Part 4/11:
The authors argue that, historically, real estate bubbles have triggered financial crises, and China's market, despite previous assumptions of resilience, is showing signs of similar vulnerabilities. Not only is household debt skyrocketing—climbing from under 20% in 2008 to over 60% today—but the saturation of new housing in many cities, especially smaller ones, has stifled any potential future growth benefits that the sector might provide.
Rogoff and Changyang warn that if this trend continues, the implications will be profound, signaling the end of China’s era of high growth and ushering in a new phase marked by slower and more unstable economic conditions.