While the Chinese economy has featured explosive growth over the past decades, it appears to have come to a grinding halt today. A major area in which this has become apparent is real estate. Shortly before the Covid-19 pandemic, the Chinese state came down in full force on real estate with long awaited rules on banking capitalization, mortgages, and prices. Yet, the policies have also pushed property giants Evergrande, Country Garden, and others into trouble and have raised worldwide fears of a “Chinese Lehman crisis”.
Real estate accounts for a substantial part of the Chinese economy: local governments rely on land sales up to 40 percent of their revenues while over two-thirds of household wealth is invested in realty. Yet, there are mitigating factors: high saving rates, low outstanding mortgages, and low overseas debts. In this confounding situation, this project examines whether a property bust could occur, and if so, to what degree it might lead to destabilizing conflict due to losses in jobs, investments and property. The research will be contrasted to housing crises and property speculation in other countries.