Emre Erşahin

Emre Erşahin · 2024-01-31T12:07:43.673Z

Those economies who grow with concrete, in turn inevitably shrink with concrete! Eventually concrete(!) growth is highly questionable. The situation with Evergrande, as detailed in Peter Zeihan's video on the topic, points to a deepening crisis in the Chinese property market. Evergrande's bankruptcy highlights systemic issues within China's economic model, notably its dependence on the real estate sector and practices of hyper-financialization. The Chinese government's reluctance or inability to intervene effectively in Evergrande's crisis reflects the complexities of the situation. While the government has traditionally played a significant role in the country's economic affairs, including the real estate sector, the scale of Evergrande's problems and the potential for widespread fallout makes this a particularly challenging scenario. Evergrande's aggressive expansion and accumulation of debt were typical of the broader trends in China's property development sector. This approach worked well during times of rapid urbanization and easy credit but became unsustainable as market conditions changed and regulatory scrutiny increased. Evergrande's crisis symbolizes the broader vulnerabilities in China's property sector, where many developers have similarly overextended themselves. The potential implications for China's economy and global markets are significant, as the property sector is a substantial part of China's GDP and an essential driver of domestic consumption. This situation also raises questions about the future of China's economic model, particularly its heavy reliance on real estate and construction for growth. The crisis may necessitate a reevaluation of this model and potentially lead to more significant economic reforms. https://lnkd.in/dgYn37RS