Tema: PPCC-Pisitófilos Creditófagos-Invierno 2022

[Cadavre Exquis]

https://cincodias.elpais.com/cincodias/2023/02/03/companias/1675443846_507043.html

Saludos.

[Cadavre Exquis]

https://cincodias.elpais.com/cincodias/2023/02/03/mercados/1675429249_977056.html

Saludos.

[sudden and sharp]

Finalmente, vean la reformulación por Cadavre Exquis del bucle VHA (Vendo-Hodl-Alquilo), de Hynkel, con alguna aportación nuestra (revísenlo, por favor: ¿se pueden sustituir las comillas inglesas por angulares españolas; ¿las líneas SLEEP van también con comillas?):

10 IF lo_puedo_vender THEN
 20   IF sin_palmar_pasta THEN
 30     PRINT "Va a ser que no..."
 40   ELSE
 50     PRINT "Antes le pego fuego!"
 60   END IF
 70 ELSE
 80   IF lo_puedo_alquilar THEN
 90     PRINT "Lo alquilo"
100     SLEEP "3 años con 2 de prórroga"
110   ELSE
120     IF me_puedo_permitir_el_lujo_de_tenerlo_vacío THEN
130       PRINT "'Hodl!'. Los 'mercaos' darán respiros."
140       SLEEP "1 mes"
150     ELSE
160       PRINT "Alquilo habitaciones para esquivar la LAU 2019 y a Hacienda."
170       SLEEP "Temporada pactada con los bichos"
180     END IF
190   END IF
200 END IF
210 GOTO 10

Bueno, bromas aparte, tampoco se compliquen mucho con la formulación del "algoritmo". Sólo tiene dos elementos. Si todo va bien, me forro. Era lo que se hacía dando el pase antes de 2007. Y si la cosa no va bien, me salgo. Y hago lo que sea para traspasar el pufo a otro.

Todo el jaleo del alquiler, la hotelización, el AirBnb, y el copón bendito (incluyendo los indisimulados intentos de que Papá Estado pague la fiesta como último recurso) son en el fondo lo mismo. El premio de consolación, el buscar rentabilidad de debajo de las piedras, y que la rueda no se pare.

Si Bernardos está "on fire" con la ametralladora es porque saben -o intuyen- que la rueda se ha parado, y que buscan cualquier salida que no sea comerse el pufo y asumir pérdidas. Todo lo demás es poco más que ruido. No hacer contratos a familias no sea que se divorcien y "no se les pueda echar". Querer cobrar extra a los teletrabajadores -aunque esto tenía mucho más de idea de bombero con las patas muy cortas-. Y así con todo. Fíjense que todos los artículos que hablan de "la inseguridad jurídica del alquiler" hablan sin excepción de que los caseros quieren garantizar sus ingresos.

Y no hablamos de algo legítimo como querer que se cumpla lo contratado. No, va mucho más allá. Va de "si gano ganó, y si pierdo eso no puede ser y que se lo coma otro".

Acabas de definir el algotimo helitista... Je, je.

Por cierto:

Freebasic
https://www.freebasic.net/
Win, Mac, Linux.

SLEEP
https://www.freebasic.net/wiki/KeyPgSleep

Geany
https://www.geany.org/
Visual Studio Code  (Sí, es de Microsoft. Pero es el "Code" el recomendable. Y hay .DEB .)
https://code.visualstudio.com/download/

Primeros pasos
https://www.ochobitshacenunbyte.com/2015/09/15/programando-freebasic-gnu-linux/

Código para hackers... Creative Computing Magazine
https://archive.org/details/creativecomputing

[Maloserá]

Leer a gran velocidad las páginas que cuelga Cadvre Esquis es una experiencia psicodélica (Gracias, Cadvre, gran esfuerzo, no lo agradezco en cada post pero debería).

El embajador de la UE en Londres que no puede alquilar el piso que quiere porque es muy caro. Que si no se alquila a padres solteros con churumbeles en Vigo. Pero que en Orense no quedan churumbeles. Lo curioso es que Vigo está lleno de ourensanos de segunda y tercera generación... o sea que el flujo se cierra. Y mientras los pensionistas haciendo cola para comprar letras del tesoro...

