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| Tenor |
If the words recession and Chinese property market were to ever appear in the same sentence, this is it.
The big realty mess-up in China is pointing the global economy towards the ICU and we’re talking serious issues here, with household debt nudging USD10 trillion.
What’s even scarier? 27% of Chinese bank loans are linked to real estate. Now imagine if they all turned turtle (or NPAs).
Why the realty slowdown is pinching everyone
Real estate was once China’s biggest employment generator, but these days, it's having its Lehman moment (aka 2008’s Lehman Brothers’ bankruptcy) with unsold inventory surpassing 65 million units. In a cruel twist of fate, real estate is now viewed as a national threat in China as prices soar higher than the skyscrapers.
China Evergrande is the most indebted real estate developer in the world and that’s just one chapter from the book called What Women Want. The Government’s taken over HNA Group in the past, but even Beijing does not have bottomless pockets.
Why it hits globally?
A market crash in China could spark massive global unemployment and deflation. It may cripple the financial markets in China, with consequences in the U.S. and elsewhere.
What the experts want
📉 Lower property prices
❎ Lesser dependence on construction for GDP growth
🆕 Creating newer investment channels.
⛔ Lesser speculative housing market activity through Government measures.
Is Beijing listening? Or are we at the crossroads of a Chinese property-driven global outage?
There are thousands of questions but no answers yet. For our sake and mostly theirs, we hope they find those answers soon.