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Speaker 1: You really need to be able to stum like the

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Speaker 1: volatility in China right Boomber's range.

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Speaker 2: Bound, So it tells you just the level of uncertainty

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Speaker 2: that's in the market and the pessimism still around China's

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Speaker 2: economy and.

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Speaker 3: No clear strategy out of that malaise either.

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Speaker 4: Question, why is China letting the economy run cold? That

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Speaker 4: is the topic of.

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Speaker 5: The Economists around the world are increasingly uneasy about what's

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Speaker 5: going on in China. The nation's eighteen trillion dollar economy

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Speaker 5: on's growing fast is decelerating, Exports have fallen off, young

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Speaker 5: people are having trouble finding good jobs. China's long real

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Speaker 5: estate crisis is deepening, with major property developers who borrowed

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Speaker 5: too much now facing default and home buyers stuck paying

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Speaker 5: mortgages on half built apartments. Meanwhile, local governments in China

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Speaker 5: are burdened with debt they can't afford. All This uncertainty

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Speaker 5: has led some foreign investors to pull their money out

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Speaker 5: of the country, and some fore casters have downgraded their

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Speaker 5: expectations for China's economic growth this year. They say it

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Speaker 5: won't reach the government's target of five percent.

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Speaker 1: There is enough room, obviously, for stimulus in China as

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Speaker 1: the economy has been sputtering, But the problem, she says,

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Speaker 1: is that you need massive stimulus in the trillions.

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Speaker 5: Of remenbe Some of these troubles can be traced to

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Speaker 5: President Ji Jimping's decision to try to break China's habit

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Speaker 5: of fueling growth with speculative construction and spending projects that

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Speaker 5: are often funded by local borrowing China.

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Speaker 1: To prop up the economy. Investors are waiting for that

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Speaker 1: big stumulus, it ain't coming, and hence that is impacting sentiment.

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Speaker 5: The idea is that the pain will be temporary and

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Speaker 5: China will emerge stronger for it, but concerns are growing

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Speaker 5: that the consequences may instead turn out to be severe

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Speaker 5: and long lasting, and not just for China but across

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Speaker 5: the global economy.

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Speaker 4: What feels like a big change is this shift in

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Speaker 4: can census that China's growth miracle that has once fired

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Speaker 4: so many portfolios around the world is no longer a

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Speaker 4: given two.

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Speaker 2: Large economies in the world, so going on opposite tracks,

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Speaker 2: both trying not to repeat the mistakes of the past

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Speaker 2: and maybe making new mistakes.

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Speaker 5: That's Bloomberg's Rebecca Cheung Wilkins and Tom Hancock in Hong Kong.

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Speaker 5: They're here with me to explain what's happening and what

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Speaker 5: China's leaders are doing to try to turn things around.

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Speaker 5: I'm Wes Kasova today on The Big Take, China feels

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Speaker 5: the heat of a cooling economy. In a story out

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Speaker 5: this week, a team including Rebecca and Beijing based reporter

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Speaker 5: Colin Murphy, along with Tom and several other colleagues, dig

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Speaker 5: into this complex situation. I started by asking Rebecca and

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Speaker 5: Tom to paint us a picture of China's economy right now.

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Speaker 4: Well, the fundamental issue or challenge is that the economy

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Speaker 4: is slowing, and everyone thought this was sort of going

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Speaker 4: to be the year that China's economy came roaring back

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Speaker 4: after it reopened after the pandemic. And actually what we've

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Speaker 4: seen is some of the policies that were rolled out

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Speaker 4: during the pandemic or just before are now an overhack

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Speaker 4: in the economy. And so essentially this move to try

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Speaker 4: and reduce risk in the property sector to tackle the

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Speaker 4: issue of oversupply is essentially continuing to really hurt growth.

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Speaker 4: And that's partly a confidence issue because people are seeing

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Speaker 4: their most valuable asset decline and price and decline and value,

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Speaker 4: and so people don't want to spend. People feel poorer,

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Speaker 4: and they're not investing in necessarily growing their businesses or

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Speaker 4: starting a new company. So we have these sort of

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Speaker 4: two big issues. Add to that that property for a

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Speaker 4: long time has been one of the really the main

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Speaker 4: or one of the main growth engines for China's economy,

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Speaker 4: previously contributing about estimated thirty sometimes people say forty percent

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Speaker 4: of the economy. That's really now paired back. And so meanwhile,

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Speaker 4: China is trying to look to alternative industries to try

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Speaker 4: and replace that as a driver of growth.