Es todo un drama pero como dice Saturno, la transición es divertidísima.

Estaba pensando en el Gran Wyoming y sus pisos alquilados. Un tio de izquierdas de rentista inmobiliario. O sea es incoherente personalmente pero coherente estratégicamente. Porque aunque el no lo sabe, está actuando contra el capitalismo de trabajo y empresa que diría Asustadímos.

[Derby]

Otra más del invierno demográfico:

La casi centenaria escuela Nostra Senyora del Carme de Barcelona cierra

Que las escuelas concertadas, consideradas como un privilegio para poder escapar a la pública, hayan pasado de la lista de espera a cerrar porque no son rentables con pocos alumnos, es una señal clarísima de por dónde vamos.

Está siendo una masacre donde yo vivo porque es una zona de gran concentración de escuelas concertadas. Los colegios concertados pierden el concierto económico por falta de alumnos (se constata finalizado el proceso de preinscripción/matriculación) y a principio de curso tienen que cerrar. Con lo que cientos de alumnos se encuentran buscando plaza en otro colegio con el curso empezado. Está pasando cada año.

[JENOFONTE10]

— quizá será débil el peso argentino (la moneda de Milei, economista doble ii, impuestitos e impresoritas, y su ejército panchovilla, todos generales individualistas anarcoides), pero el euro y, después de su reequilibrio, el dólar son monedas fuertes y van a ser fortísimas

Deconstruyendo narrativas de anarcoides 'descon-FIAT-dos' partidarios del 'hodl' en la cripto-cueva de Ali Babá:

'El Bitcoin caerá a 0', Gregorio Hernández Jiménez (7 mins.), grabado ahora que está subiendo...
https://www.youtube.com/watch?v=E0hKSJ0Sj8M

Sin un pelo de tonto: no sabe cuándo...

Saludos.

[Derby]

https://blogs.elconfidencial.com/tecnologia/tribuna/2023-02-05/inteligencia-artificial-innovacion-empresas_3569244/

La inteligencia artificial también es humana

(...) Se trata de tecnologías que desarrollan un algoritmo de aprendizaje profundo y permiten procesar la inmensa cantidad de información que las soluciones big data recopilan, detectando patrones y estableciendo pautas de actuación humana.

Eso no es aprender. Que me disculpe el forero que lo dijo, porque ahora no recuerdo quién fue, eso es velocidad y mayor capacidad en el tratamiento de datos/información.

Aprender (RAE): Adquirir el conocimiento de algo por medio del estudio o de la experiencia.

[Derby]

https://www.investmentweek.co.uk/feature/4073465/deep-dive-chinas-property-story-despite-revival-efforts

Deep Dive: China's property story not over despite revival efforts

$160bn pledge to property developers

Less than a week into the Chinese New Year and the sombre reality of China’s economic and market outlook has re-emerged, as the government attempts to battle a flip flopping Covid policy and worrying property market.

Property makes up around 25-30% of the GDP of the world's biggest economy, and the meltdown of one of its biggest developers is still being felt.

Evergrande, which became one of the most indebted companies in the world during the crisis, declared default in late 2021 when its liabilities were close to 2% of China's GDP.

Rumours it would be a Lehman Brothers part two moment did not become a reality, but one of the region's largest debt restructurings began. This is a policy pivot many investors have missed, according to Hani Redha of PineBridge Investments.

The Chinese government launched a 16-point plan back in November to be adhered to by finance officials across the country to support property developers, construction companies and homebuyers.

It includes calling on the nation's largest banks to step up support for the property sector, which they did by pledging more than $160bn in credit to developers.

Redha explained that the priority was to fund the completion of construction projects that had been suspended, which angered homebuyers, who threatened to stop mortgage payments.

For him, this creates an "interesting opportunity" in the investment grade credit markets in China, but warns investors need to be selective and "identify the likely survivors".

The government is dealing with a delicate balancing act to fund this though, as Redha explained that it is "hamstrung in its ability to lower interest rates generally for fear of capital flight".

Chris Rush, IBOSS investment manager, said one of his main risks for China was that "the leaders, in whatever guise, fail to back up their more market-positive rhetoric with hard policy support".

Back in November, the government indicated it also would offer below-market-rate loans to financial firms through its relending facility.

