How China’s Model of Dictated Economic Growth Blew Up, by Wolf Richter

The Chinese government steered prodigious amounts of debt towards real estate, and now China is paying the price. Perhaps a planned economy isn’t such a great idea after all. From Wolf Richter at wolfstreet.com:

The debt-fueled property & construction bubble that drove its growth turned into a huge explosive mess with an enormous amount of debt.

It’s mind-boggling just how important the residential property sector is to the Chinese economy, to what extent government-dictated economic growth was achieved by building more apartment towers, and it’s even more mind-boggling how much debt residential property developers have racked up, and how much household wealth is tied up in the property sector at multiple levels.

Then there are the demographic headwinds the property sector has been facing for years, that are coming to the forefront.

So now there is a property crisis in China that is making the US mortgage crisis of 2008 look like child’s play in terms of magnitude.

The central government has been trying to deal with rampant real estate speculation and prevent it from going even more haywire and take down the financial system and the economy.

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One response to “How China’s Model of Dictated Economic Growth Blew Up, by Wolf Richter

  1. Pingback: How China’s Model of Dictated Economic Growth Blew Up, by Wolf Richter | STRAIGHT LINE LOGIC – Additional survival tricks

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