A few days after the whole ruckus was over.
I enjoyed the high-grade intelligence the domestic construction companies had handed over, along with a cup of coffee.
“Slurp—”
They said that, among all forms of collusion between politics and business, construction corruption was the king. And indeed, the scale was on a whole different level.
Looking at these premium materials, I instantly understood why greenbelts were suddenly lifted, why reconstruction permits suddenly went through, and why useless stations suddenly appeared on the KTX and GTX lines.
At the same time, I felt a faint sense of self-reproach.
Why bother struggling to predict the future? With internal materials like this, you could get rich without knowing the future at all.
“Slurp—”
After reviewing them nonstop for three hours, I picked up my pen.
I had sufficiently confirmed the construction companies’ sincerity. These documents mentioned not only senior, multi-term, and key-position lawmakers, but even the names of the president and the prime minister.
Regrettably, the people I had thought might be involved were, as expected, involved—and among them was even someone I’d thought surely couldn’t be.
Well, at this level, it really did say everything.
—Thud.
And so I sealed away the materials, where the names of lawmakers from both parties were mentioned in friendly harmony, inside my own cabinet.
I had checked the necessary names several times. The president’s confidants, the president’s political enemies… Now I had to consider how to use these materials in the right place at the right time.
I was already curious about the results of the general election one year from now.
Lost in such thoughts, I allocated the Russian jobs I had promised our construction companies. Since they had taken plenty during Ukraine’s reconstruction, I cut them down moderately on the Russian reconstruction projects. Hoping that Korea’s good influence would reach both countries.
“Yes, CEO Ming. You’re already here? Then please wait just a moment.”
After finishing the arrangement, I headed to the conference room where CEO Ming was waiting.
I smiled brightly at CEO Ming, whom I had not seen in a long time.
“For some reason, it feels like it’s been ages. Have you been well?”
“Yes, thanks to you, Team Leader. But this really feels strange.”
“Why strange?”
“It’s the first time I’m meeting you at NPS headquarters.”
“Was it?”
“Yes. Until now, whenever we met, it felt like we were always plotting something. Seeing you like this in broad daylight is quite nice. Haha.”
After Changcheng Fund’s entire portfolio was made public, CEO Ming’s face became much brighter than before.
That was only natural. He no longer had to secretly purchase Russian bonds, nor did he have to keep double books. Of course, there was nothing to be done about the massive consulting fee(?) paid to Meilin every month.
“If you’re pleased, CEO Ming, then I’m pleased too. In that case, shall we cause some trouble for once today?”
“N-no! Not again! What bonds are you going to tell me to buy this time?”
“I’m joking. I asked to see you because of an issue related to Chinese real estate.”
CEO Ming patted his chest in relief, then twitched his eyebrows.
“By real estate, you mean… Shanghai and Beijing?”
“Yes. It came up briefly last time when we talked about Seoul real estate, didn’t it? How much is Changcheng currently investing in Chinese real estate?”
CEO Ming smiled bitterly.
“I’m sorry, but the amount isn’t that large. The real estate assets we currently hold are about ten million dollars…?”
“That’s slower than I expected. Why didn’t you buy more?”
“Even this was purchased with all the passion and sincerity I could muster. Honestly, if it hadn’t been your instruction, Team Leader, I wouldn’t even have invested ten million dollars.”
I knew why CEO Ming said that.
Chinese real estate was still struggling in deflation. Like our Boxpi five years ago, it was a long-term downward trend where it would fall over whenever it looked about to rise, then fall over again whenever it looked about to rise.
“In fact, even the real estate we bought now is in the red.”
“Hmm… Is that so? Still, I heard the amount of malignant unsold inventory in China has decreased significantly.”
“I hate to say this, but you shouldn’t believe that. The statistics stretch and shrink like rubber bands. It’s an open secret that our statistics authorities are tampering with them.”
I groaned inwardly.
Just how far had these bastards falsified the statistics? Were all the news announcements lies?
“Team Leader, no matter how Chinese I am, I’m a cold-blooded person when it comes to investing. From my perspective, Chinese real estate assets are still too large. Leaving everything else aside, if you can’t trust the statistics, what exactly are you supposed to trust when entering the market?”
When I did not respond, CEO Ming raised his voice.
“Of course, even if real estate does trend upward in the long term, what about opportunity cost? Real estate is ultimately a lagging indicator of the economy. If you earn double from real estate, you would have earned quadruple from the stock market.”
“That’s not always the case. Real estate holds still, then rises all at once; then holds still again, and rises all at once again, you could say.”
“Team Leader…”
I held out a sheet of documents.
“Recently, the Chinese authorities extended Wangke Group’s debt maturity by thirty days.”
“That’s still just life support. No one can even grasp how large the deficit is.”
“But I read the authorities’ will from it. As expected, it seems they intend to prevent a chain bankruptcy of construction companies.”
Recently, the Chinese authorities had been desperate to save construction companies.
They had extended maturing bonds worth 400 billion won in our money by one month, trying somehow to prevent bankruptcy.
However, the consensus was that all three of China’s largest construction companies were barely clinging to artificial respirators.
Since the maturity extension was only for thirty days, the general assessment was that the death sentence had merely been delayed by thirty days.
“Surely you’re not taking hope just because our authorities granted a small maturity extension, are you? Don’t. Something dead won’t come back to life just because of that. They only delayed filing the death certificate by a month.”
“Is that so? But if all three of China’s largest construction companies go bankrupt, what kind of chain reaction would follow?”
