China's International Debt Crisis
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- čas přidán 26. 07. 2022
- In 2013 President Xi Jinping announced the launch of his signature policy, the Belt and Road Initiative, the largest transnational infrastructure program ever undertaken by a single country. Today though, many of the loans financing these huge infrastructure projects are going bad and going bad in record numbers.
Today's video looks at the Belt and Road Initiative, how the projects are going and how recent events like Russia's invasion of Ukraine are affecting debtor nations like Sri Lanka, who defaulted on their sovereign debt in May of this year.
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As always, your content is amazing even before it begins xD
Your direct, unbiased view on pertinent financial topics is refreshing...
I truly appreciate the content you provide.
😎👍🏼
You do know that alot of U.S. millionaires and billionaires are heavily invested into China right? Bill Gate, Elon Musk, Ray Dalio, Tim Cook and even Trump. You do know that all those companies give up their intellectual property rights, right? Now America is actually $91 trillion of debt and they owe China trillions of dollars.
Hey Patrick, I think your analysis makes a lot of sense thinking from a bank perspective: loans are given out to be repaid and to be profitable.
However, the belt and road initiative is a State project and it may be better to look at it as a jobs and international relations program. Yes, the loans may be unsustainable, but by the time the defaults come workers have already been paid, machines have already been bought and productive infrastructure in strategic places to China has already been built.
It is true that the value of that infrastructure is lower than what the loan would require, but it's value is not zero. Specially when you look at the return of the infrastructure on itself + the additional growth it has brought to the Chinese economy indirectly through induced demand and reduced logistics costs.
In that perspective, the questions you ask briefly at the end of the video may be the most important ones.
- How could china deal with the bad loans? What is the total amount of write offs that may be required?
- What would be the impact on Chinese and global economy of China writing those loans off? How would interest rates, inflation and growth be affected?
- Would a new round of stimulus borrowing be a viable continuation of this 'lending as state planing' strategy?
I would like to recommend China update for daily news on the Chinese economy. Tony is very good czcams.com/users/ChinaUpdate
If you owe the bank $50k and you can't pay, you have a problem. If you owe the bank a billion and you can't pay, the bank has a problem.
Old saying in part, but absolutely on point
If you owe the bank a trillion and can’t pay, the government has a problem.
Just delete the app
Put it in another way, if you can only borrow $50k from the bank, it means the bank management is doing the job properly. But if you can still borrow $500 million, then the bank is either stupid or the bank manager in charge & you have some hanky panky deals going on.
Actually it is the taxpayers problem because banks will always be protected by the government
You always have the most straightforward cut to the chase content of anybody from the finance world thank you for doing this
His first 4 minutes are pure nonsense. Just repeated myths. Such as the Marshall plan being about helping US industry.
@@bighands69 Evidence?
@@subject_7
Read the Mutual Security Act. That is all I need to present.
Irish accent obviously but what else is in their too? I can't figure put my finger on it..... 🤔🤷♂️
@@bighands69 this doesn’t really invalidate what he’s saying though. It’s just another version of the Marshall plan with similar goals
Watching Patrick Boyle is a lot more informative than Watching Bloomberg, The Economist and other mainstream outlets!
The Economists is like grad students (like me) writting stuff for free, I need someone with deeper knowledge
I'mnotsureanyonethatdidn'tgrowupinNYCcanactuallyunderstandBloomberg...
What do you think that Patrick reads? Bloomers, The Economist and other mainstream media. It is your problem that you do not understand it.
@@stupidbro2301 LOL ur an npc if you think that
@@stupidbro2301 OP never said that they "didn't understand [Bloomberg, The Economist, etc]", they said that Patrick is more informative.
Slavery part I can confirm, in my hometown in Serbia one big Chinese factory is built by Vietnamese workers who don't get regularly paid and their passports are held by managers. There are NGOs who try to help by donating food and clothes to the workers. Quite embarrassing situation for any civilized country...
These Vietnamese can either stay in Vietnam and get paid $200/month or go work in a Chinese factory and get paid $600/month. No one forced them to do it.
That's a common practice among businesses that employ illegal migrants in the United States.
@@hemiedwards217
That is not the practice in the US so stop with the nonsense and pretending the US is like China.
@@hemiedwards217 the US does use illegal immigrants but they aren't slaves, they still get paid a hell of a lot better then they do in their home country.. otherwise why would they be there?
