Speaker 1: You really need to be able to stum like the
Speaker 1: volatility in China right Boomber's range.
Speaker 2: Bound, So it tells you just the level of uncertainty
Speaker 2: that's in the market and the pessimism still around China's
Speaker 2: economy and.
Speaker 3: No clear strategy out of that malaise either.
Speaker 4: Question, why is China letting the economy run cold? That
Speaker 4: is the topic of.
Speaker 5: The Economists around the world are increasingly uneasy about what's
Speaker 5: going on in China. The nation's eighteen trillion dollar economy
Speaker 5: on's growing fast is decelerating, Exports have fallen off, young
Speaker 5: people are having trouble finding good jobs. China's long real
Speaker 5: estate crisis is deepening, with major property developers who borrowed
Speaker 5: too much now facing default and home buyers stuck paying
Speaker 5: mortgages on half built apartments. Meanwhile, local governments in China
Speaker 5: are burdened with debt they can't afford. All This uncertainty
Speaker 5: has led some foreign investors to pull their money out
Speaker 5: of the country, and some fore casters have downgraded their
Speaker 5: expectations for China's economic growth this year. They say it
Speaker 5: won't reach the government's target of five percent.
Speaker 1: There is enough room, obviously, for stimulus in China as
Speaker 1: the economy has been sputtering, But the problem, she says,
Speaker 1: is that you need massive stimulus in the trillions.
Speaker 5: Of remenbe Some of these troubles can be traced to
Speaker 5: President Ji Jimping's decision to try to break China's habit
Speaker 5: of fueling growth with speculative construction and spending projects that
Speaker 5: are often funded by local borrowing China.
Speaker 1: To prop up the economy. Investors are waiting for that
Speaker 1: big stumulus, it ain't coming, and hence that is impacting sentiment.
Speaker 5: The idea is that the pain will be temporary and
Speaker 5: China will emerge stronger for it, but concerns are growing
Speaker 5: that the consequences may instead turn out to be severe
Speaker 5: and long lasting, and not just for China but across
Speaker 5: the global economy.
Speaker 4: What feels like a big change is this shift in
Speaker 4: can census that China's growth miracle that has once fired
Speaker 4: so many portfolios around the world is no longer a
Speaker 4: given two.
Speaker 2: Large economies in the world, so going on opposite tracks,
Speaker 2: both trying not to repeat the mistakes of the past
Speaker 2: and maybe making new mistakes.
Speaker 5: That's Bloomberg's Rebecca Cheung Wilkins and Tom Hancock in Hong Kong.
Speaker 5: They're here with me to explain what's happening and what
Speaker 5: China's leaders are doing to try to turn things around.
Speaker 5: I'm Wes Kasova today on The Big Take, China feels
Speaker 5: the heat of a cooling economy. In a story out
Speaker 5: this week, a team including Rebecca and Beijing based reporter
Speaker 5: Colin Murphy, along with Tom and several other colleagues, dig
Speaker 5: into this complex situation. I started by asking Rebecca and
Speaker 5: Tom to paint us a picture of China's economy right now.
Speaker 4: Well, the fundamental issue or challenge is that the economy
Speaker 4: is slowing, and everyone thought this was sort of going
Speaker 4: to be the year that China's economy came roaring back
Speaker 4: after it reopened after the pandemic. And actually what we've
Speaker 4: seen is some of the policies that were rolled out
Speaker 4: during the pandemic or just before are now an overhack
Speaker 4: in the economy. And so essentially this move to try
Speaker 4: and reduce risk in the property sector to tackle the
Speaker 4: issue of oversupply is essentially continuing to really hurt growth.