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Speaker 5: And it's not just the property market that's ailing. Another

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Speaker 5: problem is the world just isn't buying as many products

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Speaker 5: from China as it once did.

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Speaker 2: This year, Chinese exports are declining, and that's mostly about

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Speaker 2: the fact that there was a surge in demand for

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Speaker 2: Chinese goods during the pandemic coming from.

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Speaker 3: Europe and the US as people.

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Speaker 2: Stayed at home, and now that demand is normalizing, and

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Speaker 2: so you've got exports to those countries falling by double

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Speaker 2: digit rates. So if you add that up, you know,

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Speaker 2: you could say that's at least a third of the

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Speaker 2: economy that is experiencing quite a large decline. If you

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Speaker 2: imagine that the Chinese economy is like an aeroplane with

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Speaker 2: two engines, we could say that one engine is property

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Speaker 2: and exports, and then the other engine is all the rest. Well,

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Speaker 2: the property and exports part is currently sort of on

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Speaker 2: fire and it's really interfering and slowing down the entire plane.

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Speaker 2: On the other hand, for the rest of the economy,

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Speaker 2: so you're talking about high tech industries and also domestic

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Speaker 2: services for people traveling around the country, going to restaurants

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Speaker 2: and so on, that's really surging. So you've got the

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Speaker 2: other engine, it's actually going very well. So that means

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Speaker 2: that the plane is still going forward. Right, Chinese economy

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Speaker 2: is still growing. However, it's not growing as fast because

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Speaker 2: you've only got one engine working. And ultimately, the risk

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Speaker 2: is that that could have contagion on the other part

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Speaker 2: of the economy too.

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Speaker 3: Currently that isn't happening. It's a risk that's worth thinking about, Rebecca.

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Speaker 5: The other thing that's happening that you write about is

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Speaker 5: that people are worried about their jobs. Young people are

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Speaker 5: having trouble finding jobs that pay well. Costs are going up,

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Speaker 5: and they're feeling like they can't make ends meet.

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Speaker 4: Yeah, I mean, this has been a quite remarkable level

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Speaker 4: of youth unemployment. We've had that a record high north

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Speaker 4: of twenty percent. One in five young people in China's

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Speaker 4: urban hubs cannot find jobs. Some estimate that could be

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Speaker 4: quite significantly higher when we look at the nationwide figure.

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Speaker 4: And so other thing to consider here is the way

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Speaker 4: in which the social contract may be, if not changing

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Speaker 4: in China, but at least being scrutinized and for years

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Speaker 4: and people have sort of exchanged or accepted fewer freedoms

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Speaker 4: in exchange for the promise of a job, a home,

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Speaker 4: a family. But when you consider sort of some of

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Speaker 4: the demographic challenges as well as some of the challenges

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Speaker 4: around real estate no longer being a sort of reliable

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Speaker 4: asset to acquire, you can see that dynamic is changing too.

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Speaker 2: What we're doing is talking generally in economics about year

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Speaker 2: on year growth.

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Speaker 3: And the real.

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Speaker 2: Stress test for China's economy was last year, when at

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Speaker 2: any given time a third of the country was in lockdown,

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Speaker 2: and it's quite amazing that the economy got through that

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Speaker 2: without any financial crisis and so on. So this year

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Speaker 2: we are talking about a growth picture, and we're talking

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Speaker 2: about growth of around the government's target of five percent.

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Speaker 2: Now some people think that that's going to be missed,

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Speaker 2: but not likely by a large margin.

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Speaker 5: Why is this five percent growth target that the government

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Speaker 5: set causing so much unease?

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Speaker 4: Well, to begin with, in the beginning of the year,

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Speaker 4: many investors and banks thought that it was quite a

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Speaker 4: conservative number and that China would have no issues really

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Speaker 4: in reaching that. Just in the last couple of weeks,

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Speaker 4: we've had at least six investment banks downgrading their forecast

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Speaker 4: for the year. Most of those are actually below the

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Speaker 4: five percent target. But what feels like a big change

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Speaker 4: is this shift in consensus that China's growth miracle that

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Speaker 4: has once fired so many portfolios around the world is

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Speaker 4: no longer a given and people are really changing. There's

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Speaker 4: a longer term and fundamental view of China, and so

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Speaker 4: that's sometimes why although perhaps on the ground, you know,

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Speaker 4: we're not seeing actually the sort of seismic change or

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Speaker 4: the kind of contagion risk chaos as Tom lays out,

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Speaker 4: but it feels like a really significant shift.