"The loans would be used to buy bonds issued by property developers, further helping to liquefy the sector," Redha said.

All of this does not mean property will be the go-to space, as Arthur Budaghyan, chief EM strategist at BCA Research, said housing completion will stabilise "but will not experience a strong revival".

The arranged funding will be offset by the repayment of the CHY 2.64trn ($369bn) in real estate development loans Chinese banks made between January and October last year, plus a drop in homebuilder funding from market sources, Budaghyan said.

Back from rock bottom

One positive theme swirling around China is that its equities and economy no longer are at "rock bottom", as Budaghyan described it.

Chinese equities suffered one of the biggest drawdowns on record in 2022 and while the reality of China's property refurbishment play out, markets reacted well to the support.

Performance of major global indices over one and five years (%)





IBOSS' Rush said Chinese equities "seemed to reach their nadir" at the end of October last year.

The reopening of China from its persistently stringent lockdown has also been a source of optimism, allowing some runway for economic growth, although the risk of soaring Covid cases slamming it shut are not totally off the table, Rush said.

The International Monetary Fund recently highlighted China - along with the US and eurozone - as experiencing economic slowdown, but the reopening means it can move to a "higher level of economic performance".

However, as Budaghyan pointed out, reopening is "largely about mean reversion" and it will be "uneven".

Those sectors that were most impacted by the lockdowns likely to be the major beneficiaries, while the ones that benefitted from the restrictions will revert back to the norm, he noted.

"Consumer spending, especially on services, will recover briskly, but the industrial sector will struggle," he said.

Sandy Pei, Asia ex Japan portfolio manager for Federated Hermes, said she was bullish on consumption and notably travel-related stocks.

Outbound travel dropped to close to zero and domestic travel had been around half of 2019 levels by revenue. With domestic freedom of movement reinstated with the new Covid policy, she expects pent-up demand and long-term structural wealth to drive growth in the travel industry.

Online travel agencies "could outperform the sector" due to continued market share gains, she said.

As well as internal travel, a return of international tourism could be beneficial, with Pei highlighting transnational leisure and luxury companies as a play on this.

For fund exposure to the region, Rush highlighted three funds: Baillie Gifford Emerging Markets Growth, Baillie Gifford China and FSSA Greater China Growth.

Performance of funds and sectors



The Baillie Gifford funds share a manager in Mike Gush, who has been co-managing the team since 2015, but has run the China fund since 2009.

The funds are ideal for the growth, often tech-orientated stock exposure the Scottish fund house is renowned for, Rush noted, whereas the FSSA Greater China Growth strategy's more cautious approach to investing blends well with other more aggressively positioned China funds or for investors who want a small holding in a single China fund.

"It is also worth noting that, relative to Baillie Gifford, the fund holds much larger Hong Kong and Taiwan positions," he added.

Geopolitics

Ignoring the geopolitical risks around China would omit a key investment factor. Its ongoing tug-of-war with the US bubbled up this week, when US president Joe Biden moved to halt US exports to Huawei.

According to reports, the president is planning to tighten its rules on exports of US technology to China, targeting the firm Biden's government have called a threat to US national security.

Last summer, Chinese firms began to move out of the US ahead of the Holding Foreign Companies Act of 2020 deadline.

One of the big escalations has been Taiwan and if the situation escalated it could alter other nations' trading policies. According to Rush, these were two "primary and immediate investment risks".

[sudden and sharp]

Leer a gran velocidad las páginas que cuelga Cadvre Esquis es una experiencia psicodélica (Gracias, Cadvre, gran esfuerzo, no lo agradezco en cada post pero debería).

El embajador de la UE en Londres que no puede alquilar el piso que quiere porque es muy caro. Que si no se alquila a padres solteros con churumbeles en Vigo. Pero que en Orense no quedan churumbeles. Lo curioso es que Vigo está lleno de ourensanos de segunda y tercera generación... o sea que el flujo se cierra. Y mientras los pensionistas haciendo cola para comprar letras del tesoro...

Es todo un drama pero como dice Saturno, la transición es divertidísima.

