Fudan, Public university in Shanghai, China

New Delhi, Sep 13: As the Chinese real estate behemoth Evergrande Group landed in a serious crisis, revealing the real hidden problems of the countrys property market driven by shadow banking, business ommunity across world is carefully watching the developments. A tumbling real estate sector in China could affect the world economy.According to the Institute of Chinese Studies (ICS), China's household debt in December last year was estimated at 150 per cent of its disposable income. This was also marked by a rise in property prices and seems to be concentrated among the millennials."There have been serious over-investments in several sectors in China, real estate being just one of the many. So, there are issues but since there is little transparency regarding data, it is difficult to assess the intensity of the problem," Shakti Sinha, director, Atal Bihari Vajpayee Institute of Policy Research and International Studies, MS University earlier told India Narrative.The Evergrande crisis has brought out a critical issue the problem of high and unsustainable debt that several Chinese firms may be getting caught in at this juncture when the world economy is going through testing times amid the Covid 19 pandemic and shifting geopolitical contours.China, which has remained focused on economic growth, has been witnessing a surge in its overall debt level—whether it is for local governments or corporates.High credit has been a pillar for China's economic growth. The ICS said the high credit borrowing has also put strain on financial institutions of the country. Besides, "zombie" companies that have little to no productive use, are borrowing more and more simply to meet their current obligations.The ICS study also pointed out that several state-owned and private companies in China have property subsidiaries, and property loans made to these subsidiaries are sometimes presented in the books as going to the parent company. "This results in the share of property-related debt being much higher than what is available in the official data."Earlier, Reuters reported that China's corporate bond defaults hit a record high this year, highlighting tightening credit conditions and a growing reluctance by regional governments to bail out troubled state-owned firms.Chinese companies' bond defaults amounted to 62.59 billion yuan $9.67 billion in the first half of the 2021, the highest ever, according to Fitch Ratings."That increasing proportion of defaults by state-owned enterprises (SOEs) has raised concerns among some investors that the end of implicit government guarantees on SOE debt could create market instability," it said.Disclaimer: This post has been auto-published from an agency feed without any modifications to the text and has not been reviewed by an editor

FudanFOLLOW

Fudan, Latest News

New Delhi, Sep 15 Calling for repurposing damaging incentives to the agriculture sector that is price distorting and ... ...

Seven Chinese users have been banned by the foundation that oversees Wikipedia from its websites globally after a report that alleged mainland Chinese Wikipedia editors threatened Hong Kong users. The foundation has also revoked administrator access ...

Authorities in Hong Kong have expelled an elected pro-democracy member of the city's District Council for failing to turn up to pledge allegiance to the government and the ruling Chinese Communist Party (CCP), while calling into question the oaths of ...

China on Tuesday slammed the Quadrilateral Security Dialogue (Quad) upcoming summit on September 24 saying that the group was "closed, exclusive, and targeted small circles...unpopular and have no way out." ...

An outbreak of the Delta variant of COVID-19 in the elementary school has forced China to impose restrictions in the southern province of Fujian. ...

Beijing, Sep 14 OPPO has confirmed that the upcoming ColorOS 12 will be officially announced on Thursday at ... ...

Rihanna and A$AP Rocky stole the show as they arrived together, marking their red carpet debut at the Met Gala 2021. ...

New Delhi, Sep 13: As the Chinese real estate behemoth Evergrande Group landed in a serious crisis, revealing the ... ...