train ride between the cities of Luoyang and Zhengzhou is a showcase of economic malaise and broken dreams. From the window endless, half-built residential towers pass one after another for the duration of the hour-long journey. Many of the buildings appear near completion; some are finished and have become homes to families. But many more are empty skeletons where construction ceased long ago. Developers have run out of cash and can no longer pay workers and buy materials.
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 and making purchases. They have also had an impact on the consumer psyche. Entrepreneurs fear the sudden closure of their businesses.
Potential homebuyers have dropped out of the market. Far more worrying, though, are the millions of people waiting, often for years, for homes for which they have already paid. Just 60% of homes that were pre-sold between 2013 and 2020 have been delivered. Investors and potential homebuyers are now watching with unease as the state pieces together its response, at both central and local levels. For more than a decade Chinese cities have wielded a long list of rules and incentives to fine-tune local real-estate markets, usually to reduce speculation and cool rapid price rises. These included control over access to mortgages, as well as limits on who can buy homes and how many they can buy.
Zhengzhou is experimenting with perhaps the most aggressive local plan yet. The city government has issued a directive to developers that says all stalled construction must restart by October 6th. Insolvent companies that cannot do so must file for restructuring in order to bring in new investment, and also repay any down-payments made by homebuyers such as Mr Liu. Failure to do so could result in developers being investigated for embezzlement and other serious crimes.
Americans still have a lot to learn from Chinese economics.
Look into the mirror.
The United States smuggles Syrian food
China data today. Distribution of household assets: 20% bank deposits; 40% property; 30% equity. Total value household deposits USD36 trillion. China’s financial institutions capitalised at USD58 trillion. The govt’s response has been coherent, steadily building dual circulation!
Pathetic!
This is a reminder that housing sector is a major plank in any economy and this was well proven in 2008/9 financial crisis which we are told was fueled by Sub-prime mortgages in US which were defaulted at a very high rate and there was a ripple effect.
There is no free market in China as the government won't let the troubled property developers go for liquidation. In substance, it just want to get haircut on the debts
so China is not a threat, cos from your description it's a weak economy
China has gone from preindustrial to postindustrial collapse within 45 years and their population isn’t large enough to sustain their economy.
China's not got covid under control. Had some flooding and power shortages. Massive property sector issues. Ageing population problems. Will this derail long term growth? I'm not sure. But am almost certain this will significantly delay their economy taking over the US. invest
worse than America?
bubble-pride
😰😰A lot of people are going bankrupt. The economy is about to collapse.
Isn't it interesting that western media never says anything positive about China? Almost like they do it on purpose... huh
China and Russia are on a slippery path. They will not survive it simply because the checks and balances are forbidden practices.
quite opposite,property sector is the problem need to solve,people hate it,birth rate fall much due to it,government shouldn't rely on it
It time to think seriously about it because right now he can manage the situation but that time is not too far when it will be out of control
Xi Jinping MUST GO!!! 😡🪕
Yet again, what was once considered 'nutjob theory' is now published in the mainstream press 🤡🌍
love earth
China had underestimated the power of Europe. Now, it is too late.
China is often quite gung ho about certain metrics like number of houses built. The CCP have to show promised growth to the Chinese people...but they have to play a qualitative game.
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In Brooklyn hundreds of people live in Card boxes!! But The Economist is concerned about China!! Hypocrites!!
and where is the gold of the party of china
Millions of years later, those unfinished projects are going to be unearthed as “archaeological mysteries”.
Asset bubble goes pop !
That is what happens when you set up when you set up an EBT program that is not backed by by currency or gold there's nothing propping it up it's empty transactions
Rich chinese man life savings!!!1😅😅
'could hardly come at a worse time for Xi'... LOL, gotta love the dramatic teasers from The Economist. BUT the reality is that there is no faction in the CCP powerful enough to confront or topple Xi. (sadly)
Besides looking at the Chinese property market, please take stock of the world's biggest Ponzi scheme: the Italian pension system
Why dont we hear from average Chinese workers about whether they actually like living in dogbox apartments to work in factory. Seems like its all for Xi and western elites.
mind your own business!
Rest assured that the west downfall is certain than the continued bashing China hoping to convince a few, isn't it?
Womp womp
Many of China's largest property developers are failing to repay their debts .
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