Analysis: The return of the middle class to poverty is a foregone conclusion

More than 10 million graduates, you are too much. I feel, I really can't stand it. Analysis. The return of the middle class to poverty is a foregone conclusion. China's real estate market continues to be sluggish, with housing prices in 95 cities falling off a cliff. Analyses continue to emerge about how a large number of China's middle class will be crushed by real estate. The definition of middle class in China is not very clear. What mainlanders can reach a certain consensus on is that if you have one or more properties in first and second tier cities and have a relatively decent income, you are likely to enter the ranks of middle class families. The asset allocation of domestic middle class families often favors the real estate sector. When house prices were on the rise, they made a fortune with their relatively unique vision and relatively advanced awareness. Since China rectified the high leverage problem in the housing market in 2020, China's housing prices have fallen by about 30% from the high point in 2021, which has dealt a heavy blow to the Chinese economy. The continued recession of the real estate industry has caused a general decline in housing prices. Mainland financial media pointed out that cities with HeGang-like housing prices are spread across 25 provinces, and China's most economically developed regions such as Beijing, Tianjin Hebei, the Pearl River Delta, and Chengdu Chongqing are also surrounded by HeGang-like cities. With the precipitous drop in housing prices on the mainland, many recent analyses suggest that a large number of middle class people will be destroyed by real estate. Some bloggers believe that 70% of the wealth of Chinese middle class families is in houses. This ratio is abnormal globally, as no other country has real estate accounting for 70% of family wealth. However, a large number of middle class people in China's first and second tier cities have accumulated assets in real estate. The household leverage ratio has reached 63%, the highest in the world. Therefore, as housing prices continue to fall, most of the middle class have no ability to withstand risks. Shanghai's housing prices have become a big joke. The blogger Jing Kuhuhu recently said that one of her friends bought a house in Shanghai and lost 3 million RMB, same below when selling the house. She said that in 2017, her friend and others started a business together. To take care of the family, they bought a house in Shanghai. At that time, they spent 6.2 million, 92 thousand per square meter. The house started to rise a little right after the purchase, and the couple were glad that the house was worth buying. But when they needed money and wanted to sell the house, no one asked about it when it was put up for sale. Finally, someone showed interest, but they asked to reduce the price to 5 million. The more my friend thought about it, the more he felt he was losing money, so he decided to wait. It didn't matter if I waited, I saw the house price falling more and more and the drop becoming more outrageous. Now it's down to 52 thousand per square meter. My friend realized the house was locked. You may not believe it, but the final transaction price of the house was 3.2 million, which was half of the original price. He lost 3 million. My friend really wants to cry but has no tears. Analysis The return of the middle class to poverty is a foregone conclusion. The blogger Huang Huang recently said that the return of the middle class to poverty is inevitable because most of the middle class own more than two houses. Houses are all their assets. There's a big difference between the Chinese middle class and the foreign middle class. Asset allocation heavily favors real estate, and they can't take out cash. As long as they have cash, the first thing they think of is to buy a house. If they have money but don't buy a house, it's seen as a waste of money in the eyes of these middle class families. Therefore, the vast majority of the Chinese middle class's funds are invested in houses, and on average, they own more than two houses. Data shows that the home ownership rate of Chinese households with one house is over 90%, and the ownership rate of households with two houses is over 40%. Huang Huang said that these 40% of families with two houses are China's middle class families. The 25-year upward cycle of China's real estate from 1998 to 2022 has completely ended. In 2023, real estate entered a downward cycle that may last for 30 years. In the next 30 years, housing prices will experience a long-term slow decline combined with short-term accelerated declines. Until housing prices in various cities in China fall to a reasonable level, the decline will continue. He believes that the group most affected by the continued slow decline of housing prices over the next 30 years will be the middle class people who bought more than two houses early on, because during this process, most of them bought houses with loans and are burdened with heavy mortgages. They will also face uncertainties about whether their income can steadily increase, whether their jobs are stable and long-term, whether their families remain healthy, whether their children can study abroad, and whether the costs of living, education, medical care, mortgages, etc. will remain stable or gradually decrease. But all of this is unknown. If a crisis occurs in any aspect, they will face the risk of defaulting on their payments, leading to a significant reduction in their assets. Huang Huang asserted that with the continued decline in housing prices and the decrease in China's population, the phenomenon of oversupply of houses has intensified. The government may introduce policies such as a real estate tax or vacancy tax. These are undoubtedly worse for the middle class who own more than two houses. As housing prices fall, the assets of those who own houses will only continue to shrink. It is foreseeable that the return of the middle class to poverty is inevitable. China's youth unemployment rate is high. Experts. A hidden time bomb. China's youth unemployment rate remains high and has reached a new peak for two consecutive months, far higher than in other countries. Experts point out that the real situation is worse, and the army of unemployed youth has already lain flat, becoming a time bomb that could eventually detonate and overthrow the CCP regime. The CCP Statistics Bureau announced in June 2023 that the unemployment rate for young people Afterward, the data was suspended, but in January this year, it was suddenly resumed, announcing a youth unemployment rate of 14.9%, excluding students. In July, the CCP announced the youth unemployment rate was 17.1%, and in August, it was 18.8%, a new high. Although the CCP's data is said to have shrunk significantly, it is still far higher than in other countries. According to the International Labor Organization report, the global youth unemployment rate is currently 13%, and in the United States, it is 9.8%. C.A. Tian, a professor at the Aiken School of Business at the University of South Carolina, said, China's economy is in such a recession that so many companies and factories have closed down, shut down, or moved away. The first victims are these young people. Zhang Dandan, a scholar at Peking University, estimated that in March last year, China's youth unemployment rate was as high as 46.5%. In the same year, there were 11.58 million college graduates, and this year there are 11.79 million fresh graduates, further increasing employment pressure. Chen Shuhan, a columnist for Beijing Spring, said, Most young people are unemployed and many social problems will arise. Like during the previous epidemic, why was there a blank paper movement? Ordinary people can't survive. The bleak employment prospects have left young people feeling desperate. The CCP announced that in the first 10 months of last year, the number of minors committing telecommunications fraud crimes increased by 68% year on year. Chen Shuhan, you see, there are places in China where corrupt officials are killed and their entire families exterminated. People will go to extremes when they are desperate, especially young people. If young people are pushed to the edge, there will be large-scale street movements in society directly impacting the CCP regime. Jie Tian said, The CCP's surveillance and violent rule are very serious. Many people feel powerless and helpless, and they also feel fear under high pressure. There is a limit to their lying flat approach. If these people spend their savings and their parents can no longer support them, they will eventually take to the streets. It seems calm now, but in fact, it is a hidden time bomb.