China's Stupidity to Not Use Immigration to Solve the Property and Job Crisis

In yet another epsiode of the unfolding China Property Crisis, Country Garden has warned that it might not be able to meet all its debt obligations. This is due to Country Garden experiencing slowing home sales which means it does not have enough cash receipts (inflow) to meet debt repayments (outflow)

Sales to Generate the Cash flow for Repaying Debts

As China developers have disclosed, there is a lack of sales and this is due to the destruction of speculative demand  especially in Tier 3 and 4 cities. This means only real demand based on population needs is left and the truth is these cities do not need these excess apartments based on their population numbers.

Immigration is the Solution

If there is insufficient demand, the solution is to increase the population to generate more demand. Following the example of Singapore, Singapore opened the immigration floodgate which led to an increase in rental demand for both its private and public housing markets. This helped the Singapore economy to propel itself forward. It's economic composition is similar to China where 35% of the economy is tied to property, however the continued openess to foreigners has ensured property demand is ever present in this small island.

On the contrary, the closeness of the commuist government's stance to foreigners has resulted in the population relying on the growth of the citizernery population. However, with a declining birth rate in China, the lack of growth means there is a depressed real housing demand. If China opens up to foreigners, it will definitely boost rental demand and help solve its property crisis.

The contrast in immigration policy has turned China into the sick man of Asia while Singapore remains the rising kid in Asia. Ironic considering that both population's majority are ethnic chinese just with differing capabilites in government leadership and policies.

Immigration Helps Create Jobs

China faces another problem where it has to create jobs to meet about 20 million new graduates who enter the market each year. Right now, China is unable to meet this wave and youth unemployment has hit above 20%.

The Singapore government has always said that the presence of foreigners helps to create jobs. China should consider the Singapore model because it will help solve the youth unemployment crisis it is facing.

No doubt, the entry of foreigners will erode a national identity but the economy is important. The current government led by Xi Jinping has become close minded and is no longer prirotising the country's economy. As a result, the Chinese Citizens are suffering because Xi Jinping is no longer thinking for the economy but instead to consolidate his political power. This has worried investors who are now realising how the Chinese President has stifled economic growth. With falling confidence in the communist government, private sector money is leaving China which has propelled the economy downwards.

China has to urgently restart its economy or otherwise it will become a repeat of Japan 2.0 with its citizens suffering from decades of stagnating wages. Immigration is the simple answer to solving its two main economic problems of property and jobs. Singapore has proven that it works, and replicating it in China will definitely reap economic rewards.

The tools are there to save the day, what remains is the willingness of the man.