Analysis: worsening meltdown in the country’s debt-laden property market is at the heart of a problem that comes at a precarious time for the Communist party
about how hundreds of homebuyers in central Chinese city of Xi’an have to live in unfinished apartments.
“Homebuyers’ refusal to pay mortgages on unfinished properties across cities in China and the mass protests in Henan by bank depositors demanding their savings back and condemning government corruption are another manifestation of the huge challenges Beijing faces at present,” sheFor years, property has been a key driver of China’s inexorable growth, with prices rising steadily for decades and offering a seemingly one-way bet to guarantee income growth for the new middle class.
The story has somewhat faded from view behind a morass of restructuring and absorption of troubled parts of the empire by state-owned companies, but even Beijing’s all-powerful bureaucrats cannot stop the poison spreading, as several key developments showed last week. Third, there is trouble brewing in the financial markets, where investors are fearful that there are more corporate busts to come. The concerns sent the value of bonds sold by property companies falling sharply last week, along with property shares on the Chinese stock market.One troubled firm, Shimao, this month missed a payment on a $1bn bond, blaming “significant changes to the macro environment of the property sector”.
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