Browsing: Xi Jinping

The signal coming from the CCP congress is that the world should not expect a change in policy against Covid anytime soon despite its important ramifications for the global economy. On the domestic front, the economy of China has not been doing well. Ever since its economy started to slow down, unemployment has been on the uptick, with at least 20% of young people in China said to be unemployed. 

China is also in the throes of a housing crisis, with several large property developers on the brink of financial ruin and or bankruptcy. The case of the Evergrande Group is the most prominent. The property company rose to prominence by developing massive housing projects fueled by the availability of cheap credit from the government first and from private lenders.

The urbanization of China through the migration of citizens to urban areas drove demand for apartments. Developers eager to satisfy this seemingly unending demand decided to borrow the money to build skyscrapers.

The music for the property developers stopped when there was a slowdown in the number of people migrating to urban areas. This affected their revenues to the extent that they began to default on their loans en masse. The problems in the housing markets became systemic in the sense that the credit used to finance the development of housing had come from overseas investors and lenders.