With the realities of continued Communism starting to settle in on the Chinese markets, the real estate market and economic data are all tending downward. Simply put; there is no more hiding just how badly Communism has failed in China. As the Chinese Communist Party (CCP) continues to try and attract businesses to make use of their factories, child labor, and unsafe working conditions, many investors are looking elsewhere.
According to the shined-up data provided by the CCP, institutional investors are cutting their losses in a hurry. Orders from across the world have yanked out over $31 billion from various stocks and bonds in the Chinese financial system in 2023 as of the end of October. This is the sharpest withdrawal for the nation since 2001, and by the time the end-of-year figures are added up, they look to trend significantly higher. When this occurred, this was the first year China entered into the World Trade Organization.
When COVID struck the world, China was put on notice for being more than the epicenter of this pandemic. Investors had noted the debt-ridden real estate sector and were tired of seeing their money being tied up in horrific investments. Instead, they wanted to see clean and crisp investments going through. Given the lockdowns COVID caused in China, and the lasting effects on the economy, real estate looked to be the last to improve.
Given the years of bad financial situations adding up, this is the first time more investment money is pulling out of the Chinese economy than has been coming in since the 1990s. Many companies were forced to shut down operations during COVID due to manufacturer problems in China, and in response have opted to end their contracts and bring manufacturing back into their own countries. This is especially true for US companies, in particular small market companies that rely on quick turnarounds from suppliers, and need someone not at the whim of CCP demands.
Building up the economy for decades in China was their real estate sector. The firmly entrenched investments had strong return rates and were almost guaranteed to make money. Given the way people lost their income due to the stiff lockdowns the CCP instituted, they already knew their real estate market was not going to look good. Combine that with the massive number of deaths from COVID as well as killed by CCP death squads, and there is little if anything to feel positive about when it comes to the Chinese economy.
Since the first days of COVID, companies who were constructing China’s newest high rises and other buildings quickly found themselves at odds with the government. They couldn’t make their payments without progress and couldn’t make progress without workers. Workers were, of course, locked down and unable to report to their jobs, and projects fell increasingly far behind. Now 40% of new construction homes have loans that have been defaulted on. Even major developers Evergrande and Country Garden are looking likely to default on their new construction loans.
Many business owners are still looking to the Chinese for a free meal though. Given the large consumer market in China, goods are still being sent there. When Chinese President Xi Jinping visited the US in November, scores of them still showed up to break bread with him. In their claims, meetings like these allow the two to build stronger economic relationships. Hundreds of business leaders attended the dinner, with Apple CEO Tim Cook, Black Rock CEO Larry Fink, and Tesla CEO Elon Musk among them. Earning a standing ovation, Xi seemed tickled to be there.
While many consider dinners like these to be little more than discussing how rich everyone is, it is at these tables where trillion-dollar deals are worked out. Where new factories open, and old ones get specialized orders simply because they have prime locations. Now, it served as a way to render a final decision on China as an investment superpower, and the answer was a resounding no.
