Chinese developer Shimao misses $1 bil bond payment


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And so it continues!

It’s like watching a slow motion car crash.

The question is how far will this go and what will be its wider impact both on China and the wider world?

5 ( +5 / -0 )

China's tax base relies heavily on property appreciation (almost all property is technically owned by the state), with income and other taxes making up only a minor fraction. In the event of a full-scale crash (which is very likely), Zhongnanhai will have few of the recourses western countries do during a bubble collapse. This is uncharted territory.

5 ( +7 / -2 )

almost all property is technically owned by the state

All urban land is owned by the central government. City dwellers can own their car, their personal and business property and their building, but not the land beneath the building. Farm land is owned by the cooperatives that farm it. There is no privately held land anywhere in China or Hong Kong.

6 ( +6 / -0 )

The greater danger than the tax base is that the building industry in China compromises about 30% of their GDP. China has something on the order of 40 million new "homes", really flats in high rise condo complexes, that are sitting unsold. That is enough empty housing to house the population of Germany. The problem is that China's workforce began to decline in 2011 and their absolute population is just starting what will likely be a prolonged period of steady decline. China doesn't need to build new housing. It has a surplus and that surplus is going to grow. This means the demand for new housing will collapse and with it the building industry. China is on the cusp of losing a large chunk of its GDP. That in turn has broader implications for the Chinese economy and social stability there.

4 ( +4 / -0 )

Pray for China...

-8 ( +1 / -9 )

one question.what jpn gov did to solve "disputet" islands with their neigbours?

Russia-imposed sanctions

ROK empty neverending talk


how they want solve these issues for once and forever?just wondering...

-5 ( +0 / -5 )

The beginning of the crash. The Chinese Communust party, in their singular pursuit of money, allowed development to get out of control to the point of this crash. There are thousands of empty developments that will never see any occupants. This will make the Lehmann shock look like a tiny blip.

Pray for China...

Nope. This impending disaster was brought on by pure greed for money.

4 ( +4 / -0 )

So many cracks opening across the global economy.

0 ( +1 / -1 )

In anything resembling a free market economy this would cause a crash or at least a serious recession, but China isn’t anything approaching a free economy, ultimately the state or more accurately the CCP will fudge the numbers, change the rules, impose their “narrative” (ie propaganda and lies) to placate the masses and use extreme force if necessary thus ensuring their continued grip on power. Don’t expect to see any CCP leaders or party “princes” living in poverty.

1 ( +1 / -0 )

This is going to be China's big real estate/bank bubble bursting ala. Japan 1989/90.

Over speculation.

1 ( +1 / -0 )

Worse yet, the Chinese government somehow allowed personal data on one billion citizens to be hacked - and it's now being sold on the dark web. Bank accounts, health records, the who shebang. Probably won't get reported by the legacy media.

2 ( +2 / -0 )

the reason for its struggles It is not COVID itself, is the irrational reaction of the chinese government that used the pandemic to tighten control of anything that could challenge its power, too bad for Shimao but that is what you get by giving all the power to the CCP

2 ( +2 / -0 )

China kept building ghost cities over decades, not for people to live in but for investments. People kept buying as they build those ghost cities in hope of selling them. Keep building homes that are not expected to be occupied is a pyramid scheme. Properties and related industries are now more than 25% of China's GDP. And the 40% of local governments fiscal revenue are from those property sales. The burst of the bubbles will be painful.

2 ( +2 / -0 )

@ Seigi

I did, but they still exist.

1 ( +1 / -0 )

Commanteer, not sure if you regard the FT, Reuters, The Guardian, Metro, Fox News or The Independent as legacy media? All reported it so far. That volume of information should provide reams of useful data to academics! Surely no criminals would make use of it!

1 ( +1 / -0 )

Greed and stupidity will be China's down fall. The economy is tanking worse that reported. Xi is in trouble if the economy does not get any better he will lose power. He has taken the rich which are many cabinet members on a spiral down fall. The craziest thing is the mint which prints money were printing duplicate serial numbers for the money in circulation so there is more money out there in the hands of those in office. The system is so corrupt. China has relied on real estate and companies are no longer hiring, they are asking employees to take 50% pay cuts. These employees can barely pay their mortgage notes so many loans are going into default. The land is own by the state, so now the state is talking about proposing "property taxes" on those who own homes. LMFAO when the state sends the bill expect it to be a whopper!!! You have more middle class citizens in China than ever before, you have many new graduates who now can't find jobs and are now Uber delivery drivers. The world economies are tanking but China's economy will get hit hardest because of too much corruption and greed!

1 ( +1 / -0 )

Chinese companies were newbies at capitalism and made a lot of the traditional mistakes, often at a much larger scale.

For example, their financial health was based on continued expansion. This is not unusual, globally, despite being unrealistic and unwise. Given the size of the property market in China, the investment bubble, the impact of Covid Zero and Xi's determination to walk back to old school communism, the sector is facing a perfect economic storm. Xi will take it down and remake it as he wishes it to be.

The government will focus on the essentials for social order, but to re-establish communist values, a lot of people and their cash are going to hammered along the way.

Memo to Washington: You no longer need to worry about China nicking Top Nation spot. Xi is taking all the bits that scared you down, piece by piece, to rebuild his Communist promised land. It's an age/legacy thing. The same reason why Putin is trying to recreate the USSR. Dictators hit a certain age and the nostalgia kicks in. Ordinary guys that age just buy a leather jacket and try to date women half their age. Also unwise, but less damaging to global stability.

3 ( +3 / -0 )

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