@@bighands69 “Hey John, look I found a US stan!”
There's certainly a slowdown inside China as consumption drops. After four years here, I've noticed the change. Many Westerners have left and there is a surplus of excellent Chinese graduates around. Salaries are lower, getting jobs or changing jobs is difficult but, oddly enough, education is still in demand.
Education will always be in demand as it has been promoted as a vehicle of social mobility and a way out of poverty.
Just like in the US, people willingly get into debts for education, people in Asia have pretty much the same mindset.
The problem with the education the young are getting is the removal of western influence. Now it's just CCP propaganda being fed to the kids. As the world moves away from globalisation due to the actions of the communists and their superiority complexes, even the brightest of Chinese graduates will only ever find employment within China. This means les and less infiltration of western enterprises by those who are spies.
education can be one of the first bubbles in something good. similar to affordable housing in US. I won’t mind healthcare bubble now to create too good services for average user
@@AndyWallWasWeak we already have a bubble in healthcare. The administrative overhead costs in the USA I would guesstimate are 4 times those of the OECD and they are better staffed with more employee benefits.
Lol may be a liberal arts graduate
We are already in the big crash, Inflation is a
catastrophe. This CPI report is a colossal failure. To bring the housing market to a halt, the FED will have to pull all the stops. The unfortunate issue is that other markets are being decimated.If you want to stay green, you have to rely on a lot of diversification. Currently up 14% and being careful. Still a better deal than leaving it in a savings or checking account yielding 0-1 percent interest.
If you are not in the financial market space right now, you are making a huge mistake. I
understand that it could be due to ignorance,but if you want to make your money work for you, prevent inflation from eroding your savings, build generational wealth, and cultivate good habits and financial knowledge, you must be in the market.
I just love the way Patrick presents his analysis on whatever he's reviewing. It's like Walter Cronkite. Here are the facts, do with it as you will. Love his videos. The Musk Twitter one is still one of my faves.
same - the timing at which he published the video was so perfect as well - he is my fav channel
Like how news is supposed to be reported.
He does have his moments of opinion though. His Elon Musk videos have been quite out of character at how one sided and subjective they are. The best part of course was never actually disagreeing with Patrick's overall opinion that Elon Musk would pull out, yet having people gloat thinking I had been proven wrong about something. He's also known for his dry humor, which is inherently subjective in nature.
His Elon Musk vids were not subjective. Elon's fans just dislike the truth.
@@lentilgod58 do you really not see how it's possible for Patrick to be overall right about Elon as a businessman but not as a person? It seems like it's impossible in your mind for someone to disagree with the over abundance of character jokes but not the overall idea that the Twitter purchase was likely to fall through?
What a fantastic and well-balanced analysis. I have seen hour-long documentaries about the Belt and Road Initiative that were not nearly as informative as this 20-minute video. Subscribed.
Dude still is wrong about alot of issues
@@chrissi.enbyYT I think not. It’s thoughtful analysis. Come back to this in 2 years and you’ll see how right he is.
@@kknudsen4907 China can absorb more than others. It will take a long time
@@chrissi.enbyYT You should explain what was wrong.
@@randomaccessfemale This CZcamsr is lying and simplifying alot of times. Yes China is on decline. But decline can be 1 year to 10 years.
The CZcamsr here often says shit about stuff and doesnt accept and other truth. Self important, all knowing entity lol
Best financial CZcamsr by far. Thank you for sharing your knowledge
He said stuff like the US only became an industrial powerhouse after WW2. It is flippant statements like that which gives me pause.
China loans themselves are not bad but somehow they seem to be giving more and more loans only to countries where the govt is corrupt or weak. A govt which doesn't question projects that in no way help the local economy is surely not a viable one and certainly not looking after its economy properly.
Chinese loans are not given out to help foreign countries, instead they're given out to prop up China's own manufacturing, shipping, and construction sectors. In short, colonialism with Chinese characteristics.
Its truly a double edged sword.
@@Confucius_Says... Also the dual-use infrastructure for any future chinese military use.
You have to wind back all the way to 2008 to see the whole life of this whole thing
Back then china embarked on a huge domestic infrastructure project to try spark demands and jump start the economy and even that yield mixed results at best
Premier Wen when meeting western leader quite rightly acknowledged that the lack of demand was a issue globally
China then went big and extend those projects on a global scale
If doing it domestically resulted in a mixed bag at best it's easy to see what's going to happen when you doing it far flung corners of the world out of your own jurisdictions in places that often lack the institutions to make sure good use of money
@@vinniechan But you don't understand.... These infrastructure "assets" also help China in Asset Stripping the countries they're built in...
