Point of no return: crunch time as China tries to fend off property crash

theguardian.com:

China has reached a point of no return in its battle to contain what could be the biggest property crash the world has ever seen, experts are warning, putting the country’s Communist leadership and the global economy in peril.

As western countries stand on the edge of a potentially ruinous recession in the coming year, China is also facing a slump thanks to “total collapse” of confidence among ordinary people in the once-buoyant housing market, the continued ravages of Beijing’s draconian zero-Covid strategy and an extreme heatwave that is affecting the supply of power and food.

Alarm is spreading in China that tough times are on the horizon, with the chief executive of Huawei, Ren Zhengfei, causing a sensation this week when he warned that the chill from economic downturn would be “felt by everyone” for the next decade.

But just as it has become impossible for President Xi Jinping to U-turn on the mass lockdowns that have stunted economic activity, it also appears increasingly unlikely that he and his politburo will reverse the crackdown on reckless lending in the property market that has led to 40% fall in the sale of homes this year.

The Chinese housing market has driven growth for the past two decades and now represents the biggest asset class in the world, with a notional value of between $55tn (£47tn) and $60tn, which is bigger than the total capitalisation of the US stock market. Now developers are going bust after being deprived of easy credit, prices are falling, homeowners are refusing to pay mortgages on unfinished homes and the slump in properties being sold and construction is crippling local governments that rely on land sales for income.

Gabriel Wildau, a China expert at the global advisory firm Teneo, says