Why is the world worried about China's property crisis?
China's troubled property sector suffered another blow this month when frustrated homebuyers stopped making mortgage payments on units in unfinished projects. The boycott came with many developers struggling to manage mountains of debt, and fears swirling that the crisis could spread to the rest of the Chinese -- and global -- economy. How big is China's property sector? Colossal. Property and related industries are estimated to contribute as much as a quarter of China's GDP The boycott came with many developers struggling to manage mountains of debt, and fears swirling that the crisis could spread to the rest of the Chinese -- and global -- economy.
© AP - NG Han Guan The Evergrande real estate giant at the company's headquarters in Shenzhen, 24 September 2021.
The problems follow one another for Evergrande. This time, it is a subsidiary of the ex-numéro one of Chinese real estate who can no longer honor his debts. The group's financial health worries the authorities. Real estate threatens the whole Chinese economy. The sector alone represents a quarter of the country's GDP.
In difficulty, one of the Evergrande subsidiaries has just been sentenced, to pay $ 1.3 billion. This is the guarantee, for a non -honored refund. This announcement comes when the Chinese real estate giant has just changed direction . He also sold his head office of Hong Kong. strangled by an debt of around $ 300 billion, the group should also present a restructuring plan.
China: The prospect of a public support fund reassures the real estate sector
© AP - NG Han Guan The headquarters of the Chinese real estate giant Evergrande in Shenzhen (illustration image). In China, the state could financially help the real estate sector, which weighs for a quarter of Chinese GDP. The actions of the main Chinese real estate groups took off after the announcement of the Chinese Prime Minister. Investors welcomed Li Keqiang's words very favorably.
There is an emergency. In the wake of Evergrande, other promoters, young or old, could vacillate. Over -indebted, more and more of them have difficulty in ending their sites and in due time, housing sold before their construction. At the end of July, more than 320 projects were affected in 90 cities in the country.
In retaliation, owners, exasperated, refuse to pay their real estate loans, helping to aggravate the crisis in the sector. A social sling that represents a risk for banks and an concern for the regime. The real estate sector represents more than a quarter of China's GDP.
Why people in China stopped paying their mortgages .
The country's property sector is struggling with a cash crunch, forcing buyers to take extreme steps.That was one of the chants disgruntled apartment buyers in China used at a protest in June. But their ire over unfinished homes didn't stop at signs and chants.