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Speaker 2: We've got to remember that the Communist Party has really

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Speaker 2: committed to economic growth, said last year that that's basically

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Speaker 2: it's top task, and so we will see the government

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Speaker 2: stepping in to boost growth if things start going below

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Speaker 2: probably that four or five percent range next few years.

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Speaker 4: The thing is a part though, we've seen that the

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Speaker 4: government has also demonstrated this quite extraordinary tolerance for pain.

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Speaker 4: You know, it's trying to roll out these policies ultimately

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Speaker 4: to make the economy more sustainable, more robust, to shift

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Speaker 4: its growth model, move away from a model of growth

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Speaker 4: that's fueled by debt that's not as productive longer term.

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Speaker 2: A lot of things that people didn't expect to happen

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Speaker 2: in the past based on their experience of how China's

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Speaker 2: economy worked and how China's political system worked, have happened

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Speaker 2: in recent years.

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Speaker 3: And I think that's left.

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Speaker 2: A lot of people feeling quite confused about the future.

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Speaker 2: And obviously, if you're concerned and confused about the future,

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Speaker 2: you're not going to spend quite as much.

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Speaker 3: You're going to save a bit more.

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Speaker 2: And we're seeing that behavior playing out amongst households and

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Speaker 2: amongst companies. It's also an unprecedented situation we're in this year,

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Speaker 2: where China's economy is recovering, It's grown fast than it

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Speaker 2: did last year because of the end of lockdowns. But

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Speaker 2: the property sector is shrinking, and we've never had a

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Speaker 2: recovery like that in China that isn't driven by the

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Speaker 2: property sector in recent memory. So if you're looking around

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Speaker 2: you in China and you see that, maybe you're the

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Speaker 2: value of your house is declining. People aren't buying property,

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Speaker 2: but the economy is recovering.

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Speaker 3: It's just a confusing situation. You've got to adjust to that.

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Speaker 2: And I think we're seeing this adjustment of expectations.

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Speaker 3: Playing out, and it's about feelings really.

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Speaker 5: After the break why Joe Biden called China's economy a

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Speaker 5: ticking time bomb. Rebecca, you and Tom have described China's

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Speaker 5: economy and how it is slowing down. How much of

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Speaker 5: that is by design. One of the central themes of

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Speaker 5: your story is that Chinese President Ji Jinping is trying

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Speaker 5: to run the economy call as you put it.

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Speaker 4: When we talk about China running its economy cold, what

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Speaker 4: we mean is holding back from any kind of jumbo

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Speaker 4: stimulus package, for example, fueled by raising a lot of

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Speaker 4: debt and building a lot of infrastructure. But the term

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Speaker 4: is also relative, so it's less than perhaps it may

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Speaker 4: have used in the past to deal with these type

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Speaker 4: of economic woes, but also comparatively to the US and

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Speaker 4: to other large piers, season Ping has laid out these

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Speaker 4: longer term priorities for the economy, so cutting down unproductive

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Speaker 4: or less productive debt fields, spending, trying to reduce the

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Speaker 4: risks in real estate, tackle the issue of oversupply, reduce

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Speaker 4: the risk of a market bubble appearing and then popping

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Speaker 4: and creating other sorts of disorder in the economy. And

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Speaker 4: so these are long term goals. But there was so

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Speaker 4: really the reason behind why some parts of China's economy

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Speaker 4: are slowing. This is a sort of crafted policy, for example,

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Speaker 4: to deliberately shrink the size and the debt carrying capacity

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Speaker 4: of the property sector in China. We have seen many

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Speaker 4: private property developers defaulting in China over the last three years,

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Speaker 4: and it's really by design, by this sort of principle

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Speaker 4: of the three Red Lines which came into force back

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Speaker 4: in twenty twenty. Now. The three Red Lines are these

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Speaker 4: guidelines around just how much debt or how much leverage

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Speaker 4: a property firm can carry if it wanted to continue borrowing.

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Speaker 4: And that was a big issue for many properly developers,

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Speaker 4: because this model is really built on the principle of

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Speaker 4: using debt to grow its business, to continue to buy land,

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Speaker 4: to then build more.

