All Things China

[Farfromgeneva]

States seek to bar Chinese citizens from buying homes

Han Chen
Chinese buyers are returning to the U.S. housing market after a long lull, but recent efforts by several states to restrict certain foreign purchases could make homebuying harder for them.

Why it matters: Chinese buyers spent $6.1 billion on existing U.S. homes last year, more than any other international homebuyers.

They were the top foreign buyers of U.S. residential real estate from 2015 to 2020, accounting for nearly 14% of all buyers on average, according to a recent National Association of Realtors report.
Their share plunged to 6% in the last two years, mostly due to pandemic-related travel restrictions. But their average purchase price topped $1 million last year, the highest on record.
What's happening: States across the U.S. are considering — or enacting —legislation to limit or ban Chinese citizens from purchasing certain properties, arguing it will protect U.S. national security from "foreign adversaries."

In Florida, Gov. Ron DeSantis (R) signed a bill last month that bars most Chinese people who aren't U.S. citizens or permanent residents from owning property in the state, along with different restrictions for six other nationalities.
People who have asylum and nontourist visa holders are exempt under the Florida law, which is set to take effect on July 1.
Montana Gov. Greg Gianforte (R) signed a bill last month prohibiting the sale or lease of agricultural land, critical infrastructure and homes near military assets in the state to entities from six countries that the U.S. designates as foreign adversaries, including China.
Lawmakers in other states, including Texas, Alabama and Louisiana, have considered similar bills — albeit to lesser degrees — in recent months. Several states have also taken aim at preventing "foreign adversaries" from buying farmland.
The other side: The bills have faced backlash from local Chinese communities and legal experts who argue they are discriminatory and echo xenophobic alien land laws of the 19th and 20th centuries, which barred many Asian immigrants from owning land.

A group of Chinese citizens living in Florida sued the state in May, arguing the new law is unconstitutional.
Under the Fair Housing Act, the law could face challenges if its implementation results in discrimination, said Suzanne Hollander, an attorney and real estate law professor at Florida International University.
Yes, but: The Florida law is already having a "chilling effect," Jason Pugh, a managing attorney at Pugh Law Office in Orlando, told Axios.

Selina Li, a real estate broker in Orlando who spoke to Axios shortly before the bill was passed, said Chinese buyers were already worried about what the legislation could mean for them.
"There are very few buyers from China anymore. In fact, many of them want to sell their properties here," Li said.
Between the lines: Chinese buyers have historically bought residential properties in the U.S. as investments.

But nearly 70% of Chinese buyers who inquired about U.S. residential properties last year on the international property portal Juwai said they intended to buy homes for their "own use," compared to less than 20% in 2015, according to the company's data.
It's a trend some homebuyers have witnessed in recent years. "When I first wanted to move to the U.S., those who had already made it here were either wealthy businesspeople or high-ranking officials in China. ... Now many middle-class families are also trying [to move abroad]," said Kelvin, a 40-year-old former bank employee from northeastern China who declined to provide his last name for privacy reasons. Kelvin has bought several properties in Orlando over the past decade.
Chinese buyers are also increasingly looking to buy real estate in less expensive areas, beyond the cities and markets they have traditionally gravitated to, such as New York and Los Angeles.

China posted the highest number of global web searches for Miami homes in February. Southern markets like Houston and Austin are also seeing more interest from Chinese buyers, said Kashif Ansari, co-founder and group CEO of Juwai IQI.
Zoom out: Two U.S. House Democrats introduced a bill last month to preempt state legislation seeking to ban property purchases based on citizenship.

"We need such nationwide efforts to combat the growing tide of anti-Asian legislation," Pugh said.
"If such law were to pass ... I would suspect that it would be enforceable under the Commerce Clause," referring to the power of the U.S. Congress to regulate interstate commerce.
What to watch: Despite the backlash and potential legal challenges, experts expect states to continue to consider restricting the property that Chinese nationals can buy.

"I think other red states like to follow the lead of Florida and Texas in trying to do things that are 'innovative,' so I suspect we will see more of this going forward," Pugh said.

[youthathletics]

I thought this more about the Chinese buying tons of property all over, BUT primarily in close proximity to points of 'special' interest....military bases, political areas, DoD companies.

[Farfromgeneva]

I thought this more about the Chinese buying tons of property all over, BUT primarily in close proximity to points of 'special' interest....military bases, political areas, DoD companies.

Not in florida. About home price affordability. What homeboy Ronny “hey look at Pete Browns forehead down there” DeSantis doesn’t understand is he’s hurting liquidity and existing homeowners in the process for little to no upside to citizens when the state does a heck of a lot more money laundering for Russia, dirty LatAm countries etc.

