In 2020, mainland China’s macroeconomic GDP can maintain a growth rate of 2.3%, foreign trade is the biggest credit, the second biggest credit is the pull of investment.
The year 2018 was the peak year for fixed asset investment in mainland China and has been declining continuously since then. 2019 saw a sharp contraction of 13.2%, with secondary industry investment (also known as industrial investment) shrinking by a whopping 31.5%. 2020, against the backdrop of hype about various so-called new infrastructure investment concepts, fixed investment still grew by 2.9%, with secondary industry investment shrinking by 8.5% . Of course, real estate investment is still relatively hot, with a 9.9% increase in 2019 and a 7.0% increase in 2020 despite the impact of the earnings Epidemic.
From this set of data can actually draw the following conclusions: First of all, the real economy investment in mainland China is shrinking very seriously, the secondary industry investment shrunk by 8.5% on the whole of last year, although the overall fixed asset investment grew by 2.9%, but manufacturing investment is a serious drag. Second, last year’s fixed assets to maintain 2.9% growth, real estate credit. Last year, fixed asset investment in real estate investment increased by as much as 7%, basically to make up for the hole in manufacturing investment plunge.
Over the years, we have been saying that the real economy of mainland China is in recession and real estate is growing like crazy, and may not have a specific concept. Let me analyze a set of data with you to see how fast the recession of the real economy is and how crazy the development of real estate is.
In 2018, the scale of industrial investment is a full 97.8% higher than the scale of real estate investment, to 2019 only 23.4% more, and then to 2020, it is only a mere 5.5% more! After these two years of this and that, the scale of real estate investment and industrial investment is already very close to the scale. According to this trend, in 2021, the scale of real estate investment will overwhelm the scale of industrial investment, becoming the most important industry capital investment in mainland China.
The new infrastructure concept, which was popular in 2020, is actually all invested in various industries, such as data storage centers, 5G base stations, charging piles and so on. At the same Time, the financial system issued the strictest ever policy on the three red lines of real estate financing, in an attempt to stop the flow of funds into the real estate development sector. However, at the end of the day, when we look at the data, it is still the real estate investment that steadily wins over the industrial investment. It seems that no policy can really dampen the enthusiasm of funds pouring into the real estate sector. Of course, this must also mean that in 2021, real estate control policies will continue to increase.
At the end of last year, major banks were also drawn red lines for mortgages, limiting the proportion of bank funds invested in mortgages. The bottom of the barrel for real estate funds will be the biggest killer of real estate control in 2021.
Think about it, a normal country to develop, industrial investment should account for the largest proportion, which is a healthy and sustainable development model, but now is not this concept at all. Although investment as a whole is growing, industrial investment shrank significantly by 8.5%, which means that the economy of mainland China is too serious and increasingly abnormal in terms of de-realization. And these correspond to the previously analyzed trend of bankruptcies and closures of real enterprises in mainland China, as well as the withdrawal of foreign capital and the transfer of domestic capital to Southeast Asia, and the significant increase in unemployment.
And now, the scale of industrial investment has been caught up by real estate in 2020, the economy of mainland China has been completely driven by real estate, which is very dangerous and unsustainable.
This is that the growth is not growing, but is declining, and should not grow and is rising like crazy, for the Chinese government is also very disturbed. But in order to stimulate economic growth, in order to seize the throne of the global economic growth first, shaping the image of a large country against the epidemic to achieve “glorious achievements”, but also the only risk in 2020 to start the night pot of real estate, to offset the decline in manufacturing investment.
The prosperity of the property market in mainland China over the past 20 years has given many people the illusion that the real estate bubble in mainland China will never burst. When most people think this way, it means that the property bubble is almost ready to burst.
The current housing prices in northern cities in mainland China are basically generally falling, for example, in some large and medium-sized cities such as Beijing suburbs, Tianjin, Qingdao, Jinan, Zhengzhou and northeast China, it is common for housing prices to fall by 20% to 50%. The economic downturn and population decline in the north has become the biggest threat to housing prices. The outflow of population and capital from the north to cities in the south such as Shenzhen, Shanghai and Hangzhou is the main reason for the sharp rise in southern cities last year.
Moreover, the phenomenon of property loan breakage in mainland China, foreclosures as well as the increasing number of houses at cabbage prices, and some time ago there was even the odd thing of giving away houses for free in the suburbs of Beijing after the house prices fell by more than 30%, and of course the mortgages to be repaid were sent out together. All these phenomena indicate that the bursting of the property bubble in mainland China has begun to appear locally, and it remains to be seen whether it will become a national phenomenon, or whether it will spread to the south.
However, along with the shift to normal monetary policy within China this year, the currency has begun to tighten, and with the tightening of mortgage loans from banks as well as the contraction of consumption and exports in mainland China, and the severe employment problems, the income of residents will fall further. At present, more than 90% of the disposable income of mainland China residents are invested in real estate, which is the embodiment of real estate power failure. This year, real estate will definitely not have such a hot scene in the south last year. China’s real estate is becoming more and more bubble, power failure, unsustainable.
Once the rapid shrinkage of real estate investment, the second horse-drawn carriage of China’s domestic economic growth in 2020 may also have to be extinguished ……
Responsibility Editor: Ye Jing Han Source: Financial Cold Eye Please specify the author, source and keep intact when reprinting.
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