Speaker 4: And that's partly a confidence issue because people are seeing
Speaker 4: their most valuable asset decline and price and decline and value,
Speaker 4: and so people don't want to spend. People feel poorer,
Speaker 4: and they're not investing in necessarily growing their businesses or
Speaker 4: starting a new company. So we have these sort of
Speaker 4: two big issues. Add to that that property for a
Speaker 4: long time has been one of the really the main
Speaker 4: or one of the main growth engines for China's economy,
Speaker 4: previously contributing about estimated thirty sometimes people say forty percent
Speaker 4: of the economy. That's really now paired back. And so meanwhile,
Speaker 4: China is trying to look to alternative industries to try
Speaker 4: and replace that as a driver of growth.
Speaker 5: And it's not just the property market that's ailing. Another
Speaker 5: problem is the world just isn't buying as many products
Speaker 5: from China as it once did.
Speaker 2: This year, Chinese exports are declining, and that's mostly about
Speaker 2: the fact that there was a surge in demand for
Speaker 2: Chinese goods during the pandemic coming from.
Speaker 3: Europe and the US as people.
Speaker 2: Stayed at home, and now that demand is normalizing, and
Speaker 2: so you've got exports to those countries falling by double
Speaker 2: digit rates. So if you add that up, you know,
Speaker 2: you could say that's at least a third of the
Speaker 2: economy that is experiencing quite a large decline. If you
Speaker 2: imagine that the Chinese economy is like an aeroplane with
Speaker 2: two engines, we could say that one engine is property
Speaker 2: and exports, and then the other engine is all the rest. Well,
Speaker 2: the property and exports part is currently sort of on
Speaker 2: fire and it's really interfering and slowing down the entire plane.
Speaker 2: On the other hand, for the rest of the economy,
Speaker 2: so you're talking about high tech industries and also domestic
Speaker 2: services for people traveling around the country, going to restaurants
Speaker 2: and so on, that's really surging. So you've got the
Speaker 2: other engine, it's actually going very well. So that means
Speaker 2: that the plane is still going forward. Right, Chinese economy
Speaker 2: is still growing. However, it's not growing as fast because
Speaker 2: you've only got one engine working. And ultimately, the risk
Speaker 2: is that that could have contagion on the other part
Speaker 2: of the economy too.
Speaker 3: Currently that isn't happening. It's a risk that's worth thinking about, Rebecca.
Speaker 5: The other thing that's happening that you write about is
Speaker 5: that people are worried about their jobs. Young people are
Speaker 5: having trouble finding jobs that pay well. Costs are going up,
Speaker 5: and they're feeling like they can't make ends meet.
Speaker 4: Yeah, I mean, this has been a quite remarkable level
Speaker 4: of youth unemployment. We've had that a record high north
Speaker 4: of twenty percent. One in five young people in China's
Speaker 4: urban hubs cannot find jobs. Some estimate that could be
Speaker 4: quite significantly higher when we look at the nationwide figure.
Speaker 4: And so other thing to consider here is the way
Speaker 4: in which the social contract may be, if not changing
Speaker 4: in China, but at least being scrutinized and for years
Speaker 4: and people have sort of exchanged or accepted fewer freedoms
Speaker 4: in exchange for the promise of a job, a home,
Speaker 4: a family. But when you consider sort of some of
Speaker 4: the demographic challenges as well as some of the challenges
Speaker 4: around real estate no longer being a sort of reliable
Speaker 4: asset to acquire, you can see that dynamic is changing too.
Speaker 2: What we're doing is talking generally in economics about year
Speaker 2: on year growth.
Speaker 3: And the real.
Speaker 2: Stress test for China's economy was last year, when at
Speaker 2: any given time a third of the country was in lockdown,
Speaker 2: and it's quite amazing that the economy got through that
Speaker 2: without any financial crisis and so on. So this year
Speaker 2: we are talking about a growth picture, and we're talking
Speaker 2: about growth of around the government's target of five percent.
Speaker 2: Now some people think that that's going to be missed,
Speaker 2: but not likely by a large margin.
Speaker 5: Why is this five percent growth target that the government
Speaker 5: set causing so much unease?