Patrick is one of my favourite presenters of finance & economics. Despite being experienced in international finance, I find I still have a lot to learn from Patrick. Great job.
He is talking mostly fundamentals. I suspect you know more than you give yourself credit for
Wow, an extremely non bias report that focus on facts and numbers! This is why Patrick is the best financial analysis youtuber!
Oh really?
OK... Normally many of Patrick's reports are very well thought out, informative and well presented... shame he spoilt this one by
regurgitating some of the usual western sheeple fodder which really showed by quoting the Financial Crimes presstitutes.
According to them and most of this regurgita... oops, sorry... "report", China "is in trouble". Maybe China should try
bombing the countries into the stone age first, use the "morals" and "ethics" of the "united" states and king-CONNED-om or the IMF and
spread some freedumb and demonocracy instead...
Then there's the internal debt crisis.
How is he able to make such a complicated story into a superbly written script that is easy to absorb? He doesn't even rely heavily on a constant photo roll, its mainly just him talking. Superb!
I guess one of the big differences between the Marshall Plan and the Belt & Road initiative, is the Operating System (culture) of the developers and the beneficiaries. In the case of the Marshal Plan, the main beneficiaries were Europe and Japan, both places with an Operating System privileging hard work and education, at the same time the US Operating System at that time also matched that of the beneficiaries (at least in some critical points).
Nor should we forget that the beneficiaries had to start from scratch, which, terrible as it may seem, sometimes makes the reconstruction process easier (sometimes trying to modify what already exists is much more complicated).
In the case of the Belt&Road initiative, I am not so sure that the Plan Marshal's context is matched, the beneficiary countries are more heterogeneous, and many of them start from a bad base to really absorb the benefits of the aid (which of course is not altruistic - it never is, but that doesn't mean it's automatically harmful-). In my opinion, the lack of transfer of skills is a symptom of this situation. In the case of the Marshal Plan, the beneficiaries were already an educated population, therefore the transfer of skills was relatively simpler.
At the same time, China is a very different country from the USA, and I have my doubts that its culture is "easily" exportable.
With this I do not mean that the Chinese initiative is going to fail, but the conditions from which it starts are very different from those of the Marshal Plan, and at the same time that it is much more ambitious in a much more complicated geopolitical context ... let's say that the Chinese are playing a very difficult match ..
Nah, let's make the difference really simple.
The Marshall Plan is based on a very generous Lend-Lease plan which makes it really easy to repay the obligation, and if necessary even that can be amended. The reason is because the Marshall Plan didn't exist primarily to colonize Europe as subjects in an American empire, the American concept has always been based on laissez faire capitalism and liberal democracy where individuals who can stand on their own can be be helped and shouldn't be made vassals or slaves. Those who are helped don't usually turn on you, and every individual's self-fulfillment maximizes the benefit to all.
This is completely antithetical to autocracy. Trumpism, Russia and China don't believe in individualism and liberal democracy, others exist only to serve whoever is most powerful and BRI projects reflect this philosophy that China has to get something in return in the form of a debt obligation that starts quickly upon completion of the project and is likely onerous. Unlike the Marshall Plan, the primary motive for China is not altruistic but to be certain it gets compensated for its work. Host countries are victimized because there's a reason why they're poor in the first place... They don't known how to make deals and deals that are fair. They can't do sophisticated business plans. They can't see the dangers of a BRI project that doesn't generate revenue.
@@tonysu8860 Assuming today the existence of a regime of pure love and peace, with totally altruistic desires for the rest of humanity, if that regime lends large amounts of money to a country that does not have the basic conditions to develop itself (what which was not the case in European countries or Japan after the war), that loan is highly likely to fail (failure for me is that the loan does not serve the country to continue developing itself from the benefits obtained in the initial loan, which in turn means that it will not be able to repay the initial debt).
That was what I wanted to highlight in my first comment, without making any assumptions about the lender's intentions, which may or may not be altruistic. I personally do not believe that there is any case of altruism in the geopolitical game (only interests and power), but that it is not altruistic does not mean that it is necessarily negative.
