Chinese defaults on local and overseas bonds rose to a record $43 billion in 2021, according to Bloomberg, led by widespread defaults in the real estate sector.
The surprise announcement of credit risk from Zhenro Properties highlights the extent of the risks that have accumulated in the Chinese real estate sector, with a bubble of enormous proportions that's bursting slowly and creating ripple effects on the rest of the economy.
It's impossible for the Chinese regime to contain the implosion of a sector that has massive ramifications that affect all the services sector and numerous side industries.
The Chinese regime tries to disguise the risk by injecting liquidity into Chinese banks and cutting rates but, even if the vast majority of the property developers' debt is in the hands of domestic savers, the collapse in investor confidence is difficult to contain.
Many sectors in China may continue to thrive regardless of the property slump, but none of them, even all combined, can offset the impact of such a dominant part of the Chinese economy.
If other global economies were unable to offset the burst of a property bubble even when the size of their real estate sectors in the total economy was extraordinarily lower than in the case of China, it's virtually impossible to believe that the Asian giant will be able to achieve its growth target when the property bubble burst coincides with an unprecedented government intervention in other sectors.
Chinese property developers need to repay or refinance up to $100 billion in debt in 2022, according to Bloomberg.
https://www.theepochtimes.com/chinas-property-bubble-collapse-gets-worse_4292352.html
No comments:
Post a Comment