Speaker 4: Well, to begin with, in the beginning of the year,
Speaker 4: many investors and banks thought that it was quite a
Speaker 4: conservative number and that China would have no issues really
Speaker 4: in reaching that. Just in the last couple of weeks,
Speaker 4: we've had at least six investment banks downgrading their forecast
Speaker 4: for the year. Most of those are actually below the
Speaker 4: five percent target. But what feels like a big change
Speaker 4: is this shift in consensus that China's growth miracle that
Speaker 4: has once fired so many portfolios around the world is
Speaker 4: no longer a given and people are really changing. There's
Speaker 4: a longer term and fundamental view of China, and so
Speaker 4: that's sometimes why although perhaps on the ground, you know,
Speaker 4: we're not seeing actually the sort of seismic change or
Speaker 4: the kind of contagion risk chaos as Tom lays out,
Speaker 4: but it feels like a really significant shift.
Speaker 2: We've got to remember that the Communist Party has really
Speaker 2: committed to economic growth, said last year that that's basically
Speaker 2: it's top task, and so we will see the government
Speaker 2: stepping in to boost growth if things start going below
Speaker 2: probably that four or five percent range next few years.
Speaker 4: The thing is a part though, we've seen that the
Speaker 4: government has also demonstrated this quite extraordinary tolerance for pain.
Speaker 4: You know, it's trying to roll out these policies ultimately
Speaker 4: to make the economy more sustainable, more robust, to shift
Speaker 4: its growth model, move away from a model of growth
Speaker 4: that's fueled by debt that's not as productive longer term.
Speaker 2: A lot of things that people didn't expect to happen
Speaker 2: in the past based on their experience of how China's
Speaker 2: economy worked and how China's political system worked, have happened
Speaker 2: in recent years.
Speaker 3: And I think that's left.
Speaker 2: A lot of people feeling quite confused about the future.
Speaker 2: And obviously, if you're concerned and confused about the future,
Speaker 2: you're not going to spend quite as much.
Speaker 3: You're going to save a bit more.
Speaker 2: And we're seeing that behavior playing out amongst households and
Speaker 2: amongst companies. It's also an unprecedented situation we're in this year,
Speaker 2: where China's economy is recovering, It's grown fast than it
Speaker 2: did last year because of the end of lockdowns. But
Speaker 2: the property sector is shrinking, and we've never had a
Speaker 2: recovery like that in China that isn't driven by the
Speaker 2: property sector in recent memory. So if you're looking around
Speaker 2: you in China and you see that, maybe you're the
Speaker 2: value of your house is declining. People aren't buying property,
Speaker 2: but the economy is recovering.
Speaker 3: It's just a confusing situation. You've got to adjust to that.
Speaker 2: And I think we're seeing this adjustment of expectations.
Speaker 3: Playing out, and it's about feelings really.
Speaker 5: After the break why Joe Biden called China's economy a
Speaker 5: ticking time bomb. Rebecca, you and Tom have described China's
Speaker 5: economy and how it is slowing down. How much of
Speaker 5: that is by design. One of the central themes of
Speaker 5: your story is that Chinese President Ji Jinping is trying
Speaker 5: to run the economy call as you put it.
Speaker 4: When we talk about China running its economy cold, what
Speaker 4: we mean is holding back from any kind of jumbo
Speaker 4: stimulus package, for example, fueled by raising a lot of
Speaker 4: debt and building a lot of infrastructure. But the term
Speaker 4: is also relative, so it's less than perhaps it may
Speaker 4: have used in the past to deal with these type
Speaker 4: of economic woes, but also comparatively to the US and
Speaker 4: to other large piers, season Ping has laid out these
Speaker 4: longer term priorities for the economy, so cutting down unproductive
Speaker 4: or less productive debt fields, spending, trying to reduce the
Speaker 4: risks in real estate, tackle the issue of oversupply, reduce
Speaker 4: the risk of a market bubble appearing and then popping
Speaker 4: and creating other sorts of disorder in the economy. And
Speaker 4: so these are long term goals. But there was so
Speaker 4: really the reason behind why some parts of China's economy
Speaker 4: are slowing. This is a sort of crafted policy, for example,
Speaker 4: to deliberately shrink the size and the debt carrying capacity
Speaker 4: of the property sector in China. We have seen many
Speaker 4: private property developers defaulting in China over the last three years,
Speaker 4: and it's really by design, by this sort of principle
Speaker 4: of the three Red Lines which came into force back
Speaker 4: in twenty twenty. Now. The three Red Lines are these
Speaker 4: guidelines around just how much debt or how much leverage
Speaker 4: a property firm can carry if it wanted to continue borrowing.
