Right from the Middle: Real estate industry problems weaken Communist China
By William O. Lipinski
The enormous economic Red Dragon of the far East, the People’s Republic of China, that had plans to control all the countries on this planet because of its great economy has fallen victim to its own excesses.
The world’s second largest economy is failing on a number of economic fronts.
First and foremost, its system is part Capitalism, part Collectivism, and part Socialism , which has never succeeded, it never will succeed because it is so contradictory in its parts.
China’s number two problem is the real estate industry.
The incredible belief of Chinese homebuyers that real estate was a “can’t lose investment” drove the country’s property sector to become the backbone of the Chinese economy.
But unfortunately, for China and the Chinese Communist Party, over the last two years, one real estate company after another went under.
This happened because people stopped buying new homes and because of the massive death owed by real estate companies.
People stop buying homes because of the prices becoming prohibited because of the real estate companies massive debt. And also, peoples’ loss of faith in thebelief that real estate was a sure-fire investment.
Evergreen, the largest real estate firm in China last week was ordered by a court to close down operations and to liquidate the firm. The reason being, its $300 billion debt.
No one entity or individual the government, the investors, or Real estate experts have any ideas on how to turn the industry around.
The principal problem at the present time is that the Chinese people have lost total faith in the real estate industry. And that is an industry that had created great wealth for Chinese families.
The next big problem for the Chinese economy is the down turn of orders for its factories.
The Chinese people have lost so much confidence in their economy, consumer sales have fallen six straight months. Because the people are afraid to spend money because they don’t know what’s going to happen next.
Senior citizens particularly are saving their money because the one child policy has drastically changed family life for the Chinese.
Senior citizens no longer can count on their children to help them in their old age they must depend upon their own money.
Government welfare and healthcare are no longer what they once were, because of China, spending on the military, and investing in the economy to turn it around.
Cut back on these government services. has caused individuals to depend more on themselves. And that is concerning the government leaders.
The other significant problem in manufacturing is the cut back by the United States and European countries in placing orders.
These nations are starting to make their own products and are having products made in other Asian countries.
The collapse in the real estate market and the significant reduction in manufacturing, has cost China a staggering number of jobs. This is another significant problem for the Chinese economy.
There had been significant unemployment for recent college graduates over the course of the last few years and now the severe downturn in real estate and manufacturing has caused large scale, unemployment across all age groups. This has caused unrest and street demonstration by Chinese citizens, which have been put down harshly by the government.
This has exacerbated the harsh feelings, the citizens have for their government leaders. There are other problems that China has but that’s enough for this week.
Until next time, thank you for reading this week’s column especially you, Joe Bonomo. a fellow American.
(Bill Lipinski served as Democratic Committeeman/Alderman of Chicago’s 23rd Ward. Lipinski was elected to Congress in 1983 and served through 2005. He currently writes the “Right from the Center” opinion column at BillLipinski.com. Email him at BillLipinski@hotmail.com.)
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