China's Real Estate Crisis: The Debt Reckoning No One Can Ignore

In August, China's economic data, particularly in real estate, remained bleak despite the government's 517 policy aimed at stabilizing the market. This policy, which included eliminating purchase restrictions and significantly lowering mortgage requirements, failed to reverse ongoing declines in housing prices and transaction volumes. The average price of second-hand homes has dropped for 28 consecutive months, with sales for top developers down by 38.5% from January to August. The broader economic implications are severe, as real estate contributes roughly 40% to GDP. With a historic fiscal deficit exceeding 8.5 trillion yuan and local governments facing dwindling revenues, there’s increasing pressure to issue more government bonds, potentially leading to unlimited quantitative easing. This situation highlights a lack of long-term planning by the Communist Party, which has prioritized short-term gains over addressing systemic issues, leaving debts to the populace unaddressed and risking further economic decline.

China's Real Estate Crisis: The Debt Reckoning No One Can Ignore

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