China enters mass defaults due to its over-built properties. Their property market is pop. Yet, some believed their government figures a way to save the market but other doubt the government can do anything. What just happened?
Chinese hot property market
The property market in China is red hot. It goes out of control. Every asset will trace back to the property because they believe it is the safest. It is an unspoken insurance policy to hold up your asset value.
China bypassed Housing Crisis in 2008
While the rest of the global was in the housing crisis in 200 dragged by the United States, China was continue rising economy without interruption. Everyone believes that was a miracle to survive in a housing crisis.
Not a miracle
It turned out that was not merely a miracle but because China had not yet integrated the economy into the global trade. Once they did, they will have to experience the up and down like the rest of the world because we are all in the same boat now.
The current housing crisis in China
China did not print that much money as the US did to devalued the fiat currency. However, they did print money in other ways, the more hidden ways, through private corporations, specifically Real Estate Corporations.
Chinese Real Estate is a Disneyland
Because people believe Real Estate will never devaluate, they use properties to hedge and issue bonds overseas for the rich to purchase and to earn higher interest rates. Not only you can earn a dollar which more valuable than Chinese currency, but you can also enjoy high-interest returns.
High risk, high rewards but unsustainable
There are only a handful of players who knew what corporations did overseas and they anticipated gaining rewards. However, the money ran out quickly and corporations only had limited money to give out.
Everyone copied and everyone got trouble
The entire housing market in China copies each other and wash their cash overseas. It can only sustain for short periods of time until the market got a correction.
Crypto can help but they do not want to
China may try to tap into crypto and enjoy the ride of valuation while continue washing their currency using crypto. However, the central government did not like crypto and was afraid of decentralization.
If not goes up, then it will come down
The government needs to find a way to fill the financial hole. Printing money is not an option because the government has kept its currency at a low rate for a long time.
Don’t trust experts
Many experts say China will be alright. They are right. If other countries will continue buying in. But the world has changed, and we are heading towards decentralization. The surveillance state is dangerous and we need to be aware of what future we choose to live in.
The Chinese economy is broken because of their “creative ways” of printing money. A centralized economy will experience a similar crisis while crypto can avoid such a downturn and bring a more healthy financial system for everyone to anticipate.