{"id":35578,"date":"2024-02-06T12:03:44","date_gmt":"2024-02-06T10:03:44","guid":{"rendered":"https:\/\/europeanvalues.cz\/?p=35578"},"modified":"2024-03-11T15:30:53","modified_gmt":"2024-03-11T13:30:53","slug":"never-grand-chinese-property-market-crisis-overview","status":"publish","type":"post","link":"https:\/\/europeanvalues.cz\/en\/never-grand-chinese-property-market-crisis-overview\/","title":{"rendered":"Never grand: Chinese property market crisis overview"},"content":{"rendered":"\t\t
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What is happening?<\/h2>

Just two weeks after a Chinese delegation in Davos<\/a>, led by the Chinese premier Li Qiang (\u674e\u5f37), was trying to convince the world\u2019s investors of China\u2019s growth and stability, media headlines painted a very different picture. On January 29, a court in Hong Kong ordered liquidation of the China Evergrande Group<\/strong> (\u4e2d\u570b\u6046\u5927\u96c6\u5718), one of the biggest real estate enterprises in China with debts of US$300 billion in liabilities. \u00a0<\/p>

\u00a0<\/h2>

What is the broader picture?<\/h2>

In 2018, Evergrande was China\u2019s second biggest and the world\u2019s most valuable real estate brand<\/a>. Now, in just a few years, the company has an unenviable status as the world\u2019s most indebted property developer<\/strong>. Following its debt default in 2021, Evergrande\u2019s demise helped spark the current real estate crisis in China.<\/p>

Since then the company has been proposing debt restructuring plans<\/a> but that recently came to an end, with judge Linda Chan concluding<\/a> that enough was enough.<\/p>

Evergrande founder and CEO Hui Ka Yan, also known as Xu Jiayin<\/strong> (\u8a31\u5bb6\u5370), who was once China\u2019s richest man well-connected with the Chinese establishment, has been under house arrest on unspecified charges since last September.<\/p>

In 2021 Evergrande made the front pages of international media with reports of customers who paid for properties in buildings which were never built while, elsewhere, empty apartment blocks languished in Chinese ghost towns. Although an estimated<\/a> 20% of housing in China is unoccupied, the country still has one of the world\u2019s biggest owner-occupancy rates, with more than 70%<\/a> of asset wealth concentrated in property.<\/p>

As early as 2016, when it began issuing new regulations, Beijing showed it was aware of the risk of a real estate bubble<\/strong> and the necessity of stabilizing the rocketing real estate sector. At his nineteenth party congress address, Xi Jinping emphasized that \u201chouses are for living, not for speculation\u201d. This mantra has been repeated frequently by Chinese officials since then.<\/p>

In 2020, the Chinese government introduced its \u201cthree red lines\u201d rule<\/strong> (\u4e09\u689d\u7d05\u7dda), which limits the ratio of equity, assets, and debt to cash a developer can hold. The government now limits the number of homes individuals can purchase and own and also pushes local governments to scale back their financial dependence on land sales.<\/p>

\u00a0<\/h2>

Why it matters?<\/h2>

The real estate market, which was the engine of growing Chinese economy for decades, and accounts for approximately one quarter of the country\u2019s economy<\/strong>, has been in its worst decline in almost nine years. Last year saw some of the <\/strong>steepest drops<\/strong><\/a> in house prices<\/strong>.<\/p>

The Chinese economy still has not recovered from the post-pandemic slowdown and is struggling with high youth unemployment and an unprecedented drop in exports.<\/p>

This has give rise to serious concerns<\/a> over deflation and a potential knock-on effect abroad. Given global economic interdependencies, it will be important to closely monitor the steps taken by Chinese regulators, such as subsidies and other support measures, and how costly these will be.<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<\/div>\n\t\t","protected":false},"excerpt":{"rendered":"

What is happening? Just two weeks after a Chinese delegation in Davos, led by the Chinese premier Li Qiang (\u674e\u5f37), was trying to convince the world\u2019s investors of China\u2019s growth and stability, media headlines painted a very different picture. On January 29, a court in Hong Kong ordered liquidation of the China Evergrande Group (\u4e2d\u570b\u6046\u5927\u96c6\u5718), […]<\/p>\n","protected":false},"author":7,"featured_media":35579,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[500],"tags":[534],"class_list":["post-35578","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-articles","tag-zuzana-koskova"],"yoast_head":"\nNever grand: Chinese property market crisis overview - European Values Center for Security Policy<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/europeanvalues.cz\/en\/never-grand-chinese-property-market-crisis-overview\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Never grand: Chinese property market crisis overview - European Values Center for Security Policy\" \/>\n<meta property=\"og:description\" content=\"What is happening? Just two weeks after a Chinese delegation in Davos, led by the Chinese premier Li Qiang (\u674e\u5f37), was trying to convince the world\u2019s investors of China\u2019s growth and stability, media headlines painted a very different picture. 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