The nation is struggling to regain its footing after emerging from paralysing pandemic lockdowns, and many of its economic problems are pointing back to real estate.
is really unprecedented,” said Charles Chang, who heads corporate credit ratings for Greater China at StandardFor the past three decades, as China’s population surged and its people flocked to cities seeking economic opportunity, developers couldn’t build modern apartments fast enough, and the. Real estate employed millions and provided a store for household savings. Today, the property sector accounts for more than a quarter of all economic activity.
Financial institutions known as trust companies, which invest billions of dollars on behalf of companies and rich individuals, are staring at losses from risky loans handed out to property firms, prompting protests from angry investors.The current property crisis is a problem of the government’s own making. Regulators allowed developers to gorge themselves on debt to finance a growth-at-all-costs strategy for decades.
Residential buildings developed by Country Garden Holdings Co. The company has just weeks to come up with the cash to make interest payments on some of its bonds, or join its peers in default. The fears have spread to other markets. In Hong Kong, where many of China’s biggest companies are listed, confidence has plunged so drastically that stocks have fallen into a bear market, down 21 per cent from their peak in January. Over the past two weeks, investors have pulled $US7.5 billion out of Chinese stocks.The real estate troubles are also spreading to China’s so-called shadow banking system of financial trust companies.
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