomas: A hard landing in China.
2002. Westchester University: China Anxiously Seeks a Soft Economic Landing
2003. KWR International: How to find a soft landing if China..
2004. The Economist: The great fall of China?
2005. Nouriel Roubini: The Risk of a Hard Landing in China
2006. International Economy: Can China Achieve a Soft Landing?
2007. TIME: Is China's Economy Overheating? Can China avoid a hard landing?
2008. Forbes: Hard Landing In China?
2009. Fortune: China's hard landing. China must find a way to recover.
2010: Nouriel Roubini: Hard landing coming in China.
2011: Business Insider: A Chinese Hard Landing May Be Closer Than You Think
2012: American Interest: Dismal Economic News from China: A Hard Landing
2013: Zero Hedge: A Hard Landing In China
2014. CNBC: A hard landing in China.
2015. Forbes: Congratulations, You Got Yourself A Chinese Hard Landing ….
2016. The Economist: Hard landing looms for China
2017. National Interest: Is China's Economy Going To Crash?
2020. Economics Explained: The Scary Solution to the Chinese Debt Crisis
2021. DW News: What's behind the collapse of Chinese property development giant Evergrande?
Too big to fail only happens in US. Remember Chrysler in the 1980s? Various banks involved in
repackaging sub prime under performing mortgages as prime investment packages were bailed out
2008 as being too large to fail. The manipulators even received huge bonuses. The people
picked up the tab, again.
The bailouts were temporary loans that were paid back with interest
It's Real Estate, something that most Chinese yet hardly to posses in 2 generations.
It is vastly different. The 2009 crisis is caused by sub prime. There is no sub prime in China. Worrying for nothing.
@@herbertant4096 China's home ownership rate is much higher than the US you ignoramus.
The banks did not cause the housing crisis in the US. The government caused the problem.
This is the cause of treating property like a Security instead of a Home
Wrong comment for this video
@@dakshjhamb5514 66 likes to 0...tf
@@dakshjhamb5514 Why?? He's absolutely correct.
You knew this would happen when you saw the ghost cities.
Well it's like working 20 hours a day for years, in the end you will die in coma
Lmao the ghost cities are filled long ago, u get your china news from falun gong?
Yeah right@@DK-yz9xk say revolution of our times I dare you
@@AlienLivesMatter He is a China shill pay no attention the entire world laughs at China now.
@@DK-yz9xk These ghost cities that are filled is more of a bandaid. What’s happening is that it’s just moving the existing population around. There are less people moving from rural China to cities and birthdate is low but despite that there is rampant building in order for Chinese states to make money and avenues for the Chinese to invest. It’s just over supply and decreased demand. Property value will sink and investors will lose money. Only thing is to get actual sustainable demand by driving an immigrant population in to the country but that’s like a whole host of issues.
People used to say when America sneezes the world catches a cold, now they say when China sneezes the world catches Covid 19
lmao 🤣🤣🤣🤣🤣
Ayo 😭😂😭
It wasn't America it was France and this line was said by Duke Metternich
In the 80s everyone thought Japan was going to overtake America as the economic superpower. Three stagnant decades later their main stock index has finally managed to regain its 1990 level.
China is the next Japan
American problem is they dont trade with their enemies but China trade with everyone.
@@tmoney7128 unless China suddenly decides it doesn’t like you for petty reasons. Like Australia, Lithuania, previously Sweden. But you wouldn’t know that because you just swallow the CCP line.
AUKUS too.. China's getting punished
@@tmoney7128 lol China's probably gonna leave their foriegn investors blowing in the wind in the coming financial debacle. Lmao people are pulling out of China because they can't work with the CCP and it's demands. The only reason China has 2 cents to rub together is because the US in the 1980s started opening-up to Chinese trade in the hopes of creating a place for investors to benefit from a large and growing market. China is nothing without US purchasing power.
"A way to nationalize the industry" very interesting analysis 👌
Not surprising if you recall what the CPC party always claims "the advantage of constitution" for solving extremely tough problems like this.
@@wy8942 it's quite amazing how they use states intervention to curb up upcoming mess in long term .