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Speaker 3: Projects and so on.

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Speaker 4: So it was a fundamental part of the business model,

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Speaker 4: but also somewhat worrying part of the business model, and

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Speaker 4: of course that then exposes some element of risk to

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Speaker 4: the rest of the financial system that supported this model.

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Speaker 4: So think about the local banks and the larger banks

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Speaker 4: that were lending to real estate companies, as well as

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Speaker 4: of course all the homeowners that were buying. And in

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Speaker 4: China it's quite normal to actually buy your property and

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Speaker 4: take out a mortgage on a property before it's been

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Speaker 4: delivered to you, And so we then were in this

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Speaker 4: quite curious state where homeowners were paying mortgages on properties

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Speaker 4: that they hadn't yet been delivered, but also that may

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Speaker 4: not be delivered because that particular firm had defailt on

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Speaker 4: its debt and was running into trouble.

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Speaker 5: And so they were paying mortgages on buildings that had

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Speaker 5: not even been built.

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Speaker 4: All were sort of mid construction most likely, and we

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Speaker 4: did see at one point when there was a lot

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Speaker 4: of worries about whether or not projects would be delivered.

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Speaker 4: We did see these sort of sporadic protests, yes, where

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Speaker 4: people boycotted payments on their mortgages, precisely because of this reason.

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Speaker 2: To give you an idea how important the property market

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Speaker 2: is to how people feel about their wealth. We estimate

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Speaker 2: that about seventy percent of Chinese household wealth is tied

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Speaker 2: up in property. So that's a big contrast to other

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Speaker 2: countries like the US, where people own more in the

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Speaker 2: form of the stocks and other financial assets. China wants

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Speaker 2: to move its wealth system more towards that kind of

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Speaker 2: US model.

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Speaker 5: Tom US leaders have certainly taken notice of what's happening

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Speaker 5: in China's economy. Treasury Secretary Janet Yellen called China a

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Speaker 5: risk factor for the US, and President Joe Biden went

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Speaker 5: way further in saying that China's economy was a ticking

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Speaker 5: time bomb. What exactly do they mean by that?

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Speaker 3: It used to be that China's economic growth was broadly

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Speaker 3: considered a good thing because China was driving global growth

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Speaker 3: and prosperity, and there was also some feeling that development

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Speaker 3: in China was good because it was previously a poor country.

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Speaker 3: And this has really shifted, I guess post Donald Trump

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Speaker 3: to a competition frame, and you've got politicians saying, isn't

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Speaker 3: it great now we're doing better than China, or isn't

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Speaker 3: it great that China's slowing? And you've also got Biden

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Speaker 3: administration rolling out restrictions on technology, micro chips and so

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Speaker 3: on investment in China, and those things slow China's growth.

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Speaker 3: It's not just words.

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Speaker 2: I mean, there are also policies that the US is

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Speaker 2: implementing that actively slow down China's growth to some degree,

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Speaker 2: even though the White House says that's not the main

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Speaker 2: aim of those policies. And so that's why I think

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Speaker 2: it's really important for us to try and look a

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Speaker 2: bit more dispassionately at the data and trying not to

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Speaker 2: get into this political competition frame quite so much.

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Speaker 4: I think there's sort of two elements to that. The

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Speaker 4: first is that the type of growth that we see

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Speaker 4: in China does impact the knock on effect through the

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Speaker 4: rest of the world. If we see just sort of

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Speaker 4: massive depth fields stimulus infratructure field stimulus, that's not necessarily

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Speaker 4: the type of growth. Even if it were to even,

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Speaker 4: for example, exceed that five percent target, it's not necessarily

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Speaker 4: the type of stimulus that would have sort of longer

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Speaker 4: term benefits for the rest of the world. But the

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Speaker 4: sort of obvious area where we do see sort of

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Speaker 4: trickle through impact is in commodities, and that's related to

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Speaker 4: China's property sector. Again, so if China isn't building as

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Speaker 4: much as it once was, it's importing less of those

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Speaker 4: commodities from elsewhere in the world, so that certainly sort

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Speaker 4: of affects that dynamic.