[cradleandshoot]

This is one for all of the fan lax forum experts. I read this afternoon that Bill Gates is investing 50 million in an " allegedly" shady Chinese Company that makes military grade computer chips. I don't know if it's true or false but there has to be more to this story/

[youthathletics]

This is one for all of the fan lax forum experts. I read this afternoon that Bill Gates is investing 50 million in an " allegedly" shady Chinese Company that makes military grade computer chips. I don't know if it's true or false but there has to be more to this story/

I found this: https://freebeacon.com/democrats/bill-g ... -research/

[cradleandshoot]

This is one for all of the fan lax forum experts. I read this afternoon that Bill Gates is investing 50 million in an " allegedly" shady Chinese Company that makes military grade computer chips. I don't know if it's true or false but there has to be more to this story/

I found this: https://freebeacon.com/democrats/bill-g ... -research/

Does not seem like a smart move on Bills part.

[old salt]

USMC F-35's in Australia, training with their RAAF counterparts.

https://www.3rdmaw.marines.mil/News/Sto ... irst-time/

[old salt]

Well Done to President Biden for bringing Japan & N Korea together at Camp David.
I truely hope he can bring them even closer together as allies.
Working together we can be a formidable military force for deterrence in their region.

[cradleandshoot]

Well Done to President Biden for bringing Japan & N Korea together at Camp David.
I truely hope he can bring them even closer together as allies.
Working together we can be a formidable military force for deterrence in their region.

North Korea??? I'm hoping you meant South Korea.

[MDlaxfan76]

Well Done to President Biden for bringing Japan & N Korea together at Camp David.
I truely hope he can bring them even closer together as allies.
Working together we can be a formidable military force for deterrence in their region.

North Korea??? I'm hoping you meant South Korea.

Undoubtedly an oops...but good catch!

And good on Salty for offering kudos for President Biden and his foreign policy team.

Frankly, this is the sort of thing we should hope occupies the time, energy and attention of a President.

[old salt]

...Freudian wishful thinking on my part. Maybe the next Camp David meeting.

[MDlaxfan76]

...Freudian wishful thinking on my part. Maybe the next Camp David meeting.

maybe they'll pass some love notes between them first...

[NattyBohChamps04]

Most importantly, did Biden salute any Korean generals? Oh man, can you imagine how insane the media would be if he did? Would be years long scandal. Glad no president has debased himself in such a manner in recent history.

[old salt]

The National Review Editors agree with me, ...except they got the correct Korea.

https://www.nationalreview.com/2023/08/ ... for-biden/

The Japan–South Korea Alliance Is a Breakthrough for Biden

by THE EDITORS, August 21, 2023

On Friday, President Biden achieved a foreign-policy breakthrough with potentially massive implications for China’s designs across its neighborhood: a Camp David summit with Japanese prime minister Fumio Kishida and South Korean president Yoon Suk Yeol.

That’s because while Japan and South Korea, both U.S.-backed democracies in a dangerous neighborhood, should be natural allies, they have had a strained relationship owing to long-standing historical controversies related to Japan’s decades-long occupation of Korea. That history has stood in the way of building a united front of America’s allies in the region capable of countering Beijing. But Biden’s attention to this dynamic and the political courage of both Yoon and Kishida might have just ushered in a new relationship between the countries.

While this won’t involve any sort of mutual-defense pact, the statements out of Camp David Friday reveal a series of new commitments, including plans to consult each other on international crises and to carry out joint military exercises going forward and work together on anti-missile defense.

Team Biden explicitly and repeatedly denied that this development was a response to Chinese aggression, just as it has done when pursuing the other building blocks of this new alliance system in the region, and joint documents issued by the three partners after the meeting place the typical pablum about climate right next to real security issues, such as Taiwan and the Russian invasion of Ukraine. They also expressed a commitment toward the “complete denuclearization” of North Korea and sharply criticized Beijing’s militarization of the South China Sea.

But whether the White House is trying to avoid getting out in front of Kishida and Yoon, who have far more delicate relationships to manage with Beijing, or is protecting the administration’s ill-advised drive for détente with Beijing, the truth is just common sense: Without the threat of Chinese military aggression, there would be no impetus for Japan and South Korea to get together like this. There would have been no Camp David summit.

Either way, this is another own goal by Beijing, which is already pitching a fit about this diplomatic initiative. The CCP’s Global Times propaganda outlet, in an editorial, intoned that China “will not sit idly by and watch actions that jeopardize [its] own interests.” Beijing’s tack so far appears to be trying to persuade the two countries that it’s just not in their own interests to work with Washington under the new arrangement.