@@Cakemake-123. quite nice and unmessy
@Rod Williams Relax. Probably a typo, the comment doesnt seem to support the CCP.
yep... JACK MA NO MORE
If something becomes too big to fail, then it has no incentive to do well. Let it fail.
Business failure is plays a critical role in a healthy capitalist market.
However due to politics in many countries, too big to fail companies/corporations are being saved/bailed out because the potential catastrophic collateral damage is huge and could sway politics.
I am agree. Let it down. It a private company.
I’m just annoyed that they highlighted Taiwan as part of China 😂
Taiwan is an inseparable part of mainland China
“Real Estate” can’t build their homes. Meaning, the real estate they want to give u for the debit, then u would have two unfinished places, how does that help.
For the DEBT.....not debit.
Geez. Another example of Obama's dumbed down fools.
The fall of Evergrande is in fact a good development, the Chinese housing bubble needs to deflate for China to have a healthy growth.
Someone has to foot the bill for a deleveraging like this.
You can say that about the great depression too
naan knowing chinese gov, bailout as usual.
Sell BABA
I am Chinese and I agree. I am a communist as well. These rich people think they are too big to fail so they just took loans closing their eyes.
so this comes on the 13th anniversary of lehman brothers collapse
Hopefully the effects will be similar. The pin that pops this insane asset bubble we are witnessing. Rent and Real Estates prices needs to come down hard, it is unsustainable.
Lucky 13!
Symbolic
Isn’t a big portion of China’s investment market in real estate?
@@mq5731 Yes
If you bought a third house because you hoped you would be able to have a girlfriend, I think it was a bad investissement to begin with.
It’s a problem in China not enough women so competition is high
Can't even called as investment either
@@truechaosmulala3831 let's be honest, it's women who become very spoiled and entitled.
@@Sick_Pencil nope not in this case for China it’s literly millions of men more then women
Chinese live in society
It's interesting how this is only being talked about outside of China now. People who know real estate in China probably saw this from a lightyear away. Evergrande has always had a reputation of being shady and delivering unreliable real estate and financial products, as well as poor accounting and treatment of employees. They are also known for cheap but generally poor quality housing. Obviously not all companies are like this in China but unfortunate that this one got so large.
That's why you NEVER buy something you have visited or even finished yet.
It's crazy when I hear people spend their life savings (and then some debts) on a property that is still in planning.
China's real estate market was 2006 on steroids for going on years now. It was the only real investment Chinese people could buy. Now the bubble pops like it always does.
I read somewhere saying that most of the buyers were speculators, not first time home buyers. That's why the chinese government is not so keen in helping it out.
I think it's because it will go expensive as more time goes by, but it's sure spectacular to see an economic crisis due to the incompetence of Winnie the Pooh.
I believe in buying plot nd making the house from ground. But, vertial Building system is a tricky issue.
rich people pay on credit, poor people pay in advance. elon musk for example avoids income tax entirely by getting all his income in stocks, and taking out loans against those stocks instead of selling them, so he has no income but a functionally infinite amount of credit.
Evergrande had a junk credit rating, so this is business as usual, surely? Anybody who bought them should have been prepared for failure, unless they didn't know what they were doing?
To be fair, I think most people in China would not consider such things, they only know housing prices will rise forever, and nothing will go wrong to buy those apartments, no matter it is for investing or for living.
They are junk now but the bonds may not have been rated as Junk when the investors brought them
Because Evergrande is so huge a lot of people assumed the government would save the company if they ad troubles bit it doesn't seem like that is going to happen
@@somethingclever4369 been junk since 2010, looking at their credit rating history.
Feels like ponzi scheme to me. How they could be so deep in debt is beyond me.
Imperial Pacific has a massive unfinished multibillion-dollar project in the island of Saipan, as well.
I am really impressed how you went deep to the ever recent issue where others fail. Always will go for DW for detail analysis and good journalism.
These poor people that could lose their future homes. I really feel for them
You mean their 2nd and 3rd home
THEY bought the homes on credit...
NEVER buy a house or flat you haven't look at, let alone hasn't even been built yet!!!