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Speaker 5: Tom One interesting thing you write that if g and

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Speaker 5: China are running their economy cold, the US is running

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Speaker 5: the economy hot, with Joe Biden putting billions of dollars

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Speaker 5: into US manufacturing and jobs and trying to boost the economy,

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Speaker 5: and that there's this kind of what you say is

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Speaker 5: a clash of economic philosophies between the two largest economies

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Speaker 5: in the world.

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Speaker 2: You can see that showing up in two places. So

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Speaker 2: firstly inflation because Bidenomics, so some people call it, it's

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Speaker 2: about growing the economy. Het you've seen inflation surge in

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Speaker 2: the US, where it's coming down a bit now, and

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Speaker 2: China has recently entered a period of deflation because domestic

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Speaker 2: demands relative to supply is very weak. And the second

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Speaker 2: place you can see that showing up is the labor market.

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Speaker 2: So we talked about China's very high used unemployment.

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Speaker 3: Overall, the labor.

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Speaker 2: Market is a bit better than it is for young people,

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Speaker 2: but it's still quite a poor labor market relative to

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Speaker 2: pre pandemic. And so we're seeing a big contrast there

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Speaker 2: with the US, where you've got record low unemployment and

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Speaker 2: you've got people changing jobs because the labor market is

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Speaker 2: tight and that's driving up wages. We're not seeing that

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Speaker 2: dynamic to the same extent in China. And what we

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Speaker 2: can say is in a way that both administrations in

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Speaker 2: China and the US are a bit haunted by the

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Speaker 2: past and they're trying not to repeat the mistakes of

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Speaker 2: the past. So in the US, the consensus amongst the

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Speaker 2: Biden administration was that Obama didn't do enough after the

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Speaker 2: financial crisis, and so you had a decade of disappointing growth,

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Speaker 2: and we don't want to do that again, whereas in China,

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Speaker 2: the lesson from the financial crisis is the complete opposite.

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Speaker 2: Cgmping and his advisors think that China did too much

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Speaker 2: and they ended up with too much housing and so on,

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Speaker 2: and that was the problem, and they don't want to

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Speaker 2: repeat that again. So it's really funny how you've got

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Speaker 2: these two economies, two large economies in the world, so

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Speaker 2: going on opposite tracks, both trying not to repeat the

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Speaker 2: mistakes of the past and maybe making new mistakes is

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Speaker 2: the issue. So obviously there's a debate about how sustainable

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Speaker 2: to pick up in US growth is. You know, it's

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Speaker 2: exceeded expectations this year, but will that continue? And then

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Speaker 2: in China, maybe you're running the economy too cold, right,

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Speaker 2: And so if you're running the economy too cold, people's

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Speaker 2: expectations start falling and once that begins, that process is

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Speaker 2: hard to stop.

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Speaker 3: That's the risk there.

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Speaker 2: So I think the thing about running the economy hert

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Speaker 2: versus running it cold. US stimulus has put growth in

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Speaker 2: the US economy on a faster trajectory than it was

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Speaker 2: pre pandemic, and China is now on a slower trajectory,

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Speaker 2: as we said, than it was on pre pandemic. Pre

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Speaker 2: pandemic grew six percent. Now we're looking in the future

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Speaker 2: more than something like four percent. Still, most economists expect

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Speaker 2: that China will grow faster than the US, and one

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Speaker 2: reason why that is is because China is just a

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Speaker 2: much porer country and it has bigger room for catch

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Speaker 2: up growth. Chinese per capital GDP is around one sixth

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Speaker 2: of the US level, So we're talking about a country

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Speaker 2: that has still a huge number of people who by

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Speaker 2: US standards, will be considered very poor. And if China,

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Speaker 2: especially in those poorer areas, just does the things that

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Speaker 2: it did in the richer areas.

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Speaker 3: Will see catch up growth.

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Speaker 2: And that is something that China's government is still very

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Speaker 2: keen on, unsupportive of.

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Speaker 5: Rebecca earlier time talked about how one of the drivers

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Speaker 5: of China's economy, one of the bright spots, is the

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Speaker 5: tech industry, and yet the tech industry, despite its growth,

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Speaker 5: has not been able to make up for the shortcomings

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Speaker 5: in the property market in other areas.

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Speaker 4: Why is that, Well, partly because it's what China caused.

