In China, work on tens of thousands of high-rise buildings is at a standstill. So much has been built in recent years that there is now a complete oversupply of housing and huge ghost towns have emerged. For a long time, the Chinese real estate market functioned like a giant pyramid scheme. The Chinese bought apartments as an investment and retirement provision, precisely because prices continued to rise. The state had guaranteed that there would be no failures. “But this guarantee no longer applies,” says Lea Sahay, SZ’s China correspondent. “Much more was built than was needed in unimaginable dimensions.”
After a quarter of a century of unceasing growth, what was long warned about has now happened in China: the bubble in the Chinese real estate sector has burst. The construction industry is irreplaceable for China’s economic power. Foreign companies have also long been feeling the effects of the collapse in demand in the world’s second largest economy. And because many private individuals and small investors are left with nothing, the real estate crisis also threatens social peace in the country.
How did the real estate bubble in China come about? And how could the People’s Republic get out of this? That’s what the new episode of our research podcast “The Topic” is about.
You can find the report “Built on Lies” by Lea Sahay and Florian Müller HERE.
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