Now, going in particular to the intentions of the USA, well, it may be that immediately after the second world war it was a fundamentally "benign" entity (that is, not altruistic, but it did follow the "live and let live" motto). Currently, I guess it mutated to something else, I would recommend you to watch the following video on YT: "Col. Richard Black: U.S. Leading World to Nuclear War".
The latter also does not mean that China, Russia or other regimes are the "good guys", just that the reality is a little more complicated than it seems, or it is sold to us ..
Patrick's analysis always make me want to open up the trading terminal, and drop a few million in collateral debt put option writes. But I don't have a few million, and I don't know anything about finance.
@@loupasternak Seconded.
😂😂😂
Drop a couple of billion, then it's the banks problem, not yours
I wish you had the money to sell those puts... so I could be on the other side making my pockets happy.
You and Joey Garza should just trade privately whatever you can afford.
Patrick, thank you. Your content is an oasis of level headed analysis without any clickbait and sensationalism, which I really appreciate. I'm sure most of your viewers are on the same opinion. I'm an OG subscriber of Tom Nash whose content I also enjoy but lately he has been using clickbait so much that I got bad news fatigue and stopped watching altogether. Once again, thank you for your straight to the point analysis.
Since subscribing to Patrick’s channel, my IQ has gone up 15 points, my biceps have added five inches, and I’m on a date with a different Instagram model every Friday night! Thanks, PB 😎👍
LOL
Yeah.....ya dreamer!
Thanks Patrick. Do you think the financial situation in China will have a ripple effect on the west, considering their financial system is starting to show signs of a major collapse?
I think we need to stop softening the blow with the word “recession”. This is going to be a depression. 4 top economist agree on this. When the market reached high in mid 1930 it took until mid 1932 to reach the bottom. people can’t buy when they have no food, the trucks don’t have DEF to mix with the diesel to run (in all diesel trucks newer than 2009) No trucks-no food-no fertilizer.
@@cuddyb9631 Great points laid out Elliot. I am 51 & i have been working almost all my adult life. i am approaching retirement & i think this is the last window of opportunity for me to become a millionaire before retiring, as Recessions are where millionaires are created. Currently i have some lump sum in a savings account and will like to work with a fiduciary financial advisor to achieve my goals. Please how can i reach Susan?
between China and America, I’d pick America but between every country I’d pick Canada.
What debt crisis, Both China and the USA are printing money to pay their bills. Both will default on the dollar, it is all in the cards. The world will move to a basket of currencies as the reserve currency. Nobody is paying their debt back, only suckers are paying off their debt. At least Chine rebuilt their infrastructure, the US only has a bunch of corrupt politicians to show for it....
@@PhilipMurray251 without Dollar Hegemony US is nothing...
The best analytical report on China's Belt & Road Initiative, ever sighted. The summary of the data and comments are just excellent. Opine, this video will be recorded / quoted as a source material, for Finance studies and research, present and future times. Thank you, Professor !.
Oh really?
OK... Normally many of Patrick's reports are very well thought out, informative and well presented... shame he spoilt this one by
regurgitating some of the usual western sheeple fodder which really showed by quoting the Financial Crimes presstitutes.
According to them and most of this regurgita... oops, sorry... "report", China "is in trouble". Maybe China should try
bombing the countries into the stone age first, use the "morals" and "ethics" of the "united" states and king-CONNED-om or the IMF and
spread some freedumb and demonocracy instead...
Another excellent piece from Patrick. He presented views from both side and remain neutral, and provided a balanced opinion that's hard to argue against.
I usually don't listen to informative things without doing something else, like playing a game, or talking with people, etc...but man this is striking information that I was drawn into. And it's pretty worrying information too.
These videos are so packed full of information. So glad I found this channel!
Excited to see financial analysis on this topic, everywhere else I just see politics and propaganda.
Very concerned that financial insolvency in China will ripple out in a 2008-esque fashion.
@You The Chinese save by buying a property. So no, savings are not necessarily in a good state in China.
I think that the situation in China is on the way of becoming bigger than 2008 but somewhat more localised
Sorry, you will be disappointed, 2008 China went all out to save US ass, but this time round, China is not budging, that's why Biden has been trying to threaten, coerce, talk to China.
@@andreasabels589 data is what it is. Chinese have relatively more savings and no not in real estate.
