Another Chinese bank looks to have collapsed, the third since May – Unit of China’s sovereign wealth fund takes over Xiao Jianhua-linked Heng Feng Bank in third case of nationalisation since May

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by NineteenEighty9

via scmp:

If three US banks of this size all collapsed within a few months of one another like this it would be front page news. China looks to be at risk for a serious banking/financial crises… or already in one.

Central Huijin Investment will invest in Heng Feng Bank to increase its capital adequacy ratio, improve its management and enhance its operational capability, according to a report by Shanghai Securities News

Heng Feng is among more than a dozen city-level and rural lenders that had been put on notice by the authorities for a shake-up

The Chinese government’s first nationalisation of a private bank since 1998 has led to a collective collapse in the stock prices of China’s listed banks, driving their valuations to record lows, amid fears that the shakeout would affect more lenders, and that the largest and best capitalised institutions would be called upon to bail them out.

 

The housing situation alone in China is just mind boggling for what kind of a disaster they’re heading towards. I think Jon Oliver did a video on it a few years ago, but essentially it’s a giant crisis just waiting to pop for various reason.

  • It’s very common for people to own multiple houses in China. Just as many people own 3 houses as own 1, and 94% of the youth who don’t own a house say they definitely plan on buying one in the next 5 years. On what other question could you get 94% of people from one generation to agree on something like that? These are crazy high numbers that are contributing to a large number of houses sitting empty most of the time.
  • China’s national government forces local governments to spend a bunch of money on things without giving them the tax revenue to do it. The best way for the local governments to make money is… you guessed it, grant approval to build more houses or businesses on empty land. But when places run out of land to do this with, the local government has huge financial problems.
  • A big part of why so many are rushing to buy homes is social pressure, especially among single men. Having multiple houses shows you’re successful financially. And with China devaluing their currency it’s a currency hedge if the large demand for housing remains.
  • China has a rule that you DON’T own the land when you buy property, instead you’re RENTING it from the Chinese government for 70 years. After 70 years you need to get permission to keep using the land from the Chinese government, and who knows what they’ll do when that time comes.

If you thought the US housing crisis was bad just wait until the China housing bubble pops, it’s already much worse then it was in the US.

 

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