@@jamesnguyen7069 which is even worse.... Gonna mess up the whole country if everyone defaults
@@jamesnguyen7069 a lot of them made at minimum 30-40% down payment in cash….money that took decades to save up
"Fan Wanting" is a really cool name for real.
I'd say it's a hot name because they want a fan.
'Fan Wan Ting a Big Fil.'
Better than Wei Tu Lo?
@@hse6144 Wei Tu Lo? Hee Lon Gon...
😂
These buildings are so high and placed so close to each other... they look like ant (human) hills
Sheep pens.
Other than in a few special cases where land is extremely limited, there's no reason to build any higher than four stories. Also, construction cost rises drastically the taller the building.
A bleak monument to family homes. Too true. Imagine living in these monstrosities.
So true. I am sitting in my beautiful backyard in Western Australia watching a video of expensive yet (in my opinion) horrific high-rise apartments in China.
@@freeman10000 yeah but China has a population of 1.5 billion in an area that is tiny compared to the us if everyone had suburban type homes half the country would be a suburb
123.000 employees. The best of luck to the people, families and house owners.
They will find jobs pretty easily considering the world's demand for goods coming from China.
@@walden6272 🤣🤣🤣🤣
the report said 200,000
@@walden6272 That doesnt matter lol low paying jobs
And three million contractors.
Key term here: "nationalize the industry".
China will let em crash
And why stop at real estate? They are Communists after all. Maybe they'll go full Maotard.
Smells like communism
you truly understand nothing about China.... neither you want to but still are posting ignorant comments!!
what's the idea behind this MO? just to let everyone know you have no knowledge?
Nothing new here. It happens everywhere including the Global Financial Crisis where the big banks were bailed out by the government (tax payers) and even McDonalds and Walmart in the USA are on social credit where their low wages have to be topped up by government assistance to many of their workers.
As if a single company could take down the entire $14 trillion economy of China. Just wishful thinking at best. My money's on a government bailout.
I think it's almost $17 trillion this year
Evergrande is one of the biggest real estate company in china. It going bankrupt can send some shockwave across the industry which it self is 20% of China's economy
@@JamilKhan-hk1wl OFFSHORE bond holders will not get paid and go bust, evergrande will be ok
@@leemacdonald6533 and break investors trust?
Too big to fail? Once an empire that is so big have fall into ruins. Nothings stay on top forever.
Why CNN doesn't talk about Evergrande????
The Lehman comparison makes no sense. That was an investment bank, this is a developer... and there are no trillions of derivatives standing out with a A+++ rating
I guess they mean the cascading effect that sent waves rippling through he world~
They're not just in real estate. They have sold tons of financial products to people as well. This is a lot bigger than it seems.
I think you're confusing "comparison" with "perfect one-to-one equivalency".
U.S is run by capital therefore it is vulnerable to capitalist crisis. China has a capitalism and a capitalist class comparable to the west and in some ways starting to become more powerful however they don't have political power which means they will not be able to "lobby" and it will be up to the party as the response that's appropriate and i definitely don't think they will bail them out. They will likely use the state run economy to avoid a credit crunch and restructure the company with alot more party oversight in the future.
Isn't Evergrande essentially an investment firm? People use it to invest. And it's massively leveraged. It's just the assets that people invest in that's different. With Evergrand it's property.
Some venture capital will scoop this up when the time is right... about $0.20 on the dollar and 5+ years from now
if history is any help, yer right.
Wouldn’t touch the CCP in my pockets.
@@seccat I'm with you... I think any person or corp from the free world is nuts to plant any resources there. But they do and they will.
@@jamesbarrick3403 free world , sure
All the more opportunities for us here in Asia
The problem when you get the profit even without completing yet the project. Spell corruption.
Tragic for the people caught up in this. It's easy to say that people shouldn't have bought properties that aren't finished, but for years, people have got away with this.
Their buildings are hideous.
Agreed. Normally, buildings/ housing aren't allowed to sold prior to final inspection. State- run Bussiness are excepted..
Many Chinese that trusted thier ' too big to fail ' system lost thier lifes savings as a result..
All those huge unfinished housing buildings may never get finished..