2008 is still valid and in everyone's mind, when push comes to shove you will find western Europe US will go to ccp's rescue to avoid complete global financial failure. Putin in Ukraine has given a pause to both west and china's thinking, in terms of financial stability that every one desires.
Hey Patric, than you for your level headed assessment of the problems and what it could mean for China as well as the rest of the world. In the world of clickbate articles and sensationalizing every thing, no matter how significant your videos bring sober overview of the big events. Keep it up.
Love your in depth and not dumbed down video content. Thank you sir!
There is so much bad debt in the Chinese economy; internally, that the external deck might not seem such a big deal at some point
@@bluejar5614 right, the same way the Austro Hungarian empire's invasion of Serbia sorted things out for them
Very well spoken. Best reaserched and summarized video of this issue i've seen this far!
Much better break down than you get on CNBC or Bloomberg. Thanks so much.
With the rate of inflation ravaging Russia and the world at large, the economy is heading towards a severe recession and The best way to find that balance between saving and living is employing the services of a professional.
@@kaylawood9053 As with any big financial decision, it’s important to keep your guard up for economic risks. However, smart planning, time management and seeking advice from a Financial Advisor can help keep you and your money safe
@@cloudyblaze7916 I agree with you, Working with a financial expert remains the best way to deal with this market, I am no pro myself. That's why I consult with a prominent Investment-Adviser “Theda Helene Jackson” who i found on a CNBC interview were she was featured and reached out to her afterwards. She has since provided entry and exit points on the securities I focus on.
@@tariqomar1635 < I looked up the FA you mentioned on her webpage and submitted a form scheduling a call with her. I hope she replies soon.>
You can get US Fed I Bonds. Can only do $10000 per year but the interest rate is greater then inflation, so around 10%. Inflation will be high for many years.
Even pros fly blind during periods of great uncertainty. After all, they wouldn't need to work if they had all the answers.
Very informative, thank you! Aside from the malpractice in investments, there is also the bigger danger of when these constructions projects are built due to the poor quality of materials used and end up falling apart after a year or so. Tofu dreg projects I believe they're called.
Its really not the case for all projects long way from that, it depends a lot on the subcontractor chosen world wide as they have thousands of on going projects. On those maybe 100s will have issues, ans mostly the ones linked to energy. Transportation in Africa have been a outstanding success and the reason why the Chinese are.positively seen in Africa. Now most bankers even in Goldman said that these will have only but a limited impact on the chinese banking system. That the riots from bank runs stopped and those local banks were restructured
Thanks for breaking down these topics so well and easy to understand. Your awesome
Best explanation of Belt and Road initiative I'd seen. Well done!
So many great points & insights. Always love these well-researched videos!
Excellent program! Thanks for your indight.
Nice Hanky! The colors seem to match the books on the table.
Really well laid out, Patrick. Thanks for posting.
I don’t understand how you don’t have more subscribers.
Great as usual.
Would love your take on the current crisis in China of people not paying their mortgage and disappearing savings from regional banks. 👍
Very nice video I enjoy listening to you
Wow… these videos are just terrific…. Thanks Patrick 👍
Thank u for this 👍
Brilliant exposition, part of which sounds prophetic !
Excellent video. So detailed. I thought I could see the big picture of geopolitical affairs, but this video showed me it's a much bigger picture. Thanks for enlightening me. Hope you keep it up. Subscribed!
Mr. Boyle I'm Birr right now listening to your show and enjoying your wit...
knowledge in abundance, facts without blinkers and lots to digest. Thanks for the insights and a well earned subscriber.
Very informative video. Keep up the good work.
I do enjoy you reviews! Very informative and comprehensible. Thank you!
Love your videos, always seem to be packed with interesting information. Keep it up
I wonder how the countries with shiny new railroads will be able to maintain them without the transfer of knowledge that usually comes with employing local workers...
Due to cultural issues, a lot of these countries couldn't maintain rails even though the men that built them were permanent residents there.
As part of these initiatives many locals are trained. This report was very poor in that regard. You really need to read Chinese sources and sources from the countries in question to to get a full picture. If you only rely on western shitlib sources you’re going to think dumb sh7t.
Great video very educational. Thank you!
Love the your analysis, enjoy your content, looking forward to your next video.👍👍👍
Excellent as always, thanks
I really enjoy watching your insightful analyses, Patrick. Keep up the good work!
Great video! Loved your style of just presenting the facts with no slant.
