This is an interesting analysis of what is currently happening in China. Plenty of implications for the World economy.
The bit which stands out in my mind is the way the Chinese government retains the ultimate ownership of land (through the various regional authorities). Government sells 70 year (to 90 year)
leases to developers, the developers sell houses off the plan (i.e. before they are built)... the developers then use that money to secure more leases from the government before constructing the first houses (i.e. leveraging the deposits paid by buyers to expand their business)( sort of like Tesla by the way). Property prices rise which keep the buyers coming.
In a nutshell... what does that mean? It means the Chinese government has been using the property boom to fund itself.... sucking money out of its citizens (in a way that Goldman Sachs could only dream about). A collapse of property prices in China, if it continues, will bust the Chinese economy. (mirrored in the US where rising asset values provide the most significant tax revenue for the US government).
Speculation... China has a deep financial crisis on its hands... (as does the US). In the US this week the idea of the $T coin was rolled out (again)... if they did that, once the shock wears off, the laughing will start... so probably more money printing instead. In China what can they do? Devalue the Yuan (like they have done before)...probably.
However, China has the nuclear option in the back pocket... it has an estimated 20,000 tonnes of gold stacked... i.e. their version of the $T coin (except bigger and more tangible). If money printing doesn't work for China this time, to make themselves whole they can simply declare gold is now more valuable (the Shanghai gold exchange is the biggest in the World
https://www.sbma.org.sg/media-centr...g-a-better-future-for-the-global-gold-market/ )... China could , if it so decided, overnight claim gold was worth significantly higher (and back that up with on market purchases) wiping out, in one go, its entire national debt. Wild idea but wild times.