Speaker 4: And that was a big issue for many properly developers,
Speaker 4: because this model is really built on the principle of
Speaker 4: using debt to grow its business, to continue to buy land,
Speaker 4: to then build more.
Speaker 3: Projects and so on.
Speaker 4: So it was a fundamental part of the business model,
Speaker 4: but also somewhat worrying part of the business model, and
Speaker 4: of course that then exposes some element of risk to
Speaker 4: the rest of the financial system that supported this model.
Speaker 4: So think about the local banks and the larger banks
Speaker 4: that were lending to real estate companies, as well as
Speaker 4: of course all the homeowners that were buying. And in
Speaker 4: China it's quite normal to actually buy your property and
Speaker 4: take out a mortgage on a property before it's been
Speaker 4: delivered to you, And so we then were in this
Speaker 4: quite curious state where homeowners were paying mortgages on properties
Speaker 4: that they hadn't yet been delivered, but also that may
Speaker 4: not be delivered because that particular firm had defailt on
Speaker 4: its debt and was running into trouble.
Speaker 5: And so they were paying mortgages on buildings that had
Speaker 5: not even been built.
Speaker 4: All were sort of mid construction most likely, and we
Speaker 4: did see at one point when there was a lot
Speaker 4: of worries about whether or not projects would be delivered.
Speaker 4: We did see these sort of sporadic protests, yes, where
Speaker 4: people boycotted payments on their mortgages, precisely because of this reason.
Speaker 2: To give you an idea how important the property market
Speaker 2: is to how people feel about their wealth. We estimate
Speaker 2: that about seventy percent of Chinese household wealth is tied
Speaker 2: up in property. So that's a big contrast to other
Speaker 2: countries like the US, where people own more in the
Speaker 2: form of the stocks and other financial assets. China wants
Speaker 2: to move its wealth system more towards that kind of
Speaker 2: US model.
Speaker 5: Tom US leaders have certainly taken notice of what's happening
Speaker 5: in China's economy. Treasury Secretary Janet Yellen called China a
Speaker 5: risk factor for the US, and President Joe Biden went
Speaker 5: way further in saying that China's economy was a ticking
Speaker 5: time bomb. What exactly do they mean by that?
Speaker 3: It used to be that China's economic growth was broadly
Speaker 3: considered a good thing because China was driving global growth
Speaker 3: and prosperity, and there was also some feeling that development
Speaker 3: in China was good because it was previously a poor country.
Speaker 3: And this has really shifted, I guess post Donald Trump
Speaker 3: to a competition frame, and you've got politicians saying, isn't
Speaker 3: it great now we're doing better than China, or isn't
Speaker 3: it great that China's slowing? And you've also got Biden
Speaker 3: administration rolling out restrictions on technology, micro chips and so
Speaker 3: on investment in China, and those things slow China's growth.
Speaker 3: It's not just words.
Speaker 2: I mean, there are also policies that the US is
Speaker 2: implementing that actively slow down China's growth to some degree,
Speaker 2: even though the White House says that's not the main
Speaker 2: aim of those policies. And so that's why I think
Speaker 2: it's really important for us to try and look a
Speaker 2: bit more dispassionately at the data and trying not to
Speaker 2: get into this political competition frame quite so much.