While it seems almost impossible that any of these leaders would listen to Beijing, there still is reason to worry that the political winds in Tokyo and Seoul could easily shift, placing this historic partnership on shaky footing one day. Yoon has already faced criticism back home for it but has courageously chosen to forge ahead anyway.

The outcome of the summit is structured to enshrine annual consultations, through annual meetings between the leaders of the three countries, as protection against those political risks, but that protection is far from absolute.

The collapse of this arrangement would surely be a great loss, as it is poised to become one of the keystones holding up the new U.S.-led security structure in the Indo-Pacific. Nothing less than the fate of the hundreds of millions of people in the region, including Americans, depends on its survival.

[Farfromgeneva]

I hear some anecdotal things but Chinas real estate problems may finally be out of the control of their govt. these two companies have been selling between $50-$100bn in developed residential real estate in China each year. That’s more than if you took the top ten real estate brokerages and I’d hve to look but my guess is the top 6-8 developers. Dr Horton and pen are are large by revenue at around $30Bn each though Lennar is not purely development. Drops to $15Bn, $10Bn then single digits for us home builders. If we lost lennar, DR, Pulte, NVR and Toll Brothers all in one year that would start to be equivalent.

Can paste of people want as they’re paywalled but two pieces recently on it.

Evergrande cancels BK restructuring

https://www.wsj.com/business/deals/ever ... 48?mod=mhp

Country Garden toast

https://www.wsj.com/finance/chinas-coun ... 79?mod=mhp

[Farfromgeneva]

All that attention to Jina while Russia was stealing things out the back door...

Liberty Street Economics
« Borrower Expectations for the Return of Student Loan Repayment | Main

OCTOBER 19, 2023
Can China Catch Up with Greece?
Hunter L. Clark and Matthew Higgins

Decorative image: Chinese men and women assembling products in a factory?
China’s leader Xi Jinping recently laid out the goal of reaching the per capita income of “a mid-level developed country by 2035.” Is this goal likely to be achieved? Not in our view. Continued rapid growth faces mounting headwinds from population aging and from diminishing returns to China’s investment-centered growth model. Additional impediments to growth appear to be building, including a turn toward increased state management of the economy, the crystallization of legacy credit issues in real estate and other sectors, and limits on access to key foreign technologies. Even given generous assumptions concerning future growth fundamentals, China appears likely to close only a fraction of the gap with high-income countries in the years ahead.

Some Unpleasant Growth Arithmetic
While it’s not clear exactly what peer group Xi had in mind in referring to developed countries, those classified as “Advanced Economies” by the IMF seem a natural choice. This group consists of thirty-two economies, with 2022 per capita incomes ranging from $36,900 at the bottom (Greece) to $127,600 at the top (Singapore) measured at purchasing power parity. (Converting dollar incomes to PPP terms corrects for cost-of-living differences across countries.) We define “mid-level” as beginning at the 25th percentile for this group, corresponding to a per capita income of $49,300.

China is currently a middle-income country, with a per capita income of $21,400, placing it just above the 60th percentile of the global income distribution. China has a long way to go to meet our income threshold. Per capita income would need to rise by a factor of 2.3, corresponding to an average growth rate of 6.6 percent to reach the threshold by 2035. Annual income growth would have to be 4.3 percent to match the current level in Greece by that year.

A look at history underscores the daunting nature of this task. Of the forty-three countries that had reached China’s current income level by 2009, not one managed to achieve the growth rate needed to push China to the Advanced Economy 25th percentile over the subsequent thirteen years (see chart below). Indeed, the median thirteen-year income growth rate for this group comes to 3.1 percent, with only five seeing growth above 4 percent. And for the twenty-four countries with incomes above $49,300, it took an average of thirty-two years to make the climb from China’s current income level. Only two did so in less than twenty years.

High-Income Status by 2035 Requires Unprecedented Growth


Sources: Penn World Table, version 10.01; IMF WEO database, April 2023; authors’ calculations.
Note: Per capita income growth is GDP growth less population growth.

A growth optimist will no doubt point to China’s robust growth trajectory since market reforms were initiated in the early 1980s. Per capita income growth came to 6.5 percent from 2009 to 2022 and was even faster during the two prior thirteen-year periods (9.4 percent during 1996-2009 and 8.8 percent during 1983—1996). Remarkably, China was the global income growth leader during all three periods.

China’s past growth performance is indeed impressive. Even so, the official data show trend income growth slowing since the mid-2000s (see the blue line in the chart below, which shows five-year growth rates). The authorities’ income goals involve reversing or at least arresting this trend.

