The world continues to nervously watch the situation with Evergrande and other developers in China. The numbers are pretty stark. Evergrande itself has liabilities of about $300 billion, $200 billion of which is to about 1.4 million individual apartment buyers who have fronted money for apartments not yet built. Other developers have similar, smaller problems. Just the debt to individuals is more than 1% of China's GDP for 2020.
As an aside, we should note that part of the problem is closed capital markets and especially limits on foreign exchange and the difficulty Chinese investors therefore have in investing abroad. If the yuan were freely convertible, Ross Perot's giant sucking sound of NAFTA would sound like your grandmother's gentlest, demure little poot compared to the supersonic roar of yuan headed elsewhere.
But the most interesting solution to all these empty apartments would be to have some mechanism for China to admit immigrants. China has a demographic problem of an aging population and a dependency curve (ratio of working population to retirees) on a punishing slope, a huge headwind to growth going forward. Meanwhile, Africa has all too many young people.
But China is not good at importing people, and the Chinese language is something of a barrier. China could admit immigrants and have them speak English or French or something similarly simple. But it won't.
With freer immigration in general we could get back to a flatter world Tom Friedman fairly quickly. But the political will is lacking, while the epidemiology remains complex for the moment.
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