Estaba pensando en el Gran Wyoming y sus pisos alquilados. Un tio de izquierdas de rentista inmobiliario. O sea es incoherente personalmente pero coherente estratégicamente. Porque aunque el no lo sabe, está actuando contra el capitalismo de trabajo y empresa que diría Asustadímos.

Un matiz: Wayo NO tiene capacidad para poner los alquileres dondestán en Madrid. Juega sus cartas, pero no truca la baraja.



Eso lo tienen que hacer otros con muuuucha más capacidad de especulación. (Manejar 70.000 pisos qué sé yo...) El Wyoming sólo ha sido listo... al utilizar el dinero que le sobraba, legalmente. Sólo compró pisos pequeños, situados donde prevía que sí los podría alquilar siempre. Lo que fastidia es su éxito, donde otros han fracasado.




Y a ver si dejáis ya el tema. (Yo, al Wayo no tengo el gusto de conocerle. Ni tengo por qué defender a alguien que no ha hecho nada reprochable.)

[sudden and sharp]

https://blogs.elconfidencial.com/tecnologia/tribuna/2023-02-05/inteligencia-artificial-innovacion-empresas_3569244/

La inteligencia artificial también es humana

(...) Se trata de tecnologías que desarrollan un algoritmo de aprendizaje profundo y permiten procesar la inmensa cantidad de información que las soluciones big data recopilan, detectando patrones y estableciendo pautas de actuación humana.

Eso no es aprender. Que me disculpe el forero que lo dijo, porque ahora no recuerdo quién fue, eso es velocidad y mayor capacidad en el tratamiento de datos/información.

Aprender (RAE): Adquirir el conocimiento de algo por medio del estudio o de la experiencia.

Hay diferentes aproximaciones. Machine learning viene a ser una herramienta que cada vez lo hace mejor... esto es aprende. (Mejora.)

[sudden and sharp]

Una pincelada: lisp.


Id a

Land of Lisp
http://landoflisp.com/


... y scroll down. (Sólo el comic.)

[senslev]

Monty Python and the Holy Grail - Knight Running

https://www.youtube.com/watch?v=XslcgQJMZaY

[Benzino Napaloni]

https://blogs.elconfidencial.com/tecnologia/tribuna/2023-02-05/inteligencia-artificial-innovacion-empresas_3569244/

La inteligencia artificial también es humana

(...) Se trata de tecnologías que desarrollan un algoritmo de aprendizaje profundo y permiten procesar la inmensa cantidad de información que las soluciones big data recopilan, detectando patrones y estableciendo pautas de actuación humana.

Eso no es aprender. Que me disculpe el forero que lo dijo, porque ahora no recuerdo quién fue, eso es velocidad y mayor capacidad en el tratamiento de datos/información.

Aprender (RAE): Adquirir el conocimiento de algo por medio del estudio o de la experiencia.

Sin problema, fui yo mismo.

Un ejemplo aplicado de que la computación sólo da potencia cuantitativa, pero no llega a los patrones que hay detrás, sino que a menudo éstos se han descubierto antes, es la Ley de Benford de distribución de cifras. En, por ejemplo, una evaluación de fraude de evasión de impuestos o falsificación de las facturas, la IA no tiene ninguna forma de saber qué números son potencialmente falsos.

Luego está el asunto de la conducción automática. ¿Te acuerdas del vídeo con el que Tesla promocionaba el Autopilot? Era falso. Y eso quizá no sea lo más grave

7 años después, Tesla sigue sin haber desarrollado el Autopilot prometido. Y peor que eso, Mercedes y Honda han conseguido ser los primeros en conseguir llegar al grado 3 de asistencia, ya han adelantado a Tesla.

Como referencia de los niveles de asistencia:

• 0: No hay automatización de ningún tipo.
• 1: Asistencia limitada.
• 2: Automatización parcial de la conducción.
• 3: Automatización condicionada.
• 4: Automatización elevada.
• 5: Automatización completa.

https://www.xataka.com/automovil/de-0-a-5-cuales-son-los-diferentes-niveles-de-conduccion-autonoma

Sólo se puede empezar a hablar de la liberación de la necesidad de conductor en el nivel 4. Y aún queda mucho para eso, apenas hemos conseguido el 3.

