China’s property market is in crisis. Real estate prices that skyrocketed over the past few decades have begun to fall back to Earth. Now the danger is that collapsing home values will also bring the world’s second-biggest economy down along with them.
Read: Evergrande’s EV maker soars on $500m stake sale deal ADVERTISEMENT CONTINUE READING BELOW In the Bloomberg Originals mini-documentary China’s Property Meltdown, we explore how this upheaval started and look at what the implications could be for the global economy. When the country’s leaders opened the economy to foreign investors and private businesses four decades ago, it led millions to move from the countryside to China’s cities in search of factory jobs.
For President Xi Jinping, who has said he wants to create “common prosperity” by shrinking that gulf, these were reasons to act. ADVERTISEMENT CONTINUE READING BELOW Read: China Evergrande Group files chapter 15 bankruptcy in New York When Xi made his move to tighten property regulation, it set off a chain of events that have become a substantial drag on growth and a major challenge to his government. Home prices began falling, developers started defaulting and people got angry. The question now is whether authorities can act quickly enough to stop the problems in property from spiralling into a broader crisis for the financial system, Chinese society at large—and perhaps the whole world.
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