Debt and Financial Risk from China's Real Estate Sector

This panel discussion was held on Thursday, October 27, 2022, as part of a series on China’s real estate sector co-sponsored by M-RCBG and the Fairbank Center for Chinese Studies at Harvard University. The speakers were Michael Pettis, professor of finance at Peking University, and Hui Shan, managing director and chief China economist at Goldman Sachs. William Overholt, senior research fellow at M-RCBG, gave concluding remarks. M-RCBG fellows Richard Yarrow and Jinlin Li moderated the discussion.

Real estate has had a vast influence on China's economy. In particular, real estate has taken a massive role across China's financial system — accounting for an estimated 70 percent of Chinese households' assets, 30 percent of local governments’ revenues, and almost 30 percent of all outstanding bank loans before the covid-19 pandemic. As China's real estate sector faces a crisis, what are the implications for the financial system and the financial health of China's broader economy? What are China’s debt risks as real estate prices plateau or fall?

0:00:00 – Introductions by Richard Yarrow and Jinlin Li
0:04:36 – Presentation by Michael Pettis
0:19:25 – Presentation by Hui Shan
0:32:30 – Question and Answer session
0:59:32 – Remarks by William Overholt