Speaker 4: I think there's sort of two elements to that. The
Speaker 4: first is that the type of growth that we see
Speaker 4: in China does impact the knock on effect through the
Speaker 4: rest of the world. If we see just sort of
Speaker 4: massive depth fields stimulus infratructure field stimulus, that's not necessarily
Speaker 4: the type of growth. Even if it were to even,
Speaker 4: for example, exceed that five percent target, it's not necessarily
Speaker 4: the type of stimulus that would have sort of longer
Speaker 4: term benefits for the rest of the world. But the
Speaker 4: sort of obvious area where we do see sort of
Speaker 4: trickle through impact is in commodities, and that's related to
Speaker 4: China's property sector. Again, so if China isn't building as
Speaker 4: much as it once was, it's importing less of those
Speaker 4: commodities from elsewhere in the world, so that certainly sort
Speaker 4: of affects that dynamic.
Speaker 5: Tom One interesting thing you write that if g and
Speaker 5: China are running their economy cold, the US is running
Speaker 5: the economy hot, with Joe Biden putting billions of dollars
Speaker 5: into US manufacturing and jobs and trying to boost the economy,
Speaker 5: and that there's this kind of what you say is
Speaker 5: a clash of economic philosophies between the two largest economies
Speaker 5: in the world.
Speaker 2: You can see that showing up in two places. So
Speaker 2: firstly inflation because Bidenomics, so some people call it, it's
Speaker 2: about growing the economy. Het you've seen inflation surge in
Speaker 2: the US, where it's coming down a bit now, and
Speaker 2: China has recently entered a period of deflation because domestic
Speaker 2: demands relative to supply is very weak. And the second
Speaker 2: place you can see that showing up is the labor market.
Speaker 2: So we talked about China's very high used unemployment.
Speaker 3: Overall, the labor.
Speaker 2: Market is a bit better than it is for young people,
Speaker 2: but it's still quite a poor labor market relative to
Speaker 2: pre pandemic. And so we're seeing a big contrast there
Speaker 2: with the US, where you've got record low unemployment and
Speaker 2: you've got people changing jobs because the labor market is
Speaker 2: tight and that's driving up wages. We're not seeing that
Speaker 2: dynamic to the same extent in China. And what we
Speaker 2: can say is in a way that both administrations in
Speaker 2: China and the US are a bit haunted by the
Speaker 2: past and they're trying not to repeat the mistakes of
Speaker 2: the past. So in the US, the consensus amongst the
Speaker 2: Biden administration was that Obama didn't do enough after the
Speaker 2: financial crisis, and so you had a decade of disappointing growth,
Speaker 2: and we don't want to do that again, whereas in China,
Speaker 2: the lesson from the financial crisis is the complete opposite.
Speaker 2: Cgmping and his advisors think that China did too much
Speaker 2: and they ended up with too much housing and so on,
Speaker 2: and that was the problem, and they don't want to
Speaker 2: repeat that again. So it's really funny how you've got
Speaker 2: these two economies, two large economies in the world, so
Speaker 2: going on opposite tracks, both trying not to repeat the
Speaker 2: mistakes of the past and maybe making new mistakes is
Speaker 2: the issue. So obviously there's a debate about how sustainable
Speaker 2: to pick up in US growth is. You know, it's
Speaker 2: exceeded expectations this year, but will that continue? And then
Speaker 2: in China, maybe you're running the economy too cold, right,
Speaker 2: And so if you're running the economy too cold, people's
Speaker 2: expectations start falling and once that begins, that process is
Speaker 2: hard to stop.
Speaker 3: That's the risk there.