Hundreds of thousands of ordinary chinese people have put almost their entire fortune into Evergrande.
now they will have to work like the rest of us
Never put all your eggs in one basket though...that very basic finances
You mean the $0.20 per hour the average Chinese person makes working in a sweatshop factory where they make everything we use here in the USA and take for granted?
@@fatmanarchive2713 You are over exaggerating. There are 350 million working age people in China, more than the entire population of the USA. If we say the middle class equivalent to USA is around 10%, that is still 35 million.
@@massv953 Chinese people tend to gamble their fortune and rely on lucky charms. Like wear red or live in an apartment that allows free passage of wind, etc.
The stock market has been a really tough one this past year, but I watched an interview on CNBC where the anchor kept mentioning "Tamara Diane Hagan". This prompted me to get in touch with her, and from May 2021 till now we have been working together, and I can now boast of $540,000 in my trading portfolio.
That's right, getting in touch with a consultant during the pandemic was how I was able to scale through the crazy stock downtrend.
That's massive. Can you please connect me with your personal broker, I would love to work with her
Like I said previously, her name is Tamara Diane Hagan, and you can reach her via her website.
Just run a search on her name, and you would see all you need.
thanks for the info . Found her website and it really impressive
1.4billion people in China were not “expert” enough to weigh in on their own country and had to call in that ONE westerner
It’s not a democracy dude, they have no say.
@@wombatau - wut are you smoking? Im talking about the DW video.
Was there ever any other outcome with the Ghost cities they were building?
On UA-cam Zengzhou is still a ghost city ,in reality it is completely filled up now.
@@roberts2697 Chinese bot acting as westerners so he can back China as outsiders 😂
@@roberts2697 can't even spell ZhengZhou right
no more ghost cities. all filled now. now get jealous.
@@ericme5715 Western bot
300 billion for 1200 projects? How much does each building cost?!
About 250 million each on average just using basic math.
I imagine the real answer is more of a bimodal distribution but I'll admit I lack expertise in this field.
They have to lease the land as well, so much of it is the land cost.
This is the reason why none of my friends recommend pre-sale condos. Lol
I develop pre-sale condos but have them fully backed by bonds that I have funded with my business.
In other words no matter what happens the money is there for them to be completed. I have even been generous enough to let people out of pre buys that have issues with their finances.
"Wait, Evergrande still has a AAA rating"
Who’s doing the ratings, remember debt securitization of 2008, they got great ratings as well.
@@Sly2C how is it not downgraded?
@@InspireMe819 go watch the film The Big Short. Then you'll understand - in all honesty you'll probably need to watch it twice. Big finance doesn't factor in the average Joe and Jane
@@lucylovitt9583 thank you for pointing out to those that never deeply examined our financial systems in a wholistic manner, trust but needs to be investigated. The Big Short was a perfect example. China wanted us to scratch their so they can scratch ours.
Answer: no
Evergrande's downfall will shake financial sectors in and out of Chongguo
It’s Zhōngguó, not chongguo
Time to tighten the Belt (and Road).
2021: I have a big surprise for you.
Me: Not you again bro!
Poor lil people getting screwed; whole generations of wealth, saved penny by penny - gone.
Yes reminds me of the 2008-2010 global financial crisis started caused by the USA and Wall street bank's?!???!!!
Watch „The Big Short“
over and over and over
Will ccp allow evergrande to fail? How intertwined is evergrande within ccp? These are the questions to be answered.
*ESPECIALLY* if one of China's _Big Four_ banks are heavily invested in China Evergrande. G** help us all if the failure of China Evergrande collapses something like the Industrial and Commercial Bank of China (ICBC), the world's largest bank in terms of assets.
They might not be able china's coffers aren't particularly big at the moment
@@Shiny_Infinity it's peanuts for china, hardly makes a dent in their budget
@@coke2679The housing market in general is like 20% of china's income this entire situation is a massive issue for china
@@Sacto1654 wouldn’t matter much given how isolated China is to the rest of the world monetarily.
"Wack-a-mole" says a lot about the mindset of these company execs and the banks that fund them. Makes you wonder what they talk about behind closed doors.
Tangential, but I recently learned that the 2nd half of September is the time of the year that historically (on average) has had the worst stock performance.