[Derby]

https://www.ft.com/content/e03d277a-e697-4220-a0ca-1f8a3dbecb75

A bipolar currency regime will replace the dollar’s exorbitant privilege, Nouriel Roubini

The greenback is bound sooner or later to feel the effects of intensifying geopolitical rivalry between the US and China

The US dollar has been the predominant global reserve currency since the design of the Bretton Woods system after the second world war. Even the move from fixed exchange rates in the early 1970s did not challenge the greenback’s “exorbitant privilege”.

But given the increased weaponisation of the dollar for national security purposes, and the growing geopolitical rivalry between the west and revisionist powers such as China, Russia, Iran and North Korea, some argue that de-dollarisation will accelerate. This process is also driven by the emergence of central bank digital currencies that could lead to an alternative multipolar currency and international payment regime.

Sceptics argue that the global share of the US dollar as unit of account, means of payment and store of value hasn’t fallen much, despite all the chatter about a terminal decline. They also point out that you can’t replace something with nothing — as former US Treasury secretary Lawrence Summers put it: “Europe is a museum, Japan is a nursing home and China is a jail.”

More nuanced arguments point out that there are economies of scale and network that lead to a relative monopoly in reserve currency status, and that the Chinese renminbi cannot become a real reserve currency unless capital controls are phased out and the exchange rate made more flexible.

Moreover, a reserve currency country needs to accept — as the US long has — permanent current account deficits in order to issue enough of the liabilities held by non-residents as a counterpart. Finally, such sceptics argue that all attempts to create a multipolar reserve currency regime — even an IMF Special Drawing Right basket that includes the renminbi — have so far failed to replace the dollar.

These points may once have had some validity, but in a world that will be increasingly divided into two geopolitical spheres of influence — namely those surrounding the US and China — it is likely that a bipolar, rather than a multipolar, currency regime will eventually replace the unipolar one.

Complete exchange rate flexibility and international capital mobility is not necessary in order for a country to achieve reserve currency status. After all, in the era of the gold-exchange standard the dollar was dominant in spite of fixed exchange rates and widespread capital controls.

And while China may have capital controls, the US has its own version that may reduce the appeal of dollar assets among foes and relative friends. These include financial sanctions against its rivals, restrictions to inward investment in many national security-sensitive sectors and firms, and even secondary sanctions against friends who violate the primary ones.

In December, China and Saudi Arabia conducted their first transaction in renminbi. And it is not farfetched to think that Beijing could offer the Saudis and other Gulf Co-operation Council petrostates the ability to trade oil in RMB and to hold a greater share of their reserves in the Chinese currency.

It is likely that the GCC countries, as well as many other emerging market economies, may soon start accepting such Chinese offers given that they do a great deal more trade with China than the US. Also, there is a clear so-called Triffin dilemma in a currency regime in which the reserve country runs permanent current account deficits that will eventually undermine its reserve status as the growth in its international liabilities becomes unsustainable.

Critics question whether the currency of a country running a persistent current account surplus can ever achieve global reserve status. But China may in any case be moving towards a growth model less dependent on trade surpluses.

It is also an anachronism that the US, whose share of global gross domestic product has halved to 20 per cent since the second world war, still accounts for at least two-thirds of all so-called vehicle currency transactions. The current system makes emerging market economies financially and economically vulnerable to changes in US monetary policy driven by domestic factors such as inflation.

Finally, new technologies including CBDCs, payment systems such as WeChat Pay and Alipay, swap lines between China and other countries, and alternatives to Swift, will hasten the advent of a bipolar global monetary and financial system. For all these reasons, the relative decline of the US dollar as the main reserve currency is likely to occur over the next decade. The intensifying geopolitical contest between Washington and Beijing will inevitably be felt in a bipolar global reserve currency regime as well.

[Derby]

Con la reapertura de China, el tsunami inmobiliario vuelve a "rugir"...

https://adamtooze.substack.com/p/chartbook-194-can-beijing-halt-chinas?

Can Beijing halt China's housing avalanche? The most important economic-policy question for 2023?

Few things matter more for the world economy in 2023 than China’s fortunes. Not since the reform period began, have there been more serious question marks over the trajectory of China’s growth.