Chinese Real Income Growth Has Been Slowing


Sources: China National Bureau of Statistics; Penn World Table, version 10.01; Total Economy Database (Conference Board).
Notes: Per capita income growth is GDP growth less population growth. *Growth data for 2020 through 2022 (as part of five-year averages) taken from Total Economy Database.

Moreover, these figures take China’s official growth statistics at face value. There has long been skepticism over the accuracy of China’s statistics, which we have discussed in earlier work, and many analysts believe that growth has been systematically overstated. Economist Harry Wu has given substance to the view, proposing a number of adjustments to the official data. These adjustments provide the basis for alternative series published in leading international datasets such as the Penn World Table and the Conference Board’s Total Economy Database. China’s income growth performance remains exceptional even given these adjustments, placing in the top decile of the global distribution during each of the three recent thirteen-year periods. But these data show growth already slowing to “only” at 4.4 percent from 2009 to 2022—barely fast enough to climb to the bottom of the Advanced Economy ranks by 2035—and to a still slower pace for the last five years (the red line in the chart above).

The debate over China’s true growth rate remains unsettled. Fortunately, we don’t need to settle it. As we’ll see, a look at the evolving sources of growth in China suggests that it will fall below our benchmarks even if the official data are correct.

Lessons from the Neoclassical Growth Model
The standard neoclassical growth model provides a useful framework for assessing China’s growth prospects. Under the model, economic growth comes from two basic sources: increases in labor and capital inputs, and improvements in technology. Growth contributions from labor and capital are equal to the growth rates of these inputs, weighted by their shares in the value of production. The growth contribution from technology (termed “total factor productivity” or TFP) is calculated as a residual, as the increase in output not explained by higher inputs.

A neoclassical perspective reveals two fundamental constraints on China’s future growth performance. Labor inputs are set to decline under the weight of population aging. According to projections from the United Nations, China’s working age (20-64) population will fall by 6 percent by 2035. In principle, increases in labor force participation or hours per worker could offset some of the decline in the working age population. But China already ranks high on both these measures. At best, moves higher could offset only a fraction of the demographic drag.

China’s high share of investment spending in GDP—consistently above 40 percent since the mid 2000s—has supported a rapid buildup in the country’s capital stock. Indeed, China’s capital-output ratio is now among the highest in the world in PPP terms. But capital accumulation is subject to diminishing returns: A given increment makes a smaller contribution to growth when capital is abundant than it does when capital is scarce. Moreover, as the capital stock rises relative to output, a higher share of new investment must go to offset ongoing depreciation. The impact of diminishing returns is already in evidence. According to our estimates, increased capital inputs contributed an average of 3.4 percentage points to GDP growth in 2018-22, versus 4.3 percentage points for 2013-­17.

In earlier work based on the neoclassical framework, we found that the growth contribution from capital will continue to fade in the years ahead, even given favorable assumptions. Updated projections taking in new data reinforce this conclusion, implying a contribution of 1.4-1.9 percentage points for the period through 2035. (For details, see our appendix on China growth scenarios.) Taken together, we expect reduced contributions from labor and capital to hold income growth below 4 percent absent an offsetting acceleration in TFP growth.

A surge in TFP growth, however, seems unlikely, since productivity growth in China is already quite high, averaging 1.8 percent since 2009. Only five of the forty-three countries that reached China’s current income level in the past saw TFP growth that high over the subsequent thirteen years (see chart below). Not one managed to exceed this pace by more than a few tenths of a percentage point. In short, China will need to achieve TFP growth in excess of the fastest historical precedents to meet official income goals. Moreover, these estimates assume that the official growth figures are accurate. If the lower growth rates of Wu’s work are correct, TFP growth has already fallen to about zero.

Productivity Growth of 2 Percent Is Rare


Sources: Penn World Table, version 10.01; IMF WEO database, April 2023; authors’ calculations.
Notes: Country sample size: 42. The TFP growth spurt for the Netherlands covers 1964-77.

Structural Headwinds
In our view, however, a combination of longstanding and emerging structural headwinds will make it difficult for China to match its past productivity performance, let alone exceed it. The longstanding headwinds have been widely discussed elsewhere, including in our own work, and we will simply list them here:

Pervasive state and Communist Party management of the economy, a tendency that has grown more pronounced under President Xi’s tenure.
Lagging institutional development, reflected for example in low scores on survey-based measures such as the World Bank’s Worldwide Governance Indicators.
The need to rebalance the economy away from an excessive reliance on investment spending and toward consumption-led growth.
High private sector and government debt levels, built up in financing investment-led growth.
New headwinds have emerged alongside these longstanding ones. China’s growth has long been dependent on property sector activity. (By some measures, real estate accounts for one quarter of economic activity.) Chinese authorities have traditionally relied on relaxing or tightening credit and regulation for the sector to smooth out cycles in GDP growth. Over the last two years, however, real estate activity has gone into an extended decline, seemingly unresponsive to official efforts to support activity.

