Evergrande I Kina kan gå i konkurs (300 miljarder dollar)

Empty Buildings in China’s Provincial Cities Testify to Evergrande Debacle

The property giant borrowed heavily to develop in out-of-the way places like Lu’an.

The unfinished Evergrande Yujingwan complex in Lu'an, China, on Sunday.

Xi Jinping’s Evergrande dilemma has repercussions far beyond China

By Kevin Rudd. The writer, is a former prime minister of Australia.

Enter Evergrande and its growing list of missed bond payments. This behemoth, with $300bn in leverage, lies at the centre of a property sector that represents 30 per cent of Chinese gross domestic product and is more than $5tn in debt.

Some 41 per cent of the Chinese banking system’s assets are associated with the property sector, and 78 per cent of the invested wealth of urban Chinese is in housing. Given the millions of creditors, shareholders, bondholders and (unbuilt) apartment owners, Evergrande has become a problem for Xi politically, economically and globally.

China’s real estate market has been called the most important sector in the world economy. Valued at about $55tn, it is now twice the size of its US equivalent, and four times larger than China’s GDP. Taking into account construction and other property-related goods and services, annual housing activity accounts for about 29% of China’s GDP, far above the 10%-20% typical of most developed nations.

Aside from ghost cities, the property sector prospered in the 2000s and 2010s because Beijing not only appeared to want a maturing real-estate market, but promoted it hard to underpin growth and the formation of a propertied, urban middle class. Developers had no qualms about borrowing heavily, because credit was freely available and they felt the government would always support the market if needed.

Banks and property companies are likely to restrict building activity and financing as they restructure broken balance sheets and Chinese households will be wary about taking on new mortgages. Household debt has risen from about $2tn in 2010 to more than $10tn last year, with the ratio of debt to disposable income surging to about 130%, significantly higher than in the US. With incomes rising only slowly, especially in the gig or informal economy, which now accounts for about three-fifths of employment, households are likely to remain on the back foot.

Demographics, especially the low 1.3 fertility rate, are also working against the economy. China’s working age and main home buying age groups are declining. The number of prime-age, first-time homebuyers – those in the 25-39 bracket – is set to fall by 25% in the next 20 years from 327 million to 247 million. The urbanisation rate, moreover, which doubled to 64% between 1996 and 2020, is bound to slow. There will be fewer marriages, fewer children and lower household formation.

BBC: 透视中国：经济“硬着陆”还是“软着陆”？ (2016年1月27日)

Översättning: Perspective on China: Economic "Hard Landing" or "Soft Landing"?