Save time by listening to our audio articles as you multitaskThe train ride through China’s heartland helps to explain one of the country’s biggest crises in recent memory: the public’s loss of confidence in the government’s economic model. For decades the property industry has been symbolic of China’s rise. Private entrepreneurs have made vast fortunes. Average people have witnessed their net worth soar as home values trebled.
China’s zero-covid policy is a second blow. The central government has forced dozens of cities to lock residents in their homes for days, and sometimes weeks, on end when covid cases are discovered. At the time of writing, the megacities of Chengdu and Shenzhen are fully or partly locked down. The shutdowns have stopped people from viewing homes. They have also had an impact on the consumer psyche. Entrepreneurs fear the sudden closure of their businesses. Employees worry about being laid off.
Potential homebuyers have dropped out of the market. Far more worrying, though, are the millions waiting, often for years, for homes for which they have paid. Just 60% of homes that were pre-sold between 2013 and 2020 have been delivered. Cities are now loosening these rules. Between May and July municipal governments announced 304 individual measures to restore confidence, according to, a Chinese investment bank. Zhengzhou, at the centre of the protests, was an early mover. In March it announced 18 actions to stimulate demand, including measures to make it easier to get mortgages and to allow families with elderly members to buy flats if they move to the city.
For their part, policymakers have repeatedly cut mortgage rates since mid-May. To guarantee the supply of homes, the central government is fully guaranteeing bond issuance by private developers, shifting the risk to the state. Longfor, a struggling firm, priced a 1.5bn-yuan bond at a 3.3% coupon rate on August 26th, far below the market rate. This was possible solely because the bond was underwritten by China Bond Insurance, a state agency.
It a shame The Economist gone down and followed other westerns media on totally biased anti China stance. It was a media used to be unbiased and neutral. Sometimes even worse than DM
China's economy is a burning house of cards on the flanks of a rumbling volcano. Everyone still invested in this sh*t show needs to get out NOW!
Fascinating how 'en-vogue the 'P'-word has become. Unfortunately it is used in a sloppy way most of the time.
The jig must really be up in China for the economist to write this.
Is americas 500,000 homeless population coinciding w 16,000,000 empty homes property market eroding faith in americas leadership or nah?
So America has a chance to remain in pseudo control
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