Speaker 2: So I think the thing about running the economy hert
Speaker 2: versus running it cold. US stimulus has put growth in
Speaker 2: the US economy on a faster trajectory than it was
Speaker 2: pre pandemic, and China is now on a slower trajectory,
Speaker 2: as we said, than it was on pre pandemic. Pre
Speaker 2: pandemic grew six percent. Now we're looking in the future
Speaker 2: more than something like four percent. Still, most economists expect
Speaker 2: that China will grow faster than the US, and one
Speaker 2: reason why that is is because China is just a
Speaker 2: much porer country and it has bigger room for catch
Speaker 2: up growth. Chinese per capital GDP is around one sixth
Speaker 2: of the US level, So we're talking about a country
Speaker 2: that has still a huge number of people who by
Speaker 2: US standards, will be considered very poor. And if China,
Speaker 2: especially in those poorer areas, just does the things that
Speaker 2: it did in the richer areas.
Speaker 3: Will see catch up growth.
Speaker 2: And that is something that China's government is still very
Speaker 2: keen on, unsupportive of.
Speaker 5: Rebecca earlier time talked about how one of the drivers
Speaker 5: of China's economy, one of the bright spots, is the
Speaker 5: tech industry, and yet the tech industry, despite its growth,
Speaker 5: has not been able to make up for the shortcomings
Speaker 5: in the property market in other areas.
Speaker 4: Why is that, Well, partly because it's what China caused.
Speaker 4: The New economy, and just to state the obvious, it
Speaker 4: is a new thing, but we have seen quite a
Speaker 4: significant pickup in that area. So for example in investments
Speaker 4: in exports double digit and this industry of things like
Speaker 4: electric vehicles, in green industries, in sort of high tech,
Speaker 4: high growth industries that there's an increasing focus from Beijing
Speaker 4: to build out and we are increasingly seeing that dominate,
Speaker 4: and also, of course things like as Tom says, in
Speaker 4: very visible ways seeing evs appear on the streets in Europe,
Speaker 4: overtaking some of its sort of European competitors in certain
Speaker 4: markets too.
Speaker 2: So the property sector, we're thinking around twenty percent of
Speaker 2: GDP if you throw in the related industries.
Speaker 3: What China caused. The new economy is a bit smaller.
Speaker 3: It's about seventeen percent of GDP, and new economy, according.
Speaker 2: To China's official statistics, grew about seven percent in the
Speaker 2: first half of the year. Property investment trunk eight percent,
Speaker 2: So you've got a drag there on demand.
Speaker 3: That is slightly larger.
Speaker 2: And that's just the reality that China is dealing with
Speaker 2: at the moment.
Speaker 5: Rebecca, you said earlier that there is this social compact
Speaker 5: in China that people will trade some personal freedom for
Speaker 5: economic security and well being. Do you think that this
Speaker 5: economic stress poses any kind of risk to Ji, that
Speaker 5: people will become dissatisfied?
Speaker 4: Well, I think between people being dissatisfied and worried about
Speaker 4: their personal wellbeing or their personal wealth and kind of
Speaker 4: existential threat to seed Imping and the party is quite
Speaker 4: a big gap, and I think no one is really
Speaker 4: talking about the latter. But I do think that this
Speaker 4: is really one of the biggest, if not the biggest
Speaker 4: tests that seeds Imping has faced in his lifetime. For
Speaker 4: a decade, he has overseen China with economic growth, and
Speaker 4: so his vision of what he's called the China Dream
Speaker 4: that he set out when he came into that top job,
Speaker 4: the rejuvenation of the Chinese people, both at home and
Speaker 4: broad was, in a sense, you could argue, an easier path.
