What is and has been happening in China is a general consolidation in the Real Estate market. Speculation has ended. Now the lenders have to sort our the situation and since lending is pretty spooky anyway, it may actually work out. I am sure we will see spectacular defaults but that goes with the territory.
Real Estate Crash In China: Foreign Funding Down 80%, Land Sales Down 57%, Starts Down 27%
The report confirms many of the things I said would happen in regards to the Chinese real estate bubble and GDP.
Here are a few items of note.
Developers, burdened by 70% leverage ratios and loans threatening to come due, rushed to complete projects already in their pipeline, to put those units onto the market and raise cash.
That rush to complete inflated real estate investments, allegedly up 23.5% in the first quarter. Other statistics from the report tell the real story.
Clearly a crash is underway. The above stats also show the soft-landing thesis is written on toilet paper.
I like the analysis by Chovanec on GDP implications and the highly-overrated "soft landing" theory.
Nails in the Hard Landing Coffin?
One of the sillier stories making the rounds earlier last month was China currency move nails hard landing risk coffin
I responded at the time with ...
Mike "Mish" Shedlock