“Of course it would be enormous. The PF loans issued to those bastards would become scraps of paper. But even the United States let the mighty Lehman go bankrupt. Our authorities will certainly take that into consideration before making their final judgment.”
“I don’t know. I don’t think they’ll let them go bankrupt.”
“…Pardon?”
I smiled faintly and handed him a list.
“These are the promising Chinese construction companies I have in mind. Set the alternative investment budget at around three trillion won in Korean money, and diversify it across real estate, stocks, and the like.”
If my memory was correct, the Chinese authorities did not save all three of the major construction companies. But they did not let them all die either.
Like Korea during the 1998 IMF crisis, I remembered that they sorted out the promising ones through mergers and consolidations.
And the companies that survived like that soared sky-high when the Chinese economy entered recovery. With their competitors gone, it was only natural.
“Are you really… really going to do this?”
Once he checked my portfolio, CEO Ming realized that I had already made up my mind.
“With all of Beijing’s prime land, including Xuechifang, sitting idle, what on earth are you seeing?”
“The Russo-Ukrainian War is over. The Chinese authorities that were buying Russian bonds will now use that money to stimulate domestic demand. The current unsold inventory will be resolved quickly once the economy enters recovery.”
“Team Leader, you believe in Chinese real estate far more than I do, even though I’m Chinese.”
“Because it resembles Korea’s economy in the past. I predict that China’s economy will not collapse like this.”
If my memory was correct, it was after the armistice.
After the armistice, the Chinese authorities also began putting fiscal resources into stimulating domestic demand in earnest, and I remembered that the medicine started to take effect little by little.
In truth, Japan’s Lost Thirty Years had been so shocking that whenever a real estate slump came, Korea, China, and Japan were all frightened out of their wits. But Korea and China did not have a bubble bomb like Japan’s.
Actually, I sometimes thought Japan’s Lost N Years might have been because of Korea. If they had still tightly held the hegemony over mobile phones, electronics, and semiconductors that had originally been their rice bowl, I didn’t think it would have gotten that bad…
To be honest, it felt like a butterfly effect.
At the time of the Plaza Accord, they should have reformed society, but they missed the golden time. Because of that, they failed to change their business paradigm. Because they feared public resentment, their fiscal deficit ratio reached 260%. Now, if they tried to raise interest rates, they could not handle the public anger. And because they had to suppress internal dissatisfaction somehow, they ended up in a vicious cycle of continuously redirecting resentment outward—wasn’t that it?
In any case, if my memory was correct, China’s real estate slump did not continue like Japan’s Lost N Years.
After deflation, the Chinese economy soared again, and prime land in Beijing, Shanghai, and elsewhere rose sharply once more, like Seoul apartments in Korea in the early twenty-first century.
If my memory was correct, what truly dealt a fatal blow to the Chinese economy was when it lost its labor-cost competitiveness due to automation innovation from robotics and India’s economic rise.
At least, it was not now.
“Whew… Understood.”
After listening to my nagging for quite some time, CEO Ming stood up.
“Still, at least this is honest work, so my heart feels light.”
“If you put it that way, I feel terribly sorry. Haha.”
“I’ll trust you again this time. We’ll compose the portfolio according to this list.”
*
The National Bureau of Statistics of China, located in Xicheng District, Beijing.
Before the executives gathered in one place, Director Kang set down the documents and said,
“This is accurate now, right? There are no more bombs even we don’t know about, correct?”
All the executives answered with silence.
The Chinese Statistics Bureau had always kept double books. One set for external use, to be announced to the press, and one set for internal use that only they possessed… But because corruption was so rampant, even the internal data grasped by the authorities was inaccurate. Whenever they tried to formulate real estate countermeasures, bombs they themselves did not know about kept appearing and made it difficult to establish plans.
—Yes, Director. This is certain. There are no more bombs we don’t know about.
The deputy director’s answer was the beginning of another worry.
Forty million units across China. Including commercial units, vacant spaces, and apartments, the final nationwide tally of malignant unsold inventory came to forty million units.
Even considering that China had a population of 1.4 billion, it was a staggering number. Korea, with roughly fifty million people, considered unsold inventory surpassing one hundred thousand to be a danger level. If one compared China’s current situation to Korea, it was as if domestic unsold inventory had exceeded several million units.
“Good. Then now that we’ve found all the landmines, tell me how to remove them.”
—With all due respect, Director… whatever else we do, we must first prevent the construction companies from going bankrupt.
“Even after they built apartments like this?”
—I’m not saying we should keep them alive because they did well. The bankruptcy of construction companies would mean turning all of the banks’ PF loans into bad debt, and in the worst case, bank runs will erupt.
Director Kang spoke as if it were nothing.
“Don’t worry. The Chairman’s Palace will block the bank runs.”
—…Pardon?
“In the end, isn’t it enough to simply stop people from withdrawing money? Everything has already been prepared from above, so don’t worry.”
In truth, the scariest thing about a real estate slump was that banks were always entangled in it.
If real estate collapsed, the banks that had lent money to it were also in danger. And if banks were in danger, it led to people’s distrust in the financial system. This was also why, during the subprime crisis, the Federal Reserve supported its domestic real estate market by forgiving debt and even printing money.
But China had a plan for everything.
As for financial distrust, couldn’t they just stop people from taking their money out?
“Of course, I’m not saying we’ll bankrupt all our construction companies. Among the top three construction firms, identify the one that’s relatively decent, and among the small and mid-sized firms, identify those with relatively low debt ratios, then merge the companies around them. Any questions up to this point?”
No one objected.
“Good. Then now, tell me the fundamental solution. Our forty million unsold units—what on earth do we have to do to clear them?”