China’s Dangerous Rush to Resolve the Property Crisis
Industries that count on overseas backers will have a hard time raising capital if the crackdown on real estate developers leads to their sudden collapse.
Stalled projects.
Photographer: Qilai Shen/Bloomberg
Consider this thorny situation: You’re in a long-term relationship. It was great for a while, but your goals have changed. Do you have a respectful breakup, or just ghost your partner? This is the dilemma Beijing is facing with overseas investors worried that they will lose their shirts if China lets its troubled real estate developers unravel too quickly.
Beijing has good reasons to rein in the country’s property giants. They have accrued so much debt over the course of their breakneck expansion — $2.5 trillion among the top 50 or so listed companies — that even the Federal Reserve warned this week further fragility there could spread to the U.S. Years of frenzied construction has resulted in a huge oversupply of apartment blocks, scattering effective ghost towns across China as demand for new housing has waned.