Taps Coogan – June 12th, 2022

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The following chart, from Crescat Capital’s Tavi Costa, highlights that Chinese land sales have seen their largest year-over-year decline since at least the late 1990s.

The intersection of China’s ‘zero Covid’ lockdowns, Xi Jinping’s soft-reboot of the cultural revolution, the tech crackdown, high commodity prices, the Evergrande blowup, and China’s now-shrinking population have been a perfect storm for the Chinese economy and markets, pushing Chinese stocks and bonds to deep lows.

With the lockdowns easing and Xi Jinping looking to be appointed Emporer-for-life later this year, Chinese policy makers are doing everything they can to stimulate markets and the economy. That may work for a while, indeed it likely will, but in a longer term sense, China’s real-estate development heavy economy model is coming unglued.

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