Beijing time:2021-11-11 08:11
[NTD News November 11, 2021 Beijing time]The Federal Reserve issued a warning a few days ago that China’s real estate industry is heavily indebted and faces regulatory pressures, which may bring risks to the US financial system. Robert Z. Aliber, an emeritus professor at the University of Chicago Booth School of Business, said that China’s real estate crisis may drag China into a long-term economic recession.
Taiwan’s “Free Finance” quoted a report from the US “Fortune” magazine on November 10, according to Robert Eliber’s estimate that there may be 40 to 60 million vacant apartments in China. In the beginning, people bought these apartments for value preservation or investment. Now it may take more than 10 years to eliminate these idle houses.
Robert Eliber stated that China has built 10 million new houses every year for the past 15 years. These projects accounted for 10% of China’s GDP. However, due to the low birth rate and the cessation of rural population inflows, the population of China’s cities will begin to decline. All herald the possible collapse of real estate prices.
With the decline in housing prices, buyers’ wait-and-see sentiment will increase, and there will be more and more unsold houses. It is difficult for real estate companies to withdraw funds through sales. In addition, financing and refinancing channels have narrowed, debt crises are frequent, and banks are demanding development. Merchants repaid their loans, developers’ capital chains were tight, and land purchases were stopped one after another, and local government revenues dropped sharply. In addition, the downturn in the real estate industry will affect cement, steel, glass and all related industries.
Ai Libo said, “China’s economy has hit a high wall” and predicts that China may fall into an economic recession that lasts for 8 or 10 years.
George Magnus, an economist at the China Center at Oxford University, said that the debt problems faced by China’s real estate industry may lead to a period of economic stagnation, affecting the domestic and global economy.
Magnus believes that China’s real estate market will face years of stagnation.
Economists say that even if the worst of the housing market’s sharp correction and housing prices plummeted can be avoided, the actions taken by the CCP government to combat speculative property speculation may lead to a slowdown in economic growth in the next few years.
Real estate activities account for about a quarter of China’s gross domestic product (GDP). For many years, real estate speculation has provided support for local employment and government revenue.
Economists say that without a prosperous real estate market, China’s annual economic growth rate in the next few years may be around 3%-5%, instead of the 6% or more that it has become accustomed to.
Yao Wei, an economist at Societe Generale in Hong Kong, said that if China’s real estate industry ceases to be a growth driver, no other sector or industry can fill this gap.
(Transfer from Voice of Hope International Radio/Editor: Ye Ping)
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