Very interesting. Thanks Patrick
Superb analysis; I have been watching you from the beginning. Your work is very greatly appreciated, my friend.
Great antidote to the recent episode of All In in their discussion of Sri Lanka. Nothing was mentioned about Chinese debt default, as I recall. Had no idea. Thank you!
China's exposure to Sri Lanka is only 10% of Sri Lanka's external debt, at least as far as officially mentioned. Other countries and US pension funds and insitutional investors account for way more. IF the US and UK are raising rates to spite China OBOR, they're shooting themselves in the foot. The Rajapaksas are US citizens as well as Sri Lankan. All their kids are at US universities. It could be the US cultivated Rajapaksa corruption strategically.
@@klam77 You must be a Chinese diplomat. So subtle!
@@klam77 you have proof?
@Gowthan,
You can check it out on the recent report by The Washington Post.
"China is hardly the only creditor (about 10%). India and Japan, among other nations, account for a considerable portion of Sri Lankan debt and are also enmeshed in complicated talks over further repayment and aid. But China’s engagement with the country has been more conspicuous and problematic, argued Alan Keenan of the International Crisis Group".
@@klam77 According to Brent Johnson and other economists, US is now increasing the value of dollar vs other currencies in order to maximice the pressure on countries around the world ; Do what US wants (=oppose/isolate Russia and China) or face starvation.
Thank you for your insight! Always apprectiate your informative perspectives.
Thank you for your insights. Very helpful.
This was fantastic. My first view of Patrick and I'm impressed. This was the best explanation of the Belt and Road initiative that I've ever seen, and I've seen a lot of them.
very insightful. thank you!
The holdings ive seen buying everything around the world is Fosun, China Three Gorges, HNA. Most of theyr investments have been with debt only. No capital raised
first time watched your video. You talked exactly what happened in my country, Malaysia. But most of the people don’t know they intention, they developed other countries to boost they own purpose. Engineer and high management directly from China and those workers were from Bangladesh, Nepal, Pakistan etc, no local labors worked at the site at all. Overdevelopment only benefit the corruption government but not the citizens. Endup, the national debt increased until cannot repay.
I’m Malaysian myself and I fully agree with your points! Our government are only interested in getting rich for themselves and their friends. They hold no dignity nor integrity with what they do.
High-speed railways in Indonesia also have a big problem now, and China wants us to pay over cost.
That's what they get for trusting an authoritarian regime.
What an amazing video. So much research … !
Thank you
Great work! Thank you.
Stellar review and why I think near-shoring and on-shoring will continue to grow
Is the debt held by Chinese government-backed companies, by intermediary banks holding derivatives or other instruments, or by actually private entities?
It's china, where any "private" industry has political commissars and only Inner Party Members are allowed to be managers or higher rank. Their so-called capitalism is a false-front for financial domination and control of the planet.
The only real "private" would be fully family-run, every other organization has various degrees of Party oversight into their operations. That's kind of the point of Communism.
All banks in China are publicly held, especially those who lend out to foreign countries. To my knowledge only China Merchants Bank is private while ICBC China Agro Bank and Bank of China are government held.
All the above
You in a short time explaned so much, so clearly. I loved it and have liked and subscribed! Éirinn go Brách!
Thank you. This was very informative.
My work is actively shifting casting and machined parts to Mexico as fast as humanly possible. China’s insistence on shutting down districts and ports means that we have hundreds of PO’s currently 6 to 12 months behind schedule.
Getting product out of China and through the west coast ports of the US feels impossible at the moment. With everyone in our market raising prices drastically, we have enough margin to pay the higher prices that Mexico and Canada demand while maintaining enough profit to keep advancing as we were. Still can’t afford US products because most major suppliers raise their prices in relation to chinas price increases to maintain themselves as the most expensive options.
Good informative video. Thanks 🙏
Whoa - a corded office phone in the background. Super retro!
As always, a great overview of the situation, Patrick !
Another great video from Patrick. And this is my third attempt at placing a comment in this video.
I think the biggest problem in China right now it's not the external debt on those mostly very very risky and uneconomic projects. the biggest problem in China is the biggest Bubble mankind History, their internal housing market.
People in China pay up-front for a low-quality construction house, in the most expensive market in the world for a lease of 70 years of a property that is not even theirs!
It's going to be biggest market collapse in History by far, making the tulip mania look something mild in comparison.