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Speaker 4: The New economy, and just to state the obvious, it

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Speaker 4: is a new thing, but we have seen quite a

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Speaker 4: significant pickup in that area. So for example in investments

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Speaker 4: in exports double digit and this industry of things like

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Speaker 4: electric vehicles, in green industries, in sort of high tech,

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Speaker 4: high growth industries that there's an increasing focus from Beijing

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Speaker 4: to build out and we are increasingly seeing that dominate,

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Speaker 4: and also, of course things like as Tom says, in

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Speaker 4: very visible ways seeing evs appear on the streets in Europe,

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Speaker 4: overtaking some of its sort of European competitors in certain

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Speaker 4: markets too.

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Speaker 2: So the property sector, we're thinking around twenty percent of

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Speaker 2: GDP if you throw in the related industries.

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Speaker 3: What China caused. The new economy is a bit smaller.

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Speaker 3: It's about seventeen percent of GDP, and new economy, according.

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Speaker 2: To China's official statistics, grew about seven percent in the

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Speaker 2: first half of the year. Property investment trunk eight percent,

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Speaker 2: So you've got a drag there on demand.

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Speaker 3: That is slightly larger.

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Speaker 2: And that's just the reality that China is dealing with

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Speaker 2: at the moment.

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Speaker 5: Rebecca, you said earlier that there is this social compact

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Speaker 5: in China that people will trade some personal freedom for

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Speaker 5: economic security and well being. Do you think that this

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Speaker 5: economic stress poses any kind of risk to Ji, that

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Speaker 5: people will become dissatisfied?

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Speaker 4: Well, I think between people being dissatisfied and worried about

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Speaker 4: their personal wellbeing or their personal wealth and kind of

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Speaker 4: existential threat to seed Imping and the party is quite

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Speaker 4: a big gap, and I think no one is really

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Speaker 4: talking about the latter. But I do think that this

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Speaker 4: is really one of the biggest, if not the biggest

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Speaker 4: tests that seeds Imping has faced in his lifetime. For

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Speaker 4: a decade, he has overseen China with economic growth, and

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Speaker 4: so his vision of what he's called the China Dream

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Speaker 4: that he set out when he came into that top job,

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Speaker 4: the rejuvenation of the Chinese people, both at home and

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Speaker 4: broad was, in a sense, you could argue, an easier path.

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Speaker 4: We had growth rumbling on behind him. We also had

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Speaker 4: an easier international diplomatic landscape too, And now he's juggling

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Speaker 4: with these really thorny issues that he is trying to

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Speaker 4: tackle in the economy, albeit to create a more sustainable

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Speaker 4: type of growth, as well as this thorny issue of

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Speaker 4: increasing tension with the US, the perennial risk that's raised

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Speaker 4: over a Taiwan conflict, as well as this shifting balance

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Speaker 4: of power in the Indo Pacific. So this is a

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Speaker 4: very very different set of problems than the ones that

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Speaker 4: he faced a decade ago. And to Tom's point, I

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Speaker 4: think that the confidence issue in China and changing sentiment

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Speaker 4: is really one of the toughest things that a policymaker

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Speaker 4: can do. Because even as we've seen in this really

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Speaker 4: big sort of push, this positive messaging blitz that we've

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Speaker 4: had from various regulators authorities, with this drip stream of

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Speaker 4: positive news promising to support various parts of the economy

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Speaker 4: without much follow through, can only last for so long.

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Speaker 4: And that's partly when you look at markets, for example,

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Speaker 4: while you're seeing all these quite grim milestones being reached

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Speaker 4: across Chinese assets, it's so difficult to change that mood

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Speaker 4: music in.

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Speaker 5: China when we come back, well, things get worse before

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Speaker 5: they get better. Tom, what are you looking for in

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Speaker 5: the months and even the years ahead.

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Speaker 2: The big question I think hanging over China's economy is

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Speaker 2: how long does this downturn in the property sector last for?

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Speaker 2: And when do we reach a point where the government

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Speaker 2: and where residents in China, who ultimately drive this market

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Speaker 2: get back into buying again, and so this market stabilizes.

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Speaker 2: It doesn't have to grow again, but it has to

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Speaker 2: at least stabilize.

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Speaker 3: It seems like we're still quite far away.

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Speaker 2: From the end of this property shrinking era, and I

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Speaker 2: don't think anyone can really tell you how.

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Speaker 3: Much longer that's going to go on. It's already gone.

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Speaker 2: On for two and a half years, and that's much

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Speaker 2: longer than anyone expected.

