1/6
We've been having this discussion for years with no resolution, and I would argue that resolution isn't possible without a major – and as yet unlikely – transformation of the growth model. Property development is the engine of growth in China, and...
ft.com/content/4c866d…
We've been having this discussion for years with no resolution, and I would argue that resolution isn't possible without a major – and as yet unlikely – transformation of the growth model. Property development is the engine of growth in China, and...
ft.com/content/4c866d…
2/6
expectations of rising real-estate prices drive the demand that drives property development. Beijing recognizes that continually rising real-estate prices are “politically not acceptable”, so it must stabilize them without causing them to drop, which is difficult enough.
expectations of rising real-estate prices drive the demand that drives property development. Beijing recognizes that continually rising real-estate prices are “politically not acceptable”, so it must stabilize them without causing them to drop, which is difficult enough.
3/6
But even if it somehow succeeds, that means a gradual decline in the demand for new apartments and office space, and eventually with it in the expansion in property development, which means losing the economy's growth engine.
Only rapidly rising debt can keep this game...
But even if it somehow succeeds, that means a gradual decline in the demand for new apartments and office space, and eventually with it in the expansion in property development, which means losing the economy's growth engine.
Only rapidly rising debt can keep this game...
4/6
going, which is why all the talk of "three red lines" is not likely to be any more useful than previous measures to target property-sector leverage. In the end either Beijing radically transforms the structure of the economy and rebalances income, or it accepts...
going, which is why all the talk of "three red lines" is not likely to be any more useful than previous measures to target property-sector leverage. In the end either Beijing radically transforms the structure of the economy and rebalances income, or it accepts...
5/6
much lower GDP growth rates, or it allows debt to continue surging. These are the same three options I have been writing about for over a decade. So far Beijing has always chosen the last of these while insisting it would move towards the first. While it has rebalanced to...
much lower GDP growth rates, or it allows debt to continue surging. These are the same three options I have been writing about for over a decade. So far Beijing has always chosen the last of these while insisting it would move towards the first. While it has rebalanced to...
6/6
some extent, even before 2020 it did it so slowly that it would take another 10-15 years to make enough of a difference.
But can we manage with another 10-15 years of rising real-estate prices, expanding property development, and soaring debt? Perhaps, but I doubt it.
some extent, even before 2020 it did it so slowly that it would take another 10-15 years to make enough of a difference.
But can we manage with another 10-15 years of rising real-estate prices, expanding property development, and soaring debt? Perhaps, but I doubt it.
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