this post was submitted on 03 Feb 2024
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A Hong Kong court ordered the liquidation of China Evergrande, the world's most indebted property developer.

Evergrande has assets of about $245 billion, but owes about $300 billion.

Its demise is a "controlled collapse," but still raises systemic risk and will hurt investors, says an analyst.

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[–] partial_accumen 65 points 9 months ago* (last edited 9 months ago) (3 children)

is a symptom of a deeper malaise in the Chinese real estate market.

Its even worse than that because retail investors in China use real estate as their primary investment vehicle. Where as someone in the USA might put money in a 401k for retirement or a brokerage account for investing, those don't exist (in the reliable way) in China. So many regular people's nest egg is tied up in real estate. So this isn't just the real estate market getting wiped out, its millions of working class people's life savings just evaporated.

[–] Burn_The_Right 15 points 9 months ago

Goddamn. Thanks for the perspective. This is much more horrible than I thought. It sounds like vulnerable working class people are going to be hurt the worst.

[–] [email protected] 11 points 9 months ago (2 children)

Not just a China thing. Canada is absolutely fucked with the government floundering to try and keep house prices from falling

[–] partial_accumen 23 points 9 months ago (2 children)

Correct me if I'm wrong. I know that Canadian home prices are bonkers, especially in large cities like Vancouver or anywhere in the GTA (are the Quebecois also having this trouble?). However, the problem with Evergrande isn't just failure of this company reduces home prices (which is where lots of Canadian savings resides), but Evergrande had taken deposits for tens of thousands of homes it never built or never completed.

So while the value/sale price of a home in Canada may be falling. At the end of the day it still does have value monetarily, and still serves a vital function of housing a family.

China's situation with Evergrande means the money paid for the house by the owner simply evaporated with no possibility of a refund and the house doesn't exist because it was never built (or never completed). So to me the China situation looks significantly more dire.

[–] [email protected] 2 points 9 months ago

Nah, they way things are, if the canadian housing market falls, the whole economy will shit the bed. The GDP is currently driven by the housing market, the nations finances are literally built on a house of cards.

[–] [email protected] 2 points 9 months ago

Is that specific to rural areas? I'd be surprising to see urban prices dropping.

[–] [email protected] 1 points 9 months ago

That sounds like potentially violent "protests" in the future.