10 years ago analysts were warning that China’s largest property investment company, EverGrande, was a basket case of Frankenstein ideology spawned between the Communist Party and the market forces of Chinese Capitalism.
The analysts warned the insane amount of debt wracked up was utterly unsustainable and if it collapsed billions would be lost.
That was 10years ago.
Now EverGrande has $300billion in debt and the implosion is likely to cross a debt black hole threshold and drag China and the globe into an event horizon of recession at a time when Covid is still being fought.
I think if EverGrande implodes it will trigger a mass liquidation of external property holdings and businesses meaning the Chinese investor will dump property assets in the West to shore up the domestic Chinese economy.
We can see this with WasteManagement up for sale now (an asset the Regional Council should buy). If EverGrande spreads expect the contagion to hit property prices hard as a glut of sales extinguish demand.
Expect higher interest rates as house values plummet. Watch how quickly NZ Middle class kindness evaporates when they lose 40% of their fake housing wealth.
This type of economic carnage in the West would suit China’s diplomatic goals in the wake of AUKUS.
I have argued that China’s recent crackdowns on screen times, effeminate men and Chinese Tech Tzars is driven by a paranoid and frightened authoritarian State not the bold moves of an optimistic new SuperPower.
When the economic sugar rush of fake growth passes its first bloom, the dark tyranny of war quickly angers into those hollow promises.
Pandemic + economic strife = war.
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