Part 7/11:
By drawing parallels with the 2008 financial crisis in the US, analysts warn that the fallout could be exponentially worse due to China's over-reliance on real estate. Unlike in many other economies where wealth is diversified across various assets, a staggering 70% of Chinese household wealth is tied to property. When the housing market collapses, families find themselves trapped with no safety net, and no alternative means to recover their losses.
The crux of the matter lies in how companies like Evergrande operated. Developers would leverage future sales for building, but when the influx of investment dried up due to policy changes aimed at curbing excessive debt, they were left unable to complete projects or repay loans—leading to an industry-wide seize-up.