Earlier this week, Chinese President Xi Jinping said at a high-level economic policy meeting that the country needs to prevent major financial risks.
Previously, in the last few years, Chinese authorities have stepped in to limit the debt-fueled expansion of conglomerates such as airline operator HNA and insurance company Anbang., at about 70% to 80%, according to Moody's estimates. The report added about 10% of total household income is related to property.
While authorities have repeatedly stressed that "houses are for living in, not speculation," Chinese households' greater preference for investing in property than stocks or other assets has contributed to rising real estate prices.The balance of consumer housing loans has only climbed over the last several years, to reach 36.6 trillion yuan as of the end of June, according to official data. The 13% year-on-year growth rate was slower than the 14.5% rate of 2020.
The inability of the property market to serve individual housing needs has contributed to a rapid rise in household debt, said Liu Xiangdong, deputy director of the economic research department at the China Center for International Economic Exchanges based in Beijing.Parents anxious to send their children to top schools have bid up nearby housing prices — which local authorities such as those in Beijing have tried to push back on.
For Evergrande, residential real estate development remains one of its major businesses, but the company has climbed into the ranks of Fortune's Global 500 list and expanded into industries such as film and entertainment, life insurance and spring water. Evergrande backs Guangzhou's soccer team and has an electric car unit.
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