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Historically, China's economic growth has been anchored by the robust property sector. For the first 25 years of the 21st century, this sector spurred significant economic development, with many citizens investing heavily in property as a secure form of wealth. However, over the last few years, regulatory changes aimed at controlling debt financing for property development firms have led to a major downturn. Notably, companies like Evergrande have become emblematic of the larger issues within the sector.
The consequences have been severe, resulting in a slowdown of economic growth that struggles to meet the 5% target set by Chinese authorities. With the property sector constituting around 20-25% of China's GDP, this decline has posed substantial threats to the overall economy.