Can China fix its property crisis?
Reforms risk another wave of excess
Evergrande, the world’s most indebted developer, which collapsed in 2021, has still not produced a restructuring plan originally due in July.
The firm’s auditor, PwC, resigned on January 16th.
This reduction in activity has been catastrophic for China’s economy, which derives around a fifth of its gdp from the sector.
Companies began rapidly raising new debt in December—a sign that policy easing kicked off well before the government announced the new measures. Local authorities have been lowering mortgage rates, and many are now at record lows.
The state’s bail-out funds are targeting unfinished construction.
About 70% of homes sold since 2018 have been bought by people who already own at least one. Speculation has made Chinese homes the most expensive in the world on a price-to-income basis.
The Economist 23 January 2023