• China’s real estate sector is facing a crisis, with developers defaulting on bonds and a large backlog of troubled projects.
• The construction boom has been the main driver of China’s unbalanced, investment-heavy, consumption-poor growth.
• In the late 1990s, real estate accounted for 8% of GDP, but by 2021 it had risen to 25%.
• In a single generation, China has built enough homes to house a billion people.
• The IMF report shows the Chinese authorities in a relatively calm mood, but Western observers are skeptical.
• Beijing has shifted from a restrictive and deflationary course to one of re-stimulating the real estate economy.
• A key challenge to restoring confidence is the large backlog of partially built housing.
• To stabilize the Chinese real estate market, a commitment of 5% of GDP is needed.
• If Beijing succeeds in managing the fallout, it would be an example of macro-prudential economic management on a world historic scale.
Published February 5, 2023
Visit Chartbook to read Adam Tooze’s original post Chartbook #194 Can Beijing halt China’s housing avalanche? The most important economic-policy question for 2023?
