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Planet Money
China's real estate crisis, explained
Nov 15, 2023
China's real estate market has been a major driver of economic growth, but it's now facing a crisis. The podcast explores the history of the market, including bribery and luxury, and delves into the current troubles faced by property developers. It also examines the actions taken by the Chinese government, such as debt caps and price drops, and discusses the potential economic consequences for China.
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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.
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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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Discover
highlights
Listen to the best highlights from the podcasts you love and dive into the full episode