China’s property sector is the largest asset class in the world – larger even than the US equity or bond market.
But there are growing fears that it is a bubble poised to burst. Already, the heavily indebted Chinese property giant Evergrande has filed for bankruptcy protection in the United States, and the real-estate developer Country Garden is battling a liquidity crisis.
The failure of either, or both, could well trigger a financial crisis.
But why did a property bubble emerge in the first place?
Like so many other problems in China today, this one can be traced back to the one-child policy that the government adopted in 1980 – a decision that would fundamentally reshape the country’s economic, political, and diplomatic trajectory.
Project Syndicate 29 September 2023
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