Clifford Coonan is very sharp.
hes irish bro
@@videoman146 I always appreciate how the Irish answer questions on German television. LOL Still props to Clifford. We can't all be German no matter how hard we try (Adolph's probable last words)
nice!! this sounds good...
$200 billion in debt. How can company be allowed to keep gathering debt like that. Anybody who has seen these properties will know they are also piss poor quality. Not a good investment at all.
That's the true meaning of the word " enough "
Losing face is more important than anything to the CCP. It will be interesting to see how they manage this. Restructuring Evergrande seems likely and saying "necessary losses for the public good"
If they let this get out of control and contagious, they will lose face. To save face they should, take it over and recapitalize and deleverage. Punish the shareholders/executives, and then make the customers, employees, and suppliers whole. I would be surprised if they did anything different.
@HAL 9001 👏🏽👏🏽👏🏽👏🏽 absolutely! I am also hoping the Chinese government will severely punish them so that the psychotic greedy corporations can learn and avoid these schemes at all cost. Unlike in western countries, China does lock up greedy billionaires which is already much better.
hahaha, here goes another guy who thought he knew China. First of all, how is the falling of a private enterprise having anything to do with losing face, whatever that even means, you think China will value the feeling of people like you? Secondly, China is not the capitalist US and nothing is too big to fail. Maybe the government will eventually step in to help those small investors and customers impacted, it will make sure executives who are responsible do NOT walk away freely, again, UNLIKE what you people in the west do.
@@LarryLiu77 exactly!
The Chinese government tries to prove the large private corporations are dangerous withou tight regulations. So you don't get the big picture. China hates Trump style businessmen! If they fail, it proves the point.
As a regular viewer of DM from Taiwan, I’m sorry to point out that your China map is wrongly placing Taiwan as part of China or PRC. Please be acknowledged that Taiwan is an independent political entity, and was and will never be governed by the PRC or CCP government.
Just read your "Constitution".
♥️🇹🇼
ROC (Taiwan) has a Constitution that recognize Taiwan as a province of China. Your ignorance is showing. Unless Taiwan declares independence and trigger a war with Mainland, then it is very much still part of China. So DW is correct in their mapping.
@@Ruth-wu3vf the CCP stops us by threatening to invade us using military force, and they did before, several decades ago. No one wants a war and lost of lives but CCP will really do it. So everything touching the political issue needs to be carefully taken care of.
I said it before and I'll say it again, no company should be allowed to be too big to fail.
"A major moment of truth" doesnt happen in China.
Those were never "family homes for the future." They were too poorly built to inhabit. It was a boondoggle all along.
Upvote for the use of the word Boondoggle.
only 300 billion, won't create big effect. good time to create regulation that prevent a company having too much debt compared to the revenue.
Only 300 billion? it is actually a big number
@@xavier7yearsago430 depend on what you compare to. that company have habit to borrow money from the bank for the project, then sell it cheap. I don't understand the owner's thinking. he used to be smart, though.
Lehman Brothers debt was $619 billion USD in 2008 for reference.
Considering land is owned by the state, trading real estate for debt is risky. The CCP can just take the land back and demolish the building.
Or wait for the buildings to fall down, I heard tofu is delicious.
Well they'd have to wait for the typical 70 year land lease to end first.
that has its own consequences.
What utter rubbish
Deutsche Bank will be hit hard with this
THATS a sure thing ! :D
Wow so China can hit the Western economies hard with this one. I still don't know how America is to be effected, but I'm sure it's to be the case for China is our main trading partner.
@@TUBESPECIFIC1 no, not all Western economy but for now just DB, because they have extensive relationship with Evergrande.
Once again it will be the innocent middle low class that will pay for this mess
'Lower middle class' is the word you're looking for. You're welcome.
Nice video, thanks :)
This planet needs to learn to pay for things in cash and get rid of using credit and racking up debt.
Then we'll go to 14th century economy, where everyone is poor and there is virtually no growth. How can anyone start a (small) business without credit. What people need to do is use credit responsibly, perhaps set some strict limits to its use.
End Fractional Reserve Banking.
Did any investors diversify their investments, or just put it all in property? Because that's a noob mistake right there?
