Chinese economy is successfully reorienting away from real estate towards high tech
functional government
Speaking of functional government, provinces rely on land use sales of various lengths. Many of them heavily overborrowed to build out infrastructure in anticipation of future land sales that are now lower or non-existent. And meanwhile, the real estate crisis is still quite active.
If the Chinese government was so special, it should have learned from the US’s issues with companies that posed a systemic risk with inadequate oversight. Instead, they let Evergrande and others become way too large with too little oversight. They should have taken a cue from the financial regulators in the US, which identify systemically risky companies and imposes onerous regulations. Then at the height of the real estate bubble, Xi introduced a new set of policies that immediately popped the bubble instead of trying to ease it down. Too often, Xi in particular seems to work on principles like “people should invest wisely” instead of “if I introduce this policy, it will cause problems.” The good news is that China does seem to be listening more lately, but it’s already done damage.
Speaking of functional government, provinces rely on land use sales of various lengths. Many of them heavily overborrowed to build out infrastructure in anticipation of future land sales that are now lower or non-existent. And meanwhile, the real estate crisis is still quite active.
If the Chinese government was so special, it should have learned from the US’s issues with companies that posed a systemic risk with inadequate oversight. Instead, they let Evergrande and others become way too large with too little oversight. They should have taken a cue from the financial regulators in the US, which identify systemically risky companies and imposes onerous regulations. Then at the height of the real estate bubble, Xi introduced a new set of policies that immediately popped the bubble instead of trying to ease it down. Too often, Xi in particular seems to work on principles like “people should invest wisely” instead of “if I introduce this policy, it will cause problems.” The good news is that China does seem to be listening more lately, but it’s already done damage.