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First signs of China's property market collapsing?
A Chinese property firm may not be able to pay off almost six hundred million dollars of debt. So what?, you might say, but what's happening to Zhejiang Xingrun Real Estate could be the first signs of China’s credit bubble deflating fast, and that would send shock waves through the global economy.
While the People’s Bank of China is denying that emergency meetings have been held to discuss the situation, the possible default is adding to growing concern about the Chinese economy. The fears come from the fact that the property market is built on deep layers of interconnected debt.
Ben Cavender, from China Market Research Group predicts that other property firms may be ‘allowed’ to fail as the government attempts to oversee a major and overdue correction in the Chinese property markets. Having said that, he says “This is going to hurt the government because it’s going to impact their ability to generate tax and revenue from land sales.”. However he doesn’t believe there will be a major collapse of the economy as a result of the shock waves going through the Chinese property markets.
02:17 minutes
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