The problem is that China revenue does not come from tax, but from housing. It makes its economy vulnerable to real estate pricing.
when do you think this will happen?
@@danielkosmala6306 Good question and that is the one million dollar question that no one knows. Even yesterday Evergrande was on the news they are trying to sell desperately 300Billion of "assets" in order to pay for a bond payment and not default at least not right now ... so this can drag on but the ultimate result is totally clear and certain ... it is going to be a huge bust like no one has ever seen in mankind History.
- People over-payed for the most expensive houses on the Planet.
- Property is Not theirs, belongs to the provincial State = Government. They have 70 year leases only!
- Construction quality is horrendous.
- They have entire Cities Empty! We are talking cities !
- Most people have their grandparents and Parent saving entirely on house/apartment when prices are starting to fall.
It's about to get really really ugly ...
China will have to deal with a huge aging population due to the one child policy and not enough young people to support the economy.
@@mrsmucha China is a very reactive country. Unfortunately there are things that cannot be fixed with "decisive action" when things are urgent.
I think it should clarified, BRI isn't really a single policy. It's Xi claiming credit for the massive outflow of Chinese capital internationally looking for productive investment. Most of the money went into Europe, North America and the Middle East, which is how normal capital flows work. Xi looked at the portion going to the developing world and then just claimed credit, saying it's part of a grand economic strategy. Too much credit is given toward China in regards to their geopolitical strategy, when it seems they're acting just like any other nation and making just as many mistakes.
When the west is pragmatic and self interested it’s natural order when China is its underhanded and suspect somehow.
What China is doing is desperation and not some great planning policy.
@@jason8434 Did you hear what the man in this video said....their riches are fake. What sane country builds cities WITH NO ONE IN THEM, using people's life savings ?!
Now the “credits” are “debts”.
@@jason8434 except for deng’s policy is for real economic growth, bri is result of the real estate bubble. It doesn’t matter how big you imagine it is. It’s reality that matters.
Thanks for making this video
great content thanks
Excellent broad review and analysis, which among many other things, at last explains why so many of the southern hemisphere countries are not supporting "the West" against Russian aggression in the Ukraine. Happy to have subscribed.
Great content as always :)
Great overview of what’s happening in China. Why is not being reported in the mainstream media?
Wow- thank you! Fascinating and illuminating!
Good insight
I can listen to Patrick all day long. Such a soothing voice and so much great information
Awesome ! as ever …thank you Patrick and your team
Great overview Mr. Patrick...many thanks!
So hard to find unbiased analysis these days. Well done.
A few years ago Jack Na said Chinese Banks are like pawn shops I think he was right.
He was so right he disappeared and got his net worth cut in half
Excellent video… many thanks
Good work! Patrick
Thanks!
No problem!
Given the gargantuan problems the Chinese have at home with their construction sector and their dire "Tofu Dreg" construction practices I'd be interested to know whether these belt and road projects are built to the same standard? Since the Chinese use their own people to build these projects it's not too much of a stretch to expect that anything they build will fail well before they get close to the end of their designed life.
You are just jealous! Go ahead and Brag about your own antiquated railroads and highways system. Your exceptionalism is coming to the end.
@@joewong438 truth hurts the btthrt CCP fanboiz. I'm wondering were you one of the patriotic little pinks that slapped their own faces in despair when Pelosi landed in Taiwan? Just wondering, not accusing.
Your comment is very astute, it is possible that they did build these white elephant useless projects TO design except the "design" was for them to fall apart early. Nothing underhanded is beneath the CCP.
@@joewong438 Touched a nerve there have I? I just asked a simple question, if you can provide some evidence that the workmanship is up to standard then I'll stand to be corrected. At least our infrastructure projects have stood the test of time....
A Kenyan here, first of all those projects are built by locals being the majority employees, materials like sand, ballast, red soil are bought locally. Again they are very durable, our roads that they constructed in the 2000s haven't needed any repairs, thats an achievement compared to the roads made by Western and local contractors
Thank Patrick very informative.
Loved this video well done Patrick
By the way you crushed it like usually emerging market bonds and high yield debt are overvalued even with the massive drops.
Great video. Thank you!
Your presentation was easy to understand. Many thanks for explaining how banking (as a lender and/or debtor) is a major contributor in steering a country's geopolitical strategy at any given moment.
Thank you very much for this information. All the best for YOU.
Learned a lot thanks