Planet Money
China's real estate crisis, explained
Nov 15, 2023
In this insightful discussion, Emily Feng, an NPR international correspondent with a focus on China, delves into the severe real estate crisis facing the nation. She explains how China's once-mighty real estate market, an engine of economic growth, has come to a standstill, raising concerns for global markets. Feng also highlights the challenges faced by developers, including growing debt and regulatory shifts. The conversation vividly illustrates the systemic risks and ethical dilemmas bred in the competitive landscape of China's property sector.
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Quick takeaways
- China's real estate growth was fueled by land sales and high-risk leveraging by property developers.
- Tighter regulations and a market slowdown in 2020 led to a crisis in China's real estate market.
Deep dives
Chapter One: Birth of the Property Market
In the 1980s, China embarked on economic reforms that allowed people to run their own businesses and keep more of their profits. To make up for reduced tax revenues, the central government started taking in more money at the expense of local governments. Local governments realized they could make money by selling 70-year land leases for residential developments. The abundance of buyers led to a construction boom, but local officials became dependent on land sales to fund services and meet growth targets.
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