China's home ownership is 90% versus 65% for Australia. If it's a good thing politically, the Australian government would have crashed the property market. If the US raises rates too quickly, it might put pressure on China's monetary policy and worsen the property collapse. Since the pandemic, the game has changed to who has the biggest to lose. If I lose a finger and he loses his arm, that's a win for me.
They will probably try price controls first. That always seems to be in the playbook somewhere. The same old failed attempts every time like a fish out of water. It would be an easy way to destroy the rest of small businesses that are left. Europe will probably do price controls too. Win win!
As I understand China has much more control over money Flows compared to Australia and this is a strategic attempt at pulling capital away from property into other more productive sectors as property has become too large a proportion of GDP going forward. As I can tell it’s a balancing act to not bring down the whole property market and containing it to one large institution and its creditors. One theory I heard is Xi XinPing is trying to seem to be doing something about property prices while making long term strategic decisions on the flow of capital, but will back stop last minute to appear to be saving the day if it gets to that point. I digress.... So to confirm you are saying in the event USA raises rates, this will put pressure on China institutional debt repayments and in turn collapse the property market and likely any debt market? And this would be good for USA?
US raising interest rates triggered the Asian financial crisis 25 years ago. I would expect the same to repeat with China this time and much worst if it coincides with a pandemic that China has so far kept out which is becoming an unwise decision with rate hike possibility. There's no one size fits all. China is a huge country with massive income disparity. Using the same policy for everyone will eventually create disaster. The concept of Communism and dictatorship is never Chinese, it's from the West. Marx and Lenin are Europeans, not Chinese. What works for Europeans don't work for Chinese. Never mind it doesn't work even for the Europeans. The Han dynasty which the current ruler in China is trying to replicate is nothing like the PRC today. The Han dynasty was almost like a constitutional monarchy. The provinces have a lot of autonomy and power, the governors and kings even had their own private armies. The state ideology was Taoism which advocates low taxation and minimum central government regulations. The economy was capitalist. Taoism is Chinese. Communism is West imported ideology. In a way, ancient China was more similar to present today USA, the only difference is there are no elections. The Chinese states were autonomous, the power of the emperor is very limited and restrained by the governors, the regional kings, the nobility and by the Confucian scholar class. The emperor is not a dictator. Dictatorships are a Western invention. Ironically, the USA is more similar to ancient Chinese dynasty. https://en.wikipedia.org/wiki/Society_and_culture_of_the_Han_dynasty
Brilliant insights. When you say disaster are you referring to social political disaster and do you see the country returning back to mean in its horizon in the event of such collapse?
It will probably be only economic for now. The current political situation suits the global elite well. Let put it this way, if China had a "democratic" system, even a half one, they would have exceeded the US and EU. Of course, socially, a lot of people will be wrecked. People that poured in their life savings into the property will see no retirement and will have to forego medical treatment.