Most chinese people "invest" their money in real state, to the point that more than 50% of chinese homeowners own more that one property. 90% of chinese own a house. Ask yourself What happens when everyone owns more than one house and everyone wants to sell it.
Another analysis says that an average citizen spends between 25 to 45 months of median wage to buy a home in China. For convenience sake if we take it as 39 months median wage and a buyer pays 13 months wage as down payment, and if this just vanished and there are no institutional mechanisms to recompense him, then it would take the buyer 130 months to recover this amount from his monthly savings alone provided he has not taken any other collateral loans and provided further that he does not lose his employment or retire early. A really bad situation for the citizen.
I have no idea how customers paying in full up front leads to a debt crisis. Unless that’s total bull.
Never ever buy unfinished homes
The map at the beginning is inaccurate. Taiwan should not be shaded the same as China. Taiwan is an independent country.
Hope this serves as a lesson to every government across the globe, to never flirt with bioweapons (which has no controlled trajectory or radius) , because a nation's economy depends on every single human & not the other way around.
So true! As a former NBC officer, I knew this was a Bio designed weapon from the start.. China needed it to get rid of their elderly citizens who were costing them double from pensions and health care costs while producing nothing and spending very little.
Just wait until October 6, 2021 and you will see some really big, bad news.
@@ronwinkles2601 I'll keep my eyes peeled; thanks for the tip.
It's been almost half a year since this video, the clowns at DW really didn't think this one through.
not a word about CP(commercial paper) notes
A necessary correction just like how the pandemic was for hygiene
assuming it was natural?
😂😂 when your parent who works at unknown lab in china says wash your hands and you don’t listen.
There’s no such thing as “too big to fail”. Don’t let the government and GSIBS trick you into thinking that
What is your definition of "too big to fail"?
People love buying things they don't actually obtain yet. Crazy.
I am worried about the people who invested in this apartment.
Things are moving in the right direction. Less money will be available for more militarization and international belligerence.
💯
All those people just lost their investment
lol the building is still there, just need bit more money to complete it
very good journalism. keep up the good work
The homeowner didnt look worried tbh
The concern is that events of this scale have the potential to be the catalyst for war. What better to unify a people and distract them from domestic issues than to unify them under the flag and wage war against a lesser opponent? Look out Taiwan?
This is highly unlikely. Evergrande is problematic, but it is already not well liked and trusted by the Chinese people and has a poor reputation. And not everything has to do with China potentially invading xyz. The Chinese citizens also value stability importantly and real estate going down for a bit is not something to sacrifice the stability of a nation over.
is't that exactly what the US did ?
Probably means we need to put up a blockcade to protect Taiwan.
Taiwan is an integral part of mainland China.
@@mingchen9962 Taiwan is its own country
Well let's see how this mess spills over various stock markets .
It is already seen here in the US today.
@@triceratopsroar8262 Yeah Indian Stock market also dipped today. Crypto markets are also down. I don't want to open my stock app tomorrow haha.
@@pranayp1950 i was long term. Now im super long term😂😂
Not by a whole lot............ China's market is very isolated......I can't even take my money out of china......
@@Miguel-ly4bm it will reflect in BANKING attitude towards their clients ALL OVER the world. Since the China's ARISE banks in Europe have becomed some real bi**es with the common citizens. God like attitude OVER some fewer but CLEAN moneys
If it is expected to default on its debts I would call it a failure already
if they default, then the US markets will crash a bit and i understand that but how long did recovery take back in the 2008 situation?
"Communisim with Chinese characteristics"
Actually, the communism is no more
6:05 he looks like it is going to be far worse than he said it would......
That was the purest look of fear I've ever seen...
My answer is 'NO'.
The major shareholder is a big gambler by any measure. He had made lots of money for himself purely through inflated property values in the first 15 years when the country's policy was in favour of property developers. He does not know what to do when in adversity. He is not a businessman. His going under will make the market place a more orderly playground for other decent businessmen.
I feel bad for the families who invested in these properties.
Genuine home buyers will be protected by the China government and not suffer. As for the investors or speculators, well ... if they win, they brag about their business acumen, if they lose out here, just too bad.