1/4
Another useful article by Zhou Xin. Among other things he estimates that Evergrande's on- and off-balance sheet obligations may amount to as much as 3% of China's annual GDP. That's a lot of debt.
scmp.com/economy/china-… via @scmpnews
Another useful article by Zhou Xin. Among other things he estimates that Evergrande's on- and off-balance sheet obligations may amount to as much as 3% of China's annual GDP. That's a lot of debt.
scmp.com/economy/china-… via @scmpnews
2/4
But none of this is new. Many of us have know for years (some of us for over a decade) that the property-development sector was creating a very serious imbalance in the Chinese economy, and this includes a number of regulators and policy advisors.
But none of this is new. Many of us have know for years (some of us for over a decade) that the property-development sector was creating a very serious imbalance in the Chinese economy, and this includes a number of regulators and policy advisors.
3/4
So why didn't Beijing act sooner to reverse the problem? Perhaps because, as Albert Hirschman used to point out, the constituencies that benefit disproportionately from unbalanced growth are often powerful enough politically to block attempts to reverse these imbalances.
So why didn't Beijing act sooner to reverse the problem? Perhaps because, as Albert Hirschman used to point out, the constituencies that benefit disproportionately from unbalanced growth are often powerful enough politically to block attempts to reverse these imbalances.
4/4
As Zhou explains: "But property has been a key driver of China’s economic growth. Local governments rely on revenue from land sales, families invest in housing, and developers – who cannot borrow easily from banks – have tapped other sources of funding."
As Zhou explains: "But property has been a key driver of China’s economic growth. Local governments rely on revenue from land sales, families invest in housing, and developers – who cannot borrow easily from banks – have tapped other sources of funding."
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