The crisis in China’s real estate market is causing serious damage to the country’s entire economy, but a former head of national statistics has put it another way.
Even China’s entire population of 1.4 billion people will not be enough to occupy all the vacant apartments in the country, the former deputy head of China’s Bureau of Statistics, He Kun, recently announced.
For years, the property sector was among the pillars of China’s economy, but it went down sharply in 2021 with the collapse of construction giant Evergrande. The company became the world’s most indebted developer, went into insolvency, halted construction on hundreds of thousands of properties and recently filed for US bankruptcy protection.
After the collapse of Evergrande, the spiral turned and already insolvent are companies that hold about 40 percent of housing sales in China.
Due to the subsequent crisis of confidence among buyers and the collapse of property prices and purchases, another of the largest entrepreneurs in the sector – Country Garden – is at risk recently. The company also has serious problems and is teetering on the brink of default.
Photo: iStock China’s construction boom is winding down.
The problem is extremely serious, as China has for many years relied on the property market as a tool for economic growth. The sector forms nearly 1/3 of the country’s GDP – construction, rents, real estate agencies, technology, etc., and its sharp contraction – in August, for example, the drop in real estate investments was 19% on an annual basis, leading to a subsequent slowdown of the entire economy.
In the boom years of the real estate sector, this also led to overbuilding and oversaturation of the market, and the problem of vacant housing deepened along with the debt crisis of developers who failed to complete their projects.
As a result, China has a bunch of ghost towns – half-finished, frozen or abandoned projects.
According to data from the National Bureau of Statistics of China, at the end of August the total area of unsold residential properties was 648 million square meters, which according to Reuters is equal to about 7.2 million apartments of 90 square meters.
However, the statistics do not include the large number of residential complex projects that were sold but not completed due to lack of financing. Properties bought in the strong years of the real estate market with the idea of resale, which also remain empty, are not added to the calculations.
According to various calculations, even when Evergrande collapsed 2 years ago, there were about 65 million vacant properties in China.
“How many vacant residential properties do we have now? Every expert gives different figures, but the most extreme think that the current number is enough for 3 billion people,” He Kun, 81, announced at a forum in the city of Dongguan. A video of the event was released by state news agency China News Service.
According to Kuhn, this estimate may be a bit too high, but probably 1.4 billion people really can’t fill all the empty homes.
The comment by the former head of the statistics bureau is quite different from Beijing’s official position, according to which the country’s economy is “resilient”.
“Comments predicting the collapse of the economy keep popping up, but what’s collapsing is such rhetoric, not the economy,” a foreign ministry spokesman commented recently.
2023-09-25 11:00:00
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