BLUFChinese property developers raised massive amounts of money from customers to fund their next construction project. What made it a Ponzi scheme was that builders depended on an ever-increasing number of new buyers to enable them to buy more land and finish existing buildings.
Martin Farrer writing in the Guardian, makes the following points:
- In 2021 Chinese property developer Evergrande Group had around $300bn in debts.
- Chinese house prices have dropped 1.3 % over the last year, and 29.1% of property loans are now considered bad debts.
- About 2m off-the-plan homes remain unfinished across China.
- In 2021, about 90% of homes were sold off the plan in China.
- Housing makes up about 20 % of the Chinese GDP.
Recent Runway Posts related to this topic:
- Why Evergrande Is Causing Panic in Stock Markets Everywhere -The Runway (airforce.gov.au)
- China's economy is cooling rapidly and Australia could feel the chill - The Runway (airforce.gov.au)
References from the Web:
- AUG 2022 China’s mortgage boycotts: Why hundreds of thousands of people are saying they won’t pay-Grid News
- AUG 2022 Evergrande has failed to deliver the debt restructuring plan it promised-CNN Business