Evergrande's collapse isn’t leading to global contagion, but China’s looming economic disaster might
A major mistake of the Cold War was the tendency of Western observers to overestimate the Soviet Union. I have often wondered if the same mistake is being repeated with the People’s Republic of China.
Evergrande is just one of many such leveraged real estate companies in China.
But at some point soon — probably before the October holiday — the government will force through a formal restructuring and bankruptcy process. Those considered politically important will get off lightly; the politically disposable will lose their shirts; a few top executives will face jail.
China’s growth has been boosted for many years by the construction of an excess supply of housing units. This has been financed by an unsustainable mountain of debt.
Niall Ferguson Bloomberg 26 september 2021
Kommentarer