"The Interactions Between Chinese and African Leaders: Insights and Signals from Recent Events"

tong jiang

Hatched by tong jiang

Sep 12, 2023

3 min read

0

"The Interactions Between Chinese and African Leaders: Insights and Signals from Recent Events"

Introduction:

In recent months, there have been significant developments in the interactions between Chinese and African leaders. These interactions took place following the Russia-Africa Summit held in St. Petersburg, where Russian President Vladimir Putin met with 17 African heads of state from the 54 invited African countries.

Connecting Chinese-African Relations and Real Estate:

While the focus may seem divergent, there are common points to be found between Chinese-African relations and the recent activities of Hong Kong billionaire Li Ka-shing in the real estate market. Both situations provide insights into long-term factors that impact their respective landscapes.

The Impact of Population on Real Estate:

The real estate industry has a well-known analytical framework that considers long-term population factors, medium-term land factors, and short-term financial factors. In China, the real estate boom of the past two decades has been primarily driven by land and financial factors. However, the long-term factor of population is now entering a critical stage of influence.

Examples from Italy and Japan:

Italy, a developed country with a population of around 60 million and a per capita GDP of approximately $36,000, reached a 65% urbanization rate in 1970 and remained stagnant within the range of 65% to 70% for over half a century. This case highlights the potential consequences of prolonged stagnation in urban development.

Japan's experience with a real estate collapse is also worth considering. The collapse of property prices in Tokyo took three decades to recover to their previous levels. While some argue that Japan's case is not representative, citing examples from Europe and the United States to support the idea of long-term price increases, caution is necessary when assuming the universality of such trends.

Insights from Li Ka-shing's Investments:

Li Ka-shing's recent moves in the real estate market, including selling properties in Hong Kong and accelerating sales in mainland China, send significant signals. His investment style of avoiding the "first copper coin" and the "last copper coin" demonstrates his sensitivity and aversion to risk, surpassing that of many real estate developers.

Lessons from Active and Passive Urbanization:

Italy's experience of passive urbanization, where urbanization rates remained stagnant for decades, contrasts with Japan's experience of active urbanization during a period of economic decline. In Japan's "lost decades," from 2000 to 2010, the urbanization rate increased by 12 percentage points, reaching 91%. This shift was driven by the natural decline of the aging rural population, which led to significant adjustments in population distribution without large-scale voluntary migration.

Conclusion:

While seemingly unrelated, the interactions between Chinese and African leaders and Li Ka-shing's real estate activities share common elements that provide valuable insights. The impact of population on urbanization and real estate development cannot be overlooked. With this in mind, here are three actionable pieces of advice:

  • 1. Consider long-term factors: When analyzing real estate trends, take into account the influence of population dynamics over extended periods.
  • 2. Assess risk sensitivity: Follow the example of Li Ka-shing and develop a keen sensitivity to risk, avoiding being the first or last investor in a particular market.
  • 3. Understand the nuances of urbanization: Recognize the distinctions between active and passive urbanization processes and their potential effects on real estate markets.

In a rapidly evolving global landscape, understanding the connections between seemingly disparate events can provide valuable insights for decision-making and future planning.

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