Speaker 4: We had growth rumbling on behind him. We also had
Speaker 4: an easier international diplomatic landscape too, And now he's juggling
Speaker 4: with these really thorny issues that he is trying to
Speaker 4: tackle in the economy, albeit to create a more sustainable
Speaker 4: type of growth, as well as this thorny issue of
Speaker 4: increasing tension with the US, the perennial risk that's raised
Speaker 4: over a Taiwan conflict, as well as this shifting balance
Speaker 4: of power in the Indo Pacific. So this is a
Speaker 4: very very different set of problems than the ones that
Speaker 4: he faced a decade ago. And to Tom's point, I
Speaker 4: think that the confidence issue in China and changing sentiment
Speaker 4: is really one of the toughest things that a policymaker
Speaker 4: can do. Because even as we've seen in this really
Speaker 4: big sort of push, this positive messaging blitz that we've
Speaker 4: had from various regulators authorities, with this drip stream of
Speaker 4: positive news promising to support various parts of the economy
Speaker 4: without much follow through, can only last for so long.
Speaker 4: And that's partly when you look at markets, for example,
Speaker 4: while you're seeing all these quite grim milestones being reached
Speaker 4: across Chinese assets, it's so difficult to change that mood
Speaker 4: music in.
Speaker 5: China when we come back, well, things get worse before
Speaker 5: they get better. Tom, what are you looking for in
Speaker 5: the months and even the years ahead.
Speaker 2: The big question I think hanging over China's economy is
Speaker 2: how long does this downturn in the property sector last for?
Speaker 2: And when do we reach a point where the government
Speaker 2: and where residents in China, who ultimately drive this market
Speaker 2: get back into buying again, and so this market stabilizes.
Speaker 2: It doesn't have to grow again, but it has to
Speaker 2: at least stabilize.
Speaker 3: It seems like we're still quite far away.
Speaker 2: From the end of this property shrinking era, and I
Speaker 2: don't think anyone can really tell you how.
Speaker 3: Much longer that's going to go on. It's already gone.
Speaker 2: On for two and a half years, and that's much
Speaker 2: longer than anyone expected.
Speaker 4: And for many months last year, for example, people were saying,
Speaker 4: we're at the turn, just about to turn the road
Speaker 4: when it comes to the distress property cycle in China,
Speaker 4: and yet here we are again. And the other slightly
Speaker 4: more worrying element is that we are seeing some of
Speaker 4: that stress spread from China's private developers to its state
Speaker 4: owned developers. Now they so far have been quite shielded
Speaker 4: from this, but simply by the fact that people aren't
Speaker 4: buying properties anymore and that prices are declining, we had
Speaker 4: eighteen and thirty eight listed state builders reporting losses in
Speaker 4: the first half of this year. That is highly unusual
Speaker 4: for China, and it suggests that we have quite a
Speaker 4: long road to go to stabilize this industry, and that
Speaker 4: even the state sector of this industry, who were once
Speaker 4: expected to sort of be the saviors to come in
Speaker 4: to help consolidation in that industry to buy distress private
Speaker 4: assets from other developers, now they are starting to run
Speaker 4: into trouble too.
Speaker 2: So what we know is that Chinese property sales peaked
Speaker 2: in twenty twenty one at about two point three trillion dollars,
Speaker 2: and then last year they fell to about one point
Speaker 2: nine trillion dollars, and people think they'll fall a bit
Speaker 2: more this year. But we know that there is demand
Speaker 2: in China for housing fundamentally because like everyone else, Chinese people,
Speaker 2: because the rest of the economy is growing and their
Speaker 2: wages are growing, they would like to live in bigger
Speaker 2: and better houses. And also you've got an ongoing urbanization
Speaker 2: process in China. People are moving still from the countryside
Speaker 2: to cities where they can earn more money, and so
Speaker 2: they buy houses when they do that. And the question
Speaker 2: is when does this drop hit against.
Speaker 3: That fundamental demand, And.
Speaker 2: So this full can't last forever, but nobody can really
Speaker 2: tell you how long it's going to last.
Speaker 5: Rebecca Tom, thanks so much for coming on the show.
Speaker 4: Thanks for having us. Wez pleasure to be here.
Speaker 5: Thank you, Ez, thanks for listening to us here at
Speaker 5: the Big Take. It's a daily podcast from Bloomberg and iHeartRadio.
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