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upamfva 12 กันยายน 2565 , 09:28:23
The Chinese dream of homeownership is crumbling

Last November, hundreds of angry homeowners in Nanchang, the capital of China’s Jiangxi province, gathered on the roof of an unfinished apartment building. From their perch, they unfurled red and white banners along the outer walls and chanted demands for completion of the homes they had already partially paid for. On the dirt below, workers inflated a large airbag to catch anyone who jumped.To get more china economy latest news, you can visit shine news official website.
Nearly 500 miles away in Shanghai, a 26-year-old interior designer watched video of the protest on social media, and saw her life plan falling apart.

The woman and her husband, who requested anonymity to avoid retribution, had purchased a three-bedroom unit in the sprawling Xinli City project presale in August 2019. Just a few hours’ drive from both their hometowns, the development was touted as a “750,000-square-meter city of ideal life,” with a day-care center for the couple’s young child. It should have been finished that November. It wasn’t until she saw the video that she learned construction had stopped three months earlier.

Like the vast majority of Chinese home buyers, they had begun making payments before construction was completed. For years, this type of arrangement, which accounts for more than 80% of China’s home sales, gave developers easy access to funds and fueled rapid expansion as home prices soared.But with financing drying up and debts coming due, the resulting cash crunch has left thousands of units unfinished, and owners boycotting their mortgages in protest.

Demands for answers have elicited excuses, threats or detention, the woman said, and have pushed Xinli City homeowners to take desperate measures. Last month, she stopped paying her 30-year mortgage, along with thousands of others who had bought half-built homes there.

“It’s gotten to the point where no one is taking care of it. So we naturally also have to defend our own rights,” said the woman. “If we the people are not happy, it’s difficult to have a stable society.”Such boycotts, which have spread to more than 300 projects in over 100 cities, are the result of a growing crisis that strikes at the heart of both economic and political stability in China. The property sector accounts for about a quarter of China’s economy, and its deterioration is spreading financial duress among domestic industries. The ramifications threaten to spill over into the global economy, undermining the possibility that China’s growth engine could help lift the world out of a potential recession.

The red-hot real estate industry has contributed immensely to China’s rapid economic rise and the dream of home ownership. With more than half of household wealth tied up in housing, the repercussions of a hard landing in the real estate sector have long been a major economic worry.

Hoping to ease what had become an unsustainable housing boom, the government implemented new lending requirements in 2020 to deter excessive borrowing. As some developers struggled to pay back debt, sales slowed and investors soured, pushing the sector into a downward spiral compounded by pandemic pressure.

“I think authorities underestimated, if a few companies got into trouble, what the effect would be,” said Bert Hofman, director of the East Asian Institute at the National University of Singapore.What was once a virtuous cycle has turned vicious. Home prices fell for the 11th straight month in July, and dozens of developers, including real estate behemoth Evergrande Group, have defaulted on their debts. The impact has rippled through land sales, labor, construction materials and home appliances.

“We are seeing it everywhere,” said Michael Pettis, a professor of finance at Peking University’s Guanghua School of Management. “You get these spreading waves, and the bigger the sector is, the more powerful those waves are. And in China, unfortunately, the property sector is huge.”

An exacerbated slowdown in China, a major commodities consumer and the world’s second-largest economy, would also have pronounced impact on the global financial system in its fragile state.

Countries worldwide are under pressure from rampant inflation and snarled supply chains. Russia’s invasion of Ukraine has disrupted supplies such as natural gas, oil and grain. The U.S. economy just shrank for the second quarter in a row, and the war has dampened consumer confidence and manufacturing in major European economies. In July, the International Monetary Fund downgraded its global growth projections as risks from China’s zero-COVID policy and housing crisis grew.

In March, Chinese officials were still hoping to hit 5.5% growth this year, an ambitious goal that, if fulfilled, would still mark the country’s slowest expansion in three decades. Those hopes have been dashed by President Xi Jinping’s hard-line approach to COVID-19 outbreaks, as harsh lockdowns have stymied economic activity.

The country is simultaneously grappling with a slowdown in private enterprise wrought by regulations meant to mitigate income inequality. Last year, China’s immense technology industry was brought to heel for what authorities saw as unscrupulous business practices. Another crackdown on for-profit education companies crimped the lucrative private tutoring market. As growth has slowed, companies have laid off workers, and urban youth unemployment reached record highs this summer.