China’s Debt-Fueled Housing Market Is Having a Meltdown, Again
Xi Jinping’s attempts to deflate a real estate bubble could end up sinking the economy.
Shanghai, where the historic meets the new.
Photographer: CFOTO/Future Publishing/Getty ImagesFuture Publishing/Future Publishing
Three years ago, China cracked down on a booming real estate sector to reduce risk and make homes more affordable—part of President Xi Jinping’s “common prosperity” drive.
Beijing may have gone too far, it now seems. Country Garden Holdings Co., a developer that was once a pillar of the industry, is on the verge of default, suggesting no company is too big to fail. There are signs the situation is spiraling, too. More developers are on the brink, home prices are collapsing in smaller cities, and fears of contagion have spread to the nation’s $60 trillion financial system. When shadow bank Zhongrong International Trust Co. missed payments on dozens of high-yield investment products this month, investors protested outside its headquarters in the Chinese capital.