Faces Surprise Revolt From Chinese Homebuyers on Mortgage Boycott
Mortgage boycotts spread across 301 projects in 91 cities
Chinese leader facing domestic unrest on a range of issues
Rebecca Choong Wilkins
July 19, 2022
For months Xi has stood firm in reining in over-leveraged Chinese developers, spurring a record wave of defaults that spooked global investors and brought at least 24 leading property companies to the brink of collapse. In the process, more than $80 billion has been wiped from its offshore bond market.
But now ordinary Chinese people are publicly revolting, with rapidly escalating boycotts on mortgage payments spread across at least 301 projects in about 91 cities. These homeowners accuse developers of failing to deliver apartments they’ve already paid for: the value of mortgages that could be affected has swelled to an estimated 2 trillion yuan ($297 billion).
The Virus and a Contagion Like a Virus
The virus began in the Wuhan Institute of Virology (中国科学院武汉病毒研究所). It then spread at some point to the Huanan Seafood Wholesale Market (武汉华南海鲜批发市场) of Jianghan District. It so happened that there were interactions between the vendors of the market and those supplying dishes at the the Baibuting Banquet( 静观天灾人祸) in the Jiangan District of Wuhan. Forty thousand families attended the Party which was held on January 18, 2020. Wuhan itself was then locked down. The rest as they say is history. As of July 18, 2022, there are 6,369,518 people who have died of COVID-19 on a world-wide basis.
A Contagion like a Virus
It started as trouble with China Evergrande Group of Shenzhen.It defaulted on its dollar debt for the first time on December 09, 2021. The trouble extended like a virus to other developers in China when they had to pay an average 26% on their debt. Bonds then dropped to a record low of 81.6 to the dollar.
In April 2022, four rural banks in Henan province stopped customers from withdrawing deposits. This triggered a bank run. Several protests in Zhengzhou, Henan took place. The Health Code was used to prevent protesters from travelling. On July 10th, a protest by 1000 people turned violent. As a result, the CBIRC announced it would start reimbursing customers to some extent.
A movement also began in China to default on mortgage payments on pre-bought properties that remain unfinished by property developers. The "stop mortgage repayment" movement has spread to 301 projects over different provinces and 91 cities. It so happens that Yingyang District of Zhengzhou was one of the 91 cities. It is said that "Property has been getting steadily worse the whole time; prices, sales, starts, all terrible,” said Craig Botham, chief China economist at Pantheon Macroeconomics in London.
The phenomenon of ghost cities, though, throughout China has been developing since the early 2000's. A Chinese ghost city lacks an economic base. One might say they are dreams unfulfilled. While 90% of households in China are homeowners; nevertheless, up to 30 million homes have not been sold and about 100 million have been sold but not occupied. (edition,cnn.com) It seems the supply exceeds the demand in a highly, speculative market.
One might say that the housing market is saturated. No wonder owners are defaulting on new, pre-built homes where construction has halted. Default is not so much a choice as a necessity. There seems no quick fix for either Omicron or property issues before the 20th Party Congress.
D. Carlton Rossi
July 20, 2022
Chinese homebuyers halt mortgage payments on unfinished projects
July 14, 2022
In the latest blow, a growing number of homebuyers have refused to make mortgage payments if developers do not resume construction on units already sold.
As of Wednesday, homebuyers had halted payments for units in at least 100 residential property projects in 50 cities, according to data from research firm China Real Estate Information Corporation (CRIC).
At the moment, the refusal by buyers to make mortgage payments on pre-sold and unfinished units is a small percentge of sales. However, it may mark the beginning of a financial crisis precipitated by failures in the real estate sector which are roiling the banking sector. The riots in Henan are another symptom of distress in both sectors.
China faces 'complex and grave' job market, warns Premier Li
Laura He, CNN Business
May 9, 2022
One of China's top leaders has painted a grim picture of the job market in the world's most populous nation, as widespread Covid lockdowns slam the brakes on the economy.
Chinese Premier Li Keqiang — the No. 2 in the hierarchy of China's ruling Communist Party — called the employment situation "complex and grave."
Most recent data from the government shows that unemployment hit a 21-month high in March, and that was before China extended the lockdown in the financial hub of Shanghai, and enforced tight restrictions in Beijing. The jobless rate in 31 major cities even surged to a record high in March.
It seems more like a self-inflicted crisis. When so-called "capitalist roaders" are imprisoned, supply chains are interrupted by ZER0-Covid lockdowns, tech industries are forced to lay-off in order to meet more stringent restrictions and inflation erodes purchasing power then how can it be called anything else?
Small banks in China are running into trouble. Savers could lose everything
By Laura He, CNN Business
June 24, 2022
About a quarter of the industry's total assets are held by around 4,000 small lenders, which often have opaque ownership and governance structures and are more vulnerable to corruption, say experts, and the sharp economic slowdown.
"The scope of the bank scandals where bank officials embezzle and steal funds from depositors is alarming, and what is exposed could only be the tip of the iceberg," said Frank Xie, a professor at University of South Carolina Aiken who studies Chinese business and the economy.
Runs on small Chinese banks have become more frequent in recent years and some have been accused of financial improprieties or corruption. But experts worry that a much bigger financial problem could be looming, caused by fallout from a real estate crash and soaring bad debts related to the Covid-19 pandemic.
100,000 Chinese officials attend emergency meeting to revive Covid-hit economy
By Jessie Yeung, CNN Business
Updated May 26, 2022
China's cabinet held an emergency meeting with more than 100,000 participants on Wednesday, according to state media, as top leaders urged new measures to stabilize an economy battered by the country's stringent Covid-19 restrictions.
Investment banks are slashing their forecasts for China's economy this year. Earlier this week, UBS lowered its full-year GDP growth forecast to 3%, citing risks from Beijing's strict zero-Covid policy.
There isn't a clear end in sight to the crisis, with authorities still struggling to contain the spread of the virus and top leaders insisting on pushing forward with zero-Covid.
One good economist is better than 100,000 party participants. What is Sheng Hong (盛洪) saying? He was a co-founder of the former Unirule Institute of Economics (天则经济研究所) in 1993 which was shut down due to government pressure.
Simulation and comparison of several epidemic prevention models / Sheng Hong
Posted on 2022年5月23日
Epidemic prevention and Article 35 of the Constitution / Sheng Hong
‘China’s economy is coming to an end’: Shocking revelation from a bank clerk
Romina Garcia 15 hours ago
Strange movements in the Bank of Nanjing
The Bank of Nanjing’s situation caught the attention of Chinese social networks for its strange movements. On July 1, Ming Fei, an analyst at Western Securities, was fired after disclosing the bank’s debt crisis. Then he allegedly died from unknown causes, according to social media reports. The bank’s president resigned, and financial executives from large corporations immediately took the position temporarily to “stabilize financial risks.”
Fei had posted on his social networks and commented among his circle of friends that the Bank of Nanjing’s deficit came from debts caused by the Chinese regime and not from mismanagement of investments. He also reported that the bank was not sourcing money from customers but pensions, social insurance, and provident funds. He added that the bank granted loans only for industrial enterprises, the purchasing of real estate, and the regime’s projects.
On July 3, the Bank of Nanjing unexpectedly issued a statement announcing that the bank would use a new name: “Bank of Nanjing Co., Ltd. Explaining that due to long service life and serious wear and tear, the name or seal would be changed, “to facilitate the smooth running of various tasks, our bank decided to replace the seal.'”
One supposes that "Ltd" in the new name is the key to an understanding of the matter as it may pertain to liabilities.