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Speaker 4: And for many months last year, for example, people were saying,

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Speaker 4: we're at the turn, just about to turn the road

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Speaker 4: when it comes to the distress property cycle in China,

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Speaker 4: and yet here we are again. And the other slightly

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Speaker 4: more worrying element is that we are seeing some of

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Speaker 4: that stress spread from China's private developers to its state

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Speaker 4: owned developers. Now they so far have been quite shielded

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Speaker 4: from this, but simply by the fact that people aren't

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Speaker 4: buying properties anymore and that prices are declining, we had

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Speaker 4: eighteen and thirty eight listed state builders reporting losses in

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Speaker 4: the first half of this year. That is highly unusual

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Speaker 4: for China, and it suggests that we have quite a

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Speaker 4: long road to go to stabilize this industry, and that

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Speaker 4: even the state sector of this industry, who were once

441
00:26:21,960 --> 00:26:24,440
Speaker 4: expected to sort of be the saviors to come in

442
00:26:24,720 --> 00:26:29,480
Speaker 4: to help consolidation in that industry to buy distress private

443
00:26:29,560 --> 00:26:34,000
Speaker 4: assets from other developers, now they are starting to run

444
00:26:34,040 --> 00:26:35,800
Speaker 4: into trouble too.

445
00:26:37,560 --> 00:26:40,399
Speaker 2: So what we know is that Chinese property sales peaked

446
00:26:40,440 --> 00:26:45,040
Speaker 2: in twenty twenty one at about two point three trillion dollars,

447
00:26:45,359 --> 00:26:48,280
Speaker 2: and then last year they fell to about one point

448
00:26:48,359 --> 00:26:51,960
Speaker 2: nine trillion dollars, and people think they'll fall a bit

449
00:26:52,000 --> 00:26:55,960
Speaker 2: more this year. But we know that there is demand

450
00:26:56,040 --> 00:27:01,840
Speaker 2: in China for housing fundamentally because like everyone else, Chinese people,

451
00:27:02,000 --> 00:27:04,040
Speaker 2: because the rest of the economy is growing and their

452
00:27:04,240 --> 00:27:06,720
Speaker 2: wages are growing, they would like to live in bigger

453
00:27:06,720 --> 00:27:10,320
Speaker 2: and better houses. And also you've got an ongoing urbanization

454
00:27:10,520 --> 00:27:14,000
Speaker 2: process in China. People are moving still from the countryside

455
00:27:14,240 --> 00:27:16,520
Speaker 2: to cities where they can earn more money, and so

456
00:27:16,600 --> 00:27:19,400
Speaker 2: they buy houses when they do that. And the question

457
00:27:19,680 --> 00:27:22,680
Speaker 2: is when does this drop hit against.

458
00:27:22,400 --> 00:27:24,680
Speaker 3: That fundamental demand, And.

459
00:27:24,760 --> 00:27:27,840
Speaker 2: So this full can't last forever, but nobody can really

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00:27:27,840 --> 00:27:29,840
Speaker 2: tell you how long it's going to last.

461
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Speaker 5: Rebecca Tom, thanks so much for coming on the show.

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Speaker 4: Thanks for having us. Wez pleasure to be here.

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Speaker 5: Thank you, Ez, thanks for listening to us here at

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Speaker 5: the Big Take. It's a daily podcast from Bloomberg and iHeartRadio.

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Speaker 5: For more shows from iHeartRadio, visit the iHeartRadio app, Apple Podcasts,

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00:27:47,160 --> 00:27:49,760
Speaker 5: or wherever you listen, and we'd love to hear from you.

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00:27:49,840 --> 00:27:53,040
Speaker 5: Email us questions or comments to Big Take at bloomberg

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00:27:53,080 --> 00:27:56,439
Speaker 5: dot Net. The supervising producer of The Big Take is

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00:27:56,520 --> 00:28:01,080
Speaker 5: Vicky Bergolina. Our senior producer is Catherine Fink. Rebecca Chasson

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Speaker 5: is our producer. Our associate producer is Sam Gebauer. Raphael

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00:28:05,400 --> 00:28:08,879
Speaker 5: mcili is our engineer. Our original music was composed by

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00:28:09,040 --> 00:28:12,520
Speaker 5: Leo Sidron. I'm West Kasova. We'll be back on Monday

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00:28:12,640 --> 00:28:15,160
Speaker 5: with another Big Take. Have a great weekend.