China's housing crisis is worsening and threatens the country's economy

China's housing crisis is worsening and threatens the country's economy

The Hong Kong Stock Exchange exacerbated the real estate drama after the Easter closure. The value of the Chinese construction company Vanke added its negative thousandth record. Country Garden stock didn't even show up. His contribution was suspended for not submitting accounts for the previous financial year. Not a day goes by without upsetting news for a sector that in its glory days accounted for a third of GDP and weighs heavily on the economy today.

Country Garden represents drift. The value of the lead promoter's shares between 2017 and 2022 is no more than the value of peanuts today: $0.06 per share. The decline in real estate has generated a lot of anxiety. Work concentrated in small towns inland. Its rise, which extended through the process of urbanization in a country with a rural base, was as rapid as its fall. Defaults and water leaks had been accumulating for years when a creditor filed for liquidation in February.

Comparisons to Evergrande, the other giant, abound these days. For years they have been competing in profits, and now they are competing in problems. Evergrande beats Country Garden in debt: $328,000 million vs. $190.00. But the three thousand projects pending in the second project are quadruple those in the first project, a fact that indicates an even more devastating impact.

Dry stop

Brick has grown relentlessly for decades. A sector driven by the new middle class, the significant move to the city and the scarcity of investment alternatives. The coronavirus and restrictions on loans to real estate companies ordered by Beijing, alarmed by accelerating debt, have devastated businesses. The industry has stopped. Developers delivered only 60% of homes purchased off-plan between 2013 and 2020, according to a Nomura study.

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