The 2015-6 near-miss crisis, when the RMB depreciated and capital flooded out of China was a more acute moment of danger. Fear of a repetition still hangs over the current scene. But in 2015-6, the growth engine was not spluttering to the same degree. China did not face the kind of labour market pressures it does today, with youth unemployment rising towards 20 percent and graduates uncertain of their future employment. Nor was China in 2015/6 facing an avalanche in its real estate sector.

As 2023 begins, in its Article IV report on China the IMF rather blandly remarks:

As of November 2022, developers that have already defaulted or are likely to default—with average bond prices below 40 percent of face value— represented 38 percent of the 2020 market share of firms with available bond pricing. Despite these strains, the pace of restructuring has been slow, partially hampered by the potential for very large losses for pre-sale homebuyers due to the large backlog of troubled projects. The sector’s contraction is also leading to strains in local governments. Falling land sale revenues have reduced their fiscal capacity at the same time as local government financing vehicles (LGFVs) have also significantly increased land purchases.

However this is calculated precisely, a 38 percent default rate is bad news!

Everyone has long known that the pre-2021 boom in real estate was unsustainable. As the IMF points out

China’s residential housing sales averaged 1.5-1.6 billion square meters per year from 2018-2021, about 30-50 percent higher than estimated annual demand for the next few years based on demographic and housing stock factors.2

In a worrying signs of overheating, more and more floor space was at the initial stage of construction, whilst the pace of completions remained steady at c. 800 million square meters per annum, as it had been for more than a decade. There was a mounting gap between aspirations and the reality of delivery.



The construction boom, in turn, was the main driver of China’s massively unbalanced, investment-heavy, consumption-poor growth. Though, in recent years, the investment share has stabilized and consumption has begun to increase, the imbalance remains huge.



The latest estimates by Rogoff and Yang 2022 suggest that real estate development, directly and indirectly, has driven 25 percent of total economic activity in China.



Ever since the industrial revolution began in earnest in the 19th century, urbanization and real estate investment has driven surges of growth. Paris was transformed. Cities like Berlin and Chicago sprouted in the late 19th century. Stalinism stamped a new urban civilization into existence in the 1930s. Western Europe and Japan experienced rocket-ship growth after 1945 and a transformation of their urban landscapes. China has taken the dynamic of urbanization and growth to a new dimension.



Source: Rogoff 2021

In the late 1990s China still did not have a large private real estate market and real estate accounted for c. 8 percent of GDP. Over the following quarter century China experienced a revolution.

On the basis of census data, Rogoff and Yang estimate that 43 percent of all homes in China had been built since 2010, 68 percent since 2000 and 88 percent since 1990. If you put this in relation to total population it implies that in a single generation, China has built enough homes to house a billion people. The fabric of domestic life has been completely churned over in a matter of decades.



It is the demand for concrete and steel generated by this giant construction boom that has made Chinese growth so dirty. It is important to emphasize this point. As a driver of energy consumption, the rehousing of hundreds of millions of people, dwarfs China’s role as an exporter. It is important, of course, for Europeans and Americans to remind ourselves that in the course of globalization we have exported a substantial chunk of our pollution, much of it to China. But to imagine that it is our out-sourced emissions that drive China’s massive surge in energy consumption and CO2 emissions is to succumb to anachronistic Western-centric thinking. It is domestic forces that drive China’s growth.

Will 2023 be the year in which China breaks with its heavy-industrial, construction-driven growth-model? Western experts, certainly, are agreed that what China needs is not more physical construction but a burst of institutional state-building. What China needs is a welfare state adequate to its new status as a high-middle income country and that will require a new fiscal constitution. Amongst G20 members China and India rival each other for the lowest share of income tax in GDP.



But whether or not China is to embark on a new growth path, the ongoing crisis in real estate has to be addressed, not to restart the unsustainable boom, but to put out the fire that threatens to consume the sector. Over the course of 2022, housing starts and sales crashed by 40 percent year on year.



With most households having the majority of their wealth tied up in real estate. It is little wonder that consumer confidence went off a cliff in 2022. If you want a simple explanation for why zero COVID was abandoned, look at this data.



The fear of lockdowns & the imploding real estate bubble made for a truly depressing mixture. Lifting the lockdowns will help to raise the mood. But the pain in the real estate sector remains. Even the best possible outcome - a fully rebalanced recovery - cannot begin without a stabilization in real estate.