Current strains in the property sector serve as an example of the broader challenge of managing a rotation away from credit- and investment-centered growth. But these strains have their own dynamic. Shifting away from investment-led growth will entail a substantial reallocation of government expenditure from investment to consumption and household transfer payments. At the same time, though, overall government deficits and debt are already very large. Any such shift in expenditure priorities will be intertwined with the politically thorny issue of government debt restructuring.

A second emerging headwind involves the move by China’s trading partners toward onshoring and derisking. The pandemic revealed the fragility of countries’ global supply chains, many centered on China. In addition, geopolitical tensions between China and key trading partners have mounted in recent years. These forces have prompted moves to bring supply chains closer to home, and where they remain international in character, to locate them in countries with whom relations are less fraught—policies that U.S. and European officials have referred to as “derisking.”

In addition, increased geopolitical tensions have prompted the U.S. and its security partners to impose new limits on China’s access to critical foreign technologies. For example, last October the U.S. government issued major export controls that substantially blocked Chinese access to key technologies for manufacturing or acquiring cutting-edge integrated circuits, or even products containing such integrated circuits. This U.S. action was later joined by major security partners, notably including Japan and the Netherlands. These controls in essence are designed to roll back Chinese chipmaking technologies to pre-2014 levels. More recently, the U.S. issued an Executive Order that places targeted restrictions on certain outward investments in China by U.S. entities.

We do not know yet how severely property and derisking headwinds will crimp China’s future growth. But they clearly limit the prospects for maintaining past productivity performance.

Conclusion
China has many compelling strengths: a well-educated population, including half the world’s trained engineers; high-quality and still-improving infrastructure and an efficient distribution system; high if uneven state capacity; and clear leads in important new technologies, including solar power, battery production, and electric vehicles. China could surprise us and achieve Xi’s lofty income growth target. But that bet comes with stiff odds.

[youthathletics]

China launches probe into struggling shadow bank Zhongzhi

https://www.ft.com/content/39991750-e14 ... 220d1bb8cc

[Farfromgeneva]

China launches probe into struggling shadow bank Zhongzhi

https://www.ft.com/content/39991750-e14 ... 220d1bb8cc

Wait cradle won’t understand think it’s boring and call you dumb because this Amy have words beyond his comprehension.

But this will be paywalled for most. Presume you broke it via a post on X. Here’s a easier to access Reuters piece in case folks can’t read that one.

https://www.reuters.com/business/financ ... 023-11-25/

*FT is a terrific publication in fact. These days far better than WSJ I just haven’t pulled the trigger on swapping the subs yet.

[Typical Lax Dad]

China launches probe into struggling shadow bank Zhongzhi

https://www.ft.com/content/39991750-e14 ... 220d1bb8cc

Wait cradle won’t understand think it’s boring and call you dumb because this Amy have words beyond his comprehension.

But this will be paywalled for most. Presume you broke it via a post on X. Here’s a easier to access Reuters piece in case folks can’t read that one.

https://www.reuters.com/business/financ ... 023-11-25/

*FT is a terrific publication in fact. These days far better than WSJ I just haven’t pulled the tiger on swapping the subs yet.

Yep…..and the Bidens must be involved.

[Farfromgeneva]

China launches probe into struggling shadow bank Zhongzhi

https://www.ft.com/content/39991750-e14 ... 220d1bb8cc

Wait cradle won’t understand think it’s boring and call you dumb because this Amy have words beyond his comprehension.

But this will be paywalled for most. Presume you broke it via a post on X. Here’s a easier to access Reuters piece in case folks can’t read that one.

https://www.reuters.com/business/financ ... 023-11-25/

*FT is a terrific publication in fact. These days far better than WSJ I just haven’t pulled the tiger on swapping the subs yet.

Yep…..and the Bidens must be involved.

I occasionally spot check a few toxic comments in wsj pieces and one on the real estate class action commission suit which literally states the admin is working hard to break that anticompetitive behavior with some modest specifics and one fo the first comments I see is “I bet they’ll get help from the big guy” as if they didn’t even read the actual story at all. It’s beyond absurd. It’s Cradle.