The Chinese political system over this decade will be critical for whether or not it will collapse its political system in its current form due to the series of crises hitting the Chinese state, such as China’s terminal demographic decline, its housing crisis and the breakdown of globalisation.
It would be idiotic to predict the future of China’s political system throughout its long and bloody history of over 3,500 to 4,000 years.
China is full of historical examples where it collapsed as a united political entity only to be reunited.
Also, this being the modern world and factoring in modern technologies, it is unpredictable to see what will happen and that the crises could be delayed.
The Chinese housing crisis is caused by China’s investment-based economic model, which means resources and capital flow towards the development and construction within China, artificially raising national GDP.
Investing in infrastructure leads to economic growth, and better infrastructure helps to build any economy; this is the basis of Adam Smith’s Wealth of Nations, published in 1776.
Also, since 1980, China has transformed itself from an agricultural economy into an industrial and urbanised economy within 40 years, with its population going from 80% of its people living in rural areas to now living within inner cities and urban areas.
Despite the success in China being replicated in South Korea and Japan, the investment model of investing in infrastructure is not sustainable and can lead to stagnation, which Japan has experienced for over 30 years.
Unlike the Chinese, the Korean and Japanese private investment models could balance out its economy in international investment opportunities and outsource its manufacturing abroad due to Japan suffering terminal demographic decline.
Unfortunately, the Chinese capital flight restrictions meant they looked for alternatives to invest their capital in the Chinese housing market.
The issue with the Chinese housing market and why it’s facing a housing crisis is that there is enough housing for twice the Chinese population, and the Chinese have overbuilt by 200%.
Furthermore, the Chinese citizens dumped their life savings into housing, generating the world’s most massive overbuild. As China collapses and people’s money is tied up in this useless real estate, it doesn’t take much to imagine what happens next. Let’s say Xi might be losing some of his fan base.
People typically invest their capital into housing costs under normal circumstances because the housing price doubles an average every 20 years.
As long as there is a high demand for housing, housing prices continue to increase.
Unfortunately, the Chinese housing crisis is caused by too much supply, which means that the worth of properties will decrease, making people’s investments into the housing market a net loss and the possibility they can sell their property and live off their savings becoming increasingly remote.
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