On the question of stabilization, China’s real estate crisis is unique not just for its scale. China’s real estate crisis was long predicted. But the crisis did not come about as a result of a “natural” business cycle, as, for instance, in the North Atlantic housing crash in 2007-8. In China the crisis was brought on deliberately in 2021-2022 in an effort to deflate the bubble preemptively. In this respect the situation is unique in economic history. Not only has there never been a housing boom on this scale. But the attempt to deliberately curb it and bring it under control is also unique in its ambition.

As Robin Wigglesworth points out, the IMF report shows the Chinese authorities in a relatively calm mood. It is tempting for Western observers to read this as window-dressing, or whistling in the dark to steady your nerves. We should not rule out the possibility that Beijing truly believes that it can contain and manage the fallout from a wind-down, which it has itself engineered. Abandoning the zero-covid policy, with all its implications, is the first and most important decision, necessary to stabilizing the real estate sector.

Across the board in 2022 Beijing shifted from a restrictive and deflationary course to one of re-stimulating the real estate economy.



The temptation will be great to use classic monetary policy tools to revive the housing market. A sharp decline in mortgage lending and borrowing from banks to Chinese households has been a key driver of the real estate crash since 2021.



Falling mortgage borrowing has squeezed Total Social Financing, one of the key indicators of economic activity in China’s hybrid public-private, mixed economy.

But should one welcome a revival in mortgage lending? Certainly, reversing the tough red lines policy on real estate credit adopted in 2021 would suggest pragmatism. But it would also demonstrate a failure to break with the existing growth model. As Michael Pettis has tirelessly explained, Beijing would be caught up in repeating the strategy that led China into the unsustainable boom in the first place. Managing the crisis like that would be impressive exercise in what used to be called “fine-tuning”, but in strategic terms it would be a dead end.

A strategy that was directed not towards restarting the boom, but towards cauterizing the wound and restoring a platform of confidence, would instead focus on the most painful element of the crisis, the millions of Chinese households who have made large down-payments on apartments that are only partially completed or not even begun. As the IMF comments:

A key underlying challenge to restoring confidence and securing an orderly transition is the large backlog of partially built housing. In the years prior to the crisis, developers expanded their use of presales of unfinished homes as a de facto form of financing, in part by using home purchase deposits to cover the cost of unrelated projects. The annual ratio of housing pre-sales to completions—an indicator of the growth of unfinished housing—reached an average ratio of two in the last four years, up from about one in the decade through 2015. Residential real estate under construction as a result reached 6.9 billion square meters at end-2021, ten times the average floor space completed by the sector each year. The slowdown in sales has sharply limited the availability of funds to finish construction on many pre-sold projects, particularly for distressed developers. The rising risk of non-completion for some of these projects impairs the realizable market value of developer assets, worsening their solvency and liquidity problems, and affects homebuyers’ willingness to purchase homes before they are completed. This not only limits developers’ capacity to continue investment, but risks sizeable losses for households and the banks that funded these purchases via mortgage credit. Homebuyers’ decreased confidence in the pre-sales model also limits the traction of policies aimed at stimulating housing demand. Without stabilization for pre-sold housing demand, a large segment of partially finished housing would be at risk of noncompletion. While significant data gaps make the task of estimating the cost of completing troubled developers’ partially built housing inevitably imprecise, a range of estimates suggests the cost could be significant. The average of the midpoints of three estimation approaches places the gross cost of completing distressed developers’ pre-sold projects—with no funding from additional sales or restructuring recoveries—at roughly 5 percent of GDP, with one approach implying costs well above that.

So, simply to stabilize the Chinese real estate market, not to unleash a new boom but to clean up the most serious overhang from the last few years of excess, will require a commitment of in the order of 5 percent of GDP even if the resources are perfectly targeted. That is a measure of the challenge ahead.

The stakes are immensely high. The housing boom in China since the 1990s is probably the largest single driver of wealth accumulation the world has ever seen. Stopping it was an audacious act of policy. Managing the fall out is a severe test for Beijing. If it were to succeed, it would be an example of macro-prudential economic management on a truly world historic scale. If it fails, the “China